I received another response to my piece criticizing requiring a farmer to obtain a government permit before renting his land to a solar farm – this time from a respected political group.

The group began by explaining carefully that it opposed ‘all energy tax loopholes and subsidies, regardless of the energy source.’ Which is fine. So do I.

Then it added, disapprovingly, that ‘North Carolina’s energy market currently exists in a monopoly system.’ Which is fine, too. No disagreeing with that.

But, then, the group declared that “the REPs” are a bad law.

Now, the REPs are a little known provision in utilities law that make it possible for independent solar companies to produce electricity in North Carolina.

Without REPs, utility monopolies (in North Carolina that basically means Duke Energy) have complete control of the market. The monopoly can put any independent solar company it wants out of business by simply blocking the right to build its product. REPs are what give independent solar companies a way to sell electricity in the marketplace. No REPs, no competition.

I’ll grant REPs are a peculiar provision. About the only time something like REPs make sense is when the government has granted one company – like Duke Energy – a monopoly over a market.

Since they’re peculiar, in a way doing away with REPs looks sensible. But, in fact, all it actually does is strengthen the monopoly. And reduce competition.

Is that conservative?

Regulation on Top of Regulation

We’ve reached a peculiar place in politics.

Historically, conservatives have opposed excessive regulation and rightfully so. Regulations are like wind resistance when you drive your car. The bigger the car, the harder it has to work to move along at 70 miles per hour and the more it costs to drive.

Cutting foolish regulations is like rounding the corners and cutting the size. For a strong economy and maximum jobs, we want regulations that look more like a sedan than a box truck.

So it was odd when Republicans started hollering that state government should increase regulations on solar farms – some politicians even went so far as to suggest requiring a farmer to obtain a state permit before leasing his land for a solar farm.

It gets worse: In fact, a solar company already needs to get a permit from the Utility Commission to build a solar farm. It’s not a simple process and to further complicate it, when they process that application , the Utility Commission sends out notice to  seven state departments, seven divisions and four sections*.

Counting the Commission itself, that’s 19 bureaucracies that get a chance to stop, or at least delay construction of a solar farm.

Now, some say that 19 bureaucracies still isn’t enough.

How is that conservative?

* 1)      Dept. of Environmental Quality

               –          Division of Air Quality

               –          Division of Water Resources

               –          Division of Water Quality

               –          Division of Coastal Management

               –          Division of Environmental Health

               –          Division of Energy, Mineral, and Land Resources

               –          Division of Waste Management

•  Solid Waste Section

•  Hazardous Waste Section

•  Superfund Section

  2)      NC Wildlife Resources Commission

  3)      Dept. of Transportation

  4)      Dept. of Cultural Resources

  5)      Dept. of Agriculture

  6)      Dept. of Commerce

  7)      Dept. of Public Safety 

              –  Emergency Management Section

Gerrymandering and the Supreme Court

It’s easy to make fun of redistricting maps drawn by the NC legislature. It’s not a pretty picture.

While the just adopted new Congressional District maps have fewer splits of counties (13) and precincts (12) than any maps in recent NC history they still leave you wondering why, for example, the 5th Congressional District, which already was 10 counties big, needed to reach into Catawba County to include two precincts and a portion of a third.

What difference did it make that it’s worth the confusion of splitting a precinct? And putting a handful of people in Catawba County in the 5th District?

Was this just more political gerrymandering to move Republicans and Democrat votes around?

The fact is the legislature had little or no choice – they were simply following orders laid down by the U.S. Supreme Court.

In 1964, in Wesberry v. Sanders  , the Supreme Court told us the Constitution requires States to select congressmen by elections in districts composed “as nearly as is practicable” of equal population.

Which the legislature’s redistricting attorneys translated into “one person, one vote” and means exactly that. There is only a one vote difference in the total population of each of the new 13th NC Congressional Districts.

Balancing districts perfectly with 733,000 people sounds hard but it’s even harder than you think. If you need 150 votes to balance, you can’t just grab the closest 150 residents across a county line, you have to balance using entire voting blocks, (which are smaller geographic pieces that, together, make a precinct). So you may end up including a voting block of 250 people in one county and then subtracting a voting block of 100 people in another county to get the net increase of 150 people and make the districts balance. When you do that, you split two counties.

If this sounds a bit crazy, it is.  It’s unlikely that the census, taken every ten years by temporary workers is anywhere close to that level of accuracy. Even if it was, one week later a family moves and the district is no longer equal.

