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There’s been much ado in recent months about North Carolina’s “record high” gas tax levels, but that claim is missing some important historical and economic context.  After adjusting for inflation, North Carolina’s gas tax is actually quite low by historical standards (see chart below).  In fact, it’s only in comparison to a brief period of low gas taxes in the early 1980s that the state’s current gas tax rates appear abnormally high.

 

 

 

 

 

 

 

 

 

 

 

 

 

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There aren’t many in North Carolina who would argue that the state suffers from too little congestion, too few potholes, not enough crumbling bridges, or too many construction jobs.

More than 5,000 of the state’s 13,000 bridges (almost 4 in 10) are structurally deficient or functionally obsolete.  The American Society of Civil Engineers (ASCE) recently down-graded North Carolina’s roads from D to D-, and also estimates that poor road conditions cost North Carolina motorists $1.7 billion annually in additional repairs and operating costs.  At the same time, unemployment in the construction industry continues to remain above 13 percent.

Thus, it’s strange that recent statements by some North Carolina lawmakers suggest they may take up a measure after Thanksgiving that would reduce funding for vital transportation projects aimed at reducing congestion and improving the condition of the state’s roadways and bridges.

The measure in question is a seemingly perennial (and typically bipartisan) effort to cap the  state’s gas tax, a revenue source that accounts for more than half of state revenues dedicated for transportation projects.  Despite the impact a gas tax cap could have on transportation revenues, there’s been little discussion of replacing any lost revenue from capping the gas tax. Read More

Cross-posted on Prosperity Watch

The big labor market news in North Carolina last month was the increase in the state’s unemployment rate to a 15-month high of 10.5%. As devastating as it is for more than one in ten North Carolina job seekers to be out of work, even this statistic masks the true depth of the jobs crisis in the state.

In addition to the monthly unemployment rate, the US Bureau of Labor Statistics also publishes a broader measure of un- and under-employment that provides a fuller representation of the plight of workers. This measure (published as the “U-6 measure of labor underutilization”) includes not only individuals actively seeking work but also includes involuntary part-time workers and individuals classified as “marginally attached” to the labor force (i.e. individuals having sought work in the past twelve months but not in the past four weeks ).

This U-6 measure, illustrated in green in the chart below, shows that nearly one in five workers in North Carolina want, but have been unable to secure, full-time employment. Prior to the recession, only one in twelve North Carolina workers had been unable to secure full-time employment.

 

 

 

 

 

 

 

 

 

 

 

 

 

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In a must-read blog post, respected economist Timothy Bartik takes down the pernicious myth that “government doesn’t create jobs.”

This myth, Bartik writes, is based on a “profound misunderstanding” of how the economy works.  That it’s commonly held by policymakers contributes to misguided economic policies that fail to take into account the important role that government investments and services play in the economy.

But a more perceptive analysis recognizes that all sectors of the economy ideally can provide productive goods and services that can help contribute to greater well-being. Our economy is interdependent. The value of what we produce, and the number and quality of jobs, can be affected by all sectors of the economy… This includes the government.

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But more importantly, if government provides productive services, it helps support the private economy. These supports include a legal system of property rights, a criminal justice system that preserves public order, roads and other transportation infrastructure that facilitate commerce, and human capital development programs that develop the skills of the labor force. Read More

The tide of anti-tax sentiment may finally be ebbing here in North Carolina.

Voters in six North Carolina counties went to the polls this year to vote on increasing the local sales tax rate to support public investments in education, economic development, and transit.  In all six cases, voters approved adding a quarter-cent or more to the local sales tax rate.

Last night, voters in four North Carolina counties – Buncombe, Durham, Montgomery, and Orange — approved raising the local sales tax rate.  Those approvals come on the heels of two successful sales tax referenda in Cabarrus and Halifax counties earlier this year.

These results contrast sharply with similar referenda in recent years.  Last year, amidst the rise of the anti-tax Tea Party, voters in 16 North Carolina counties rejected increasing the local sales tax to fund public investments.  Only in seven counties did voters approve adding a quarter-cent to the local sales tax, and none of those approvals came during the November election. Read More