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Carolina Journal Radio No. 848: N.C. budget surplus nears unexpected $900 million

Carolina Journal Radio / Donna Martinez and Mitch Kokai
The Truth Network Radio
August 19, 2019 8:00 am

Carolina Journal Radio No. 848: N.C. budget surplus nears unexpected $900 million

Carolina Journal Radio / Donna Martinez and Mitch Kokai

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August 19, 2019 8:00 am

N.C. policymakers recently learned that state government ended its last budget year in June with a revenue surplus of nearly $900 million. Meanwhile, Gov. Roy Cooper wants the state to borrow more money as it increases spending in the new budget year and beyond. Joseph Coletti, John Locke Foundation senior fellow, places those facts in the broader context of North Carolina’s fiscal picture. State Treasurer Dale Folwell has seen pushback from large medical providers as he has proceeded with his Clear Pricing Project for the State Health Plan. It serves government workers and retirees. Folwell discusses the project and explains why it’s necessary for the health plan’s long-term viability. North Carolina’s Read to Achieve program recently faced an attack from N.C. House Minority Leader Darren Jackson, D-Wake. You’ll hear Jackson’s comments, along with a response from a Republican House colleague. N.C. lawmakers have debated the pros and cons of legalized smokable hemp. You’ll hear highlights from committee debate about the hemp. Growers and law enforcement interests clash over whether legalized smokable hemp generates more benefits than costs. Most us know that certain drugs are illegal. Far fewer of us know that North Carolinians are expected to pay taxes on their illegal drugs. Brenee Goforth, marketing and communications associate at the John Locke Foundation, discusses the state’s unauthorized substances tax. Authorities can seize property to force people to pay the tax. It generates $6 million to $11 million each year for state government.

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From Cherokee to current attack from the largest city to the smallest town and from the statehouse into the schoolhouse Carolina Journal radio your weekly news magazine discussing North Carolina's most of public policy events and issues welcome to Carolina Journal radio I Michiko got during the next hour, Donna Martinez and I will explore some major issues affecting our state state treasurer Dale Falwell has stirred up debate in the North Carolina healthcare community with his clear pricing project targets the state health plan. You hear Falwell discussed the project. He explains how it will protect the health plan's long-term viability.

North Carolina's read to achieve program for elementary school students came under attack recently on the floor of the state House of Representatives you learn why state lawmakers are debating the pros and cons of legalized smokable hemp hemp farmers are on one side of the debate. Law enforcement officers on the other, and will discuss North Carolina's tax on illegal drugs. Yes, there's a tax on those drugs generate millions each year for the state revenue department.

Those topics are just headfirst.

Donna Martinez joins us with the Carolina Journal headline $896 million. That is, how much more money the state put into its bank account, then it anticipated it would for the fiscal year that ended June 30, the surplus is one more piece of information about the state of North Carolina's finances that our next guest, Joe Colletti is looking at to assess where we are and where we should go when it comes to spending and taxing Joe of course is a senior fellow with the John Locke foundation.

He joins us now. Joe will back to the show quite a bit here.

Wow, great news $896 million.

We didn't think we were going to have had that happen.

It is nice we'll talk about positives and is largely income taxes that be had. We had the federal tax reforms, and that a lot more money to come into the state there's little bit theirs and the economy did better than expected as well. So there's higher corporate income tax money higher sales tax money. A portion of that may be due to the wayfarers. The Internet sales tax. The Department of revenue has decided that it can collect because there was more sales tax collected was, yet there's there's more on the outside.

These numbers are about $230 million more than we expected and then was expected in May so $900 million more than originally budgeted $230 million more. Just since the May estimate, which was based on April Cooper administration.

At one point, predict, we were going have a budget shortfall for the fiscal year. Yeah, they were very concerned.