In our state legislative districts, we allow a 5% margin in balancing districts. A margin a fraction of that size in the Congressional Districts could eliminate splitting precincts and a lot of split counties.

But I’m not sure you have to understand mathematics to be a Federal judge.

Is That Conservative?

I stirred up a bit of controversy with my article about the proposal to require a farmer to have the government’s permission to lease his land to a solar farm.

One fellow wrote me that he agreed the idea didn’t sound like something government needed to do. But then he added what government really should do is pass regulations telling the farmers what the leases ought to say – for example, how to dispose of solar cells.

So now, instead of a permit, we have government dictating leases to farmers?

Is that conservative?

Why shouldn’t the farmer have the freedom to handle his own business dealings?

It’s a fact I have yet to meet a government employee I would recommend a property owner use for real estate advice.

Freedom Fighters

It’s an old story that repeats itself throughout history – a flamboyant leader exhorts a suffering people to join his crusade to overthrow a ruthless dictator and win their freedom. But then, as soon as the revolution is over, it turns out the new leader is not what he seemed. He wanted power for himself, not freedom for the people.

For years conservatives, standing for two fundamental principles, have battled tax incentives that favor one business over others. We have argued those incentives are examples of government interfering with the free market and ‘picking winners and losers.’

Along the way, additional political leaders (and their allied political groups) joined in, using almost precisely the same arguments while specifically criticizing the state incentives for solar energy.

For a while, it sounded like we were all allies in the conservative cause.

But then, everything changed. After the solar incentives were eliminated, the second group dropped the cloak of standing up for free markets and, contrary to conservative principles, set out to use government to tilt the market to suit its purposes.

How? By proposing to pass a law that said no farmer could rent his land to a solar farm without the government’s permission. In other words, they want to use government to accomplish their goal of stopping solar energy.

That is not my idea of freedom. Or of protecting the free market. The government has no business getting into the business of telling a farmer how he can or cannot use his land.

Asking Permission

He works from sunrise to sunset, spent the last 40 years raising his family, sent his children to college (where they graduated without debt), contributes to his church, pays his taxes to help build the public schools and he’s done it all by growing corn and wheat and raising chickens and hogs.

He’s a farmer.

When it rains too much he can’t plant and when it rains too little his crops wither. It’s hard to know which is worse, late spring frosts or the early fall frosts. A microscopic virus can wipe out all his chickens and, as he watches, months of backbreaking work (and money) disappear.

He wonders sometimes what he’s done to deserve the treatment he receives from Mother Nature – he both loves and curses nature. In the end, like his father and grandfather before him, he simply rolls up his sleeves and goes back to work to dig out of whatever hole he’s in.

One day not long ago a man came to see him who wanted to lease the back 40 acres, where nothing hardly ever seemed to grow, for a solar farm. His wife liked the idea.  She said it would be the first time they ever received money that did not require their own sweat to earn. It would also mean no longer having to mow 40 acres of brambles every winter, after the yellow jackets were gone.

But now it looks like he may have waited too long to sign the agreement.

A bureaucrat sitting in Raleigh has decided he – the farmer – doesn’t have enough sense to decide whether to rent his land. That the government needs to tell him what to do. So now, it looks like, he’s going to need to ask a bureaucrat for permission to rent his own land.

All he can do is shake his head. And offer a silent apology to Mother Nature.

How Much Is Enough

It felt like a stick in the eye when the NC Commerce Department announced they were paying Corning Optical Communications $2.35 million in taxpayer funded incentives to move their headquarters from Catawba County to Mecklenburg County. It appears I’m not the only one feeling poked.

Even beyond using taxpayer money to help Corning move 500 jobs between NC counties, most people feel uncomfortable with idea of paying cash to a company to move to NC. It’s true that it sometimes works. It’s equally true that a corporation’s commitment to NC may not last any longer than the cash payments and the company moves on.

So why is paying corporate ‘incentives’ such a seemingly unstoppable juggernaut? The answer is politics. Woven into the state’s government and political fabric is a cluster of people who promote incentives for a straightforward reason – their livelihood depends on it. Those lawyers, lobbyists, and assorted political appointees make a better than average living advocating for government to hand out taxpayer dollars to out-of-state corporations – so they fight ending the incentives program.

But in the new NC business climate a couple of crucial factors have changed.

