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The Siren’s Song

siren 2Lean a little to the right and you might be drawn in by the conservative’s call. It’s easy to understand why the melody appeals to many people who hear it. Conservatives take every problem we face and make it someone else’s. The latest verse in the conservative siren’s song deals with population growth.

In response to last week’s press conference by Partnership for North Carolina's Future, where business leaders and advocates urged the state to begin making capital investments and building infrastructure to support North Carolina’s projected population growth over the next twenty years, John Hood writes the following in his journal:

[I]t sure sounds like the best thing to do is: absolutely nothing. If the millions come, the result would be to raise my taxes. But if my taxes aren’t raised to build stuff, millions won’t come. So, as a taxpayer, I know what isn’t in my interest and how to avoid it.

According to Mr. Hood, we don’t need to worry about having enough schools, sewers or highways to accommodate an influx of people equivalent to the population of South Carolina. No, you & I can just sit back and let the next generation worry about it. It’s not our problem.

Yup, the best way to approach the future is to turn your back and hold on tight to your wallet. Good example of visionary leadership, John. Honestly, although I disagree with you on many things I expected better from you on this, but then I guess you’re stuck singing that same old song of yours.

5 Comments

  1. John Hood

    May 31, 2007 at 9:47 am

    If you read the paragraphs following the one you pulled out, you must surely know that I was not arguing for doing absolutely nothing in this piece. The above passage is meant to critique the Partnership’s faulty reasoning, which suggested that the costs of government infrastructure to accommodate growth must inevitably outstrip revenue growth. If that’s true, then taxpayers could rationally come to the conclusion I suggested and simply be against growth.

    I’m not. I argued, here and elsewhere, that necessary infrastructure investment — and there is a great need for it — can be financed without new forms of taxation. Indeed, I spelled out specifically how to redirect low-priority spending in the state budget to finance schools, roads, and other construction:

    Just this year, according to JLF fiscal analyst Joe Coletti, the General Assembly is about to approve a state budget containing around $180 million in corporate welfare, $130 million in administrative bloat, $70 million in inappropriate subsidies for nonprofits and advocacy groups, and $270 million in excessive subsidies for state services consumed disproportionately by higher-income North Carolinians who don’t pay reasonable fees. In the transportation budget, Coletti estimated, there is an additional $310 million in annual expenditures for low-priority projects that would better be spent on high-value highways construction and expansion.

    Setting aside for the moment the inefficient use of tax dollars in the state’s largest programs – public education and Medicaid – the above savings alone, if redirected to high-priority infrastructure needs, would represent $960 million in new investment in FY 2007-08. Do that every year for 30 years, and it comes out to about $29 billion in infrastructure investment without any new taxes (in nominal terms). Yes, the redirection might require fiscal adjustments – down in General Fund tax rates, up on Highway Fund tax rates, for example – but the net could be at least zero (and should, in fact, result in tax relief).

    To turn things about, although we disagree on many things, I did expect better from you than this obvious misstatement of my argument.

  2. aplum

    June 1, 2007 at 8:56 am

    Alright John, in the spirit of debate let’s look at the details of your savings proposal.
    $180 million in corporate welfare: You’re right there; the state doesn’t need underwrite private businesses.
    $130 million in administrative bloat: If you’re talking about the Lottery Commission and the director’s excessive salary and bonus, then ok.
    $70 million in inappropriate subsidies for nonprofits: Not so fast. The services provided by many nonprofits address real needs in the community, needs such as adult literacy programs, parenting education, rehabilitation or care for people suffering from AIDS. If nonprofit organizations didn’t provide these services that the state would have to assume responsibility, which would mean we’d have an even bigger government.
    $270 million in excessive subsidies for state services consumed disproportionately by higher-income North Carolinians who don’t pay reasonable fees: What you really mean is that you think we should raise the tuition at our state universities and community colleges, we should charge more admission to cultural and learning institutions like museums, zoos and aquariums. Education is our future; making it financially inaccessible to the majority of North Carolinians is short sighted.
    $310 million in annual expenditures for low-priority projects that would better be spent on high-value highways construction and expansion: What’s the point in building bigger highways if our secondary roads that lead to the highways are overcrowded and in disrepair? Rural counties deserve a fair share of state transportation funds. People in rural counties pay taxes too.
    John, some of your suggestions make sense but others disadvantage large segments of our state’s population. As Rob Schofield said in his analysis of the Locke Foundation “Freedom Budget”,

    [T]he document is about a radically different vision of society – a society from a bygone era (perhaps the Old West or the antebellum South) in which most people lived shorter, less healthy, less connected lives, but by God, their taxes were low.

    We can’t fund grow on budget cuts alone, we need to find a reasonable and fair ways to raise state revenues. So instead of always talking about budget & tax cuts, how about giving us some suggestions for new revenue sources.

  3. krm0517

    June 1, 2007 at 10:58 am

    There’s the $505 million in the Golden LEAF Fund that could surely be used for something useful (such as rural infrastructure needs).

  4. Stan Norwalk

    June 2, 2007 at 9:43 am

    Everyone, especially Mr. Hood, seems to be ignoring inflation. The cost of constructing schools, roads and other infrastructure has risen by 60% in the last five years. There is nothing wrong with cutting costs and efficiencies – until it impacts your quality of life (e.g. year round schools in Wake County) but they are often a one-time savings and don’t begin to match the effect of construction inflation.

    The only revenue source that reflects both growth + INFLATION is the transfer tax. If the 1% local option transfer tax were allowed in all 100 NC counties, (as it is currently in six counties represented by Senator Basnight) $900 million in revenues could be generated across the state. Earmark this for infrastructure and local governments could float $9 billion in bonds without a property tax increase. Over the next five to ten years those revenues are likely to double without increasing the rate.

    Considering that our needs for schools, roads,mass transit, wastewater plants, open space, etc. are in the range of $ 70 billion over that period..a 1% transfer tax could have a real impact on preserving the quality of life that brought many of us here. The alternative…LOS ANGELES.

  5. aplum

    June 5, 2007 at 12:56 pm

    Good point, Stan. Thanks.