In 2017 when the first budget was was passed because we do work in a biennium in North Carolina so the first time that was passed, Charlie Preuss, the budget director will was writing to everybody and saying that this can create a $600 million hole in the budget. After two years so $600 million holding $900 million surplus in revenue. We can do them out of a little bit $1.5 billion difference it's plugged in on what's what's up between friends, 896 million bucks. That means that most likely a lot of different people are going to be saying my agency or my constituents need that money for fill in the blank.

What happens to that money, but the money's is currently available so as it rolls out right.

It rolls over because that's from the last fiscal year. It rolls over to what's available this year. It was not in any of the budgets that were proposed originally so that $250 million is is additional money on top of that way. That will likely that would likely been rollover to the following year. We saw this happen in previous years as well. When money that when final collections came in hundreds of million dollars more than expected in May and that just built up the. The stockpile of of unreserved cash balances so that's where this normally goes, given the circumstances of of the budget this year is hard to know where that actually ends up. I know you're a big proponent of building up the rainy day reserve fund so I suspect if you had your way, you take at least a chunk of that and put it away for bad times always the best thing to do.

Whether it's personal, money order or other goal or state money is if it's if it's a one time if it's one-time shock. Yes, save it, Joe. It's been fascinating over the past several months as we have witnessed and you've been writing a lot The debate over how much money we should spend in our new state budget, as should we or should we not borrow money to build schools and there's been a real disagreement between legislative leaders and Gov. Cooper give us a sense over what the two sides have essentially argued is the best course for right so the legislature has gone with the it's better to save money approach that that we just talked about that they call years ago created state capital and infrastructure fund that would pay for capital expenses on an ongoing basis using cash and paying down the debt that North Carolina's Artie taken out and Gov. Cooper has said that it in his first budget proposal, Charlie Preuss, the budget director we talked about earlier said this is a bad idea. The governor's proposal eliminated the skiff as it's called the capital infrastructure fund and took about $230 million of that and put that down into appropriations on just general operating expenses in that budget. They then borrowed $288 million. So it's pretty clear one to one that we want to spend today and borrow money for capital needs and that that was the that's been the approach that the governors taken throughout this throughout the budget process is not exactly any more money today and borrow to make up for that difference on capital that really is in opposition to what we've seen from legislative leaders over the past number of years where they've taken a much more restrained approach spending has grown, but at a very low level yes swimming from the legislature has grown slower than the governor and every budget that is been proposed from both sides. In the end with the skiff there to pay for capital on on an ongoing basis instead of borrowing money they're paying down debt in the governor's idea is to it. It's like if you're looking to buy a phone you could buy the top-of-the-line iPhone $4000 and pay that with cash or you could pay a portion of that in cash and use the rest of it because the phone is useless without all the subscriptions to audible and and and and Netflix and everything else use the money for that.

But then you take on this additional you have the ongoing cost of your subscription plus your paying down the debt for what you ought what you borrowed for for the phone. That's what the governors looking to do. Instead, it wears the legislature saying we have money let's pay for the phone and worry about descriptions separately with with with the money that we have left over.

In essence, Gov. Cooper wants to spend today plus borrow course that means, down, down the road you have to pay back the debt, the interest on that right and that becomes a real problem because the first thing in the Constitution that the status process but is supposed pay with its money is debt service so the capital and interest on what is been borrowed in the past is the first thing that we have to do with what you can not pay that that's not right and that and everybody is very protective of our AAA bond rating, which is also part of that and so the first thing were to take care of our debt holders in the future, which means that either the revenue has to grow the economy has to grow or you have to have new taxes or you have to cut spending, and that's with the governor is creating the choices in the future for some of the economy does slow down right were going to have to order to be back back in a really bad position of cutting services, raising taxes, probably doing both, and it's going to look like if this is just what we have to do. There's no choice when really the choices being made today that affects that future decision. Joe, you mentioned something really important and that is sent.