For years, NC had the highest Corporate Income Tax (CIT) rates among the southeastern states. So, the incentives cluster did, then, have a valid argument that cash was necessary to lure new corporate employers to NC – because our tax rates were higher than our neighbors. The result was a convoluted system of government handouts that, oddly enough, punished long term NC job creators while providing a steady stream of cash to support the incentives cluster and to keep politicians busy cutting ribbons on new plants.

Then, in 2013, the General Assembly started doing two things: 1) Closing tax loopholes and 2) Using those savings to cut tax rates. In all, the legislature has cut the Corporate Income Tax rate 57% — from 6.9% to 3%. You would think as the corporate tax rate dropped the need for cash incentives would fall too. But to the incentives cluster, none of that matters – instead the lobby continues to holler the same old line: ‘We have to give incentives because everyone else does’.

How about trying something new?

Let’s answer a simple question: How much lower does NC’s CIT rate need to be before incentives aren’t necessary and we treat all job creators the same?

Have we reached that point now? Which matters most: Lower tax rates? Or cash handouts to a few corporations?

After all, the incentives lobby perpetually crying, “We know you cut corporate tax rates 57%… but we still need to hand out ‘more’ cash to corporations” – cannot be the correct answer.

A Stick in the Eye

Sometimes serving in government reminds me of raising children. Every now and then our children start down the wrong road. When that happens, you may offer a word of advice – which sometimes works out fine. But, other times, you find yourself watching a slow motion car wreck as a life-lesson unfolds.

It makes common sense for politicians to look for a ‘sweet spot’ where good policy and good politics meet. But, more often than not, common sense is in short supply in politics and the opposite happens. Bad policy and bad politics meet.

In December, as part of its already controversial ‘Incentives Program,’ the Department of Commerce announced it was granting Corning Optical Communications nearly $2.5 million to move its headquarters to Mecklenburg County from Hickory.

As policy, what kind of sense did that make? The Commerce Department was paying a big New York based corporation to move its office – and 500 jobs – from one North Carolina county (Catawba) to another (Mecklenburg).

Politically, it didn’t make much sense either: The Governor’s Commerce Department had just given Catawba County the political equivalent of a poke in the eye with a stick. (Governor McCrory won Catawba County, which is losing 500 jobs, by a margin of 31,000 votes in his last election – while Mecklenburg County had given him a margin of 3,100 votes.)

At the end of the day, there’s just one bright spot in this mess: The Department of Commerce has just given us another clear reason why stopping the state’s incentives program, once and for all, makes common sense.

Central Planning

It wasn’t news when a report showed the NC Commerce Department has given nearly 80% of its incentives money (funded by NC taxpayers) to the 20 wealthiest counties; nor was it a surprise the Department gave most of the money (and tax breaks) to large corporations in big cities instead of small businesses in rural counties.

But one thing was odd: The Department’s explanation for this one-sided picture. The Secretary told the newspaper that giving incentives to rural counties, like Robeson County, is “central planning” – which, in his view, is dead wrong.

So it seems giving an incentive to a big company in Charlotte is free market economics at work but giving one out to a small business in a rural county is central planning.

With all respect to the Secretary, that sort of sounds like saying a cat’s a cat in Raleigh but in Alexander County it’s a weasel.

I think there are three reasons most incentives go to urban counties.

First, it’s a cold hard fact that large corporations have the political muscle to get their hands on lots of incentives – while a small business in a town like Hickory has little or no chance at all.

Second, it’s also no secret our leaders, both the Republicans and Democrats, have embraced the idea that the best way to create jobs is by turning our two largest cities into the gridlock we know as Atlanta – while leaving nothing much in the rest of the state but unoccupied farm land.

Third, years ago, early in my career, I worked out a building lease with a large corporation. After the corporation signed the lease it went to the local government and asked what incentives were available to help pay for its move.

I thought surely – since the lease had already been signed – someone would figure out the corporation had already decided to move to Hickory. But I was wrong. To my amazement they gave away the tax dollars, and, looking back, I suspect they had a simple reason: It made them look good. They could claim their incentives grant helped bring jobs to Hickory.

I have a suspicion that’s how most incentives work. After all, Governors and Cabinet Secretaries and bureaucrats in the Department of Commerce all like to look good.

Incentives, by their nature, are crony capitalism. And there’s no avoiding political back scratching gumming up the works. But there is an alternative that actually is free market economics. For everyone.

We could abolish incentives. And use the savings to lower tax rates on all businesses in all counties. That would appeal to a big corporation with its heart set on moving to Charlotte and to a small business bootstrapping its way up in Alexander County. And we might not end up looking like Atlanta.