If the economy were to slow down we know the economy is cyclical. It's going to happen at some point a little bit about why you are such a stickler about this issue of putting money away for savings. For those of us who live in North Carolina for a while. We've been through periods of time when the economy has slowed down and when the governors and the legislature have gone back on and raise sales taxes by halfpenny or a full penny and meaning $1 billion is what about a penny is worth today and that is the money that comes from the working people and it's and it's a tax increase at the worst possible time when we don't have money right we individuals don't have money. The government obviously doesn't have money. So that's what and so it's coming on Certs cutting services and in raising taxes at the worst time and that's why we need to save money today so that we can smooth that out and be in the government can provide the services that are needed when the economy slows down, which is when those services are needed and will and without raising taxes on the rest of us. And that's why I know as I said earlier, you got your eye on that 896 money but thank you very much like you say with this much more Carolina journal writing come in just a moment tired of fake names tired of reporters with political axes to grind. What you need to be reading Carolina journal, honest, uncompromising, old-school journalism, you expect and you need even better, the monthly Carolina journal is free to subscribers sign you'll receive Carolina journal newspaper in your mailbox each month. Investigations into government spending revelations about boondoggles who the powerful leaders are and what they're doing in your name and with your money. We shine the light on it all with the stories and angles. Other outlets barely cover but there's a bonus print newspapers published monthly by our daily news site gives you the latest news each and every day lot onto Carolina once, twice, even three times a day.

You won't be disappointed. It's fresh news if you'd like a heads up on the daily news sign up for daily email do that Carolina Carolina journal rigorous unrelenting old-school journalism. We hold government accountable for you. Welcome back to Carolina journal radio line, which co-guy. It's hard to tell how much healthcare actually costs but our next guest is trying to shine light on healthcare costs. It's important task for state treasurer Dale Falwell has because he oversees the state health plan for government workers and retirees will go back to the program will thank you for having me so we can talk about the more transparency and lower cost. You are tackling this issue through the state health plan. Something is called the clear pricing project before we get into the details that tell us why this is something that is important to anyone is connect with the health plan will whether your home health plan or not you're either on the plan or you're being asked to pay for the plan. This affects all citizens North Carolina pay taxes in the way shape or form of the why is simply this, the state health plan, which is the largest purchaser of healthcare North Carolina has not been taken advantage of its buying power. The reason that is is that state health plan for years and decades have been in deals that for lack of a better word or secret contracts or no one knows the price and the value of what they're getting, and so what the clear pricing project does is is it brings transparency to healthcare. It pushes the control out of the consumer and we're very confident this will allow us to lower cost for state employees and taxpayers like them who fund the plan that would like to get too far into the weeds, but one of the keys to this is basically you set reimbursement rates and say that this is what will get a pay clock to be something that will vary from place to place or time to time. Services could be what what what you pay is called referenced based pricing and the reason we went to referenced based pricing as we sent a records request one of the largest hospitals in North Carolina and this is what they return to us thumbing through them hundred 40 page document where every single part of the document is blacked out and the fact is, it is a state treasurer spending over $3 billion a year of taxpayer and member money on something we don't know the price and the value of so to get in the weeds reference based pricing is basically based on Medicare reimbursement rates not Medicaid were going on average almost 100% over that. So, almost double the Medicare reimbursement rates to put that in context for your listeners.

Mitch prisoners if they are the medical attention or colonic get services at 40% over Medicare people unfortunately who are in Journal workers comp claims the providers get reimbursed at 40% over Medicare were often 100% over Medicare for the people who teach our kids protect us from criminals and paver roads.

We think it's very reasonable and that's all were doing with a clear pricing project we are speaking with state treasurer Dale Falwell about the clear pricing project, despite what sounds for what you're just saying like a good deal. There's been a lot of pushback.

This is been a major political issue tell us about what you been trying to do the old opposition to this well the first thing that we know they can help us overcome this is that every one of your listeners has their own story about healthcare cost surprise billing out of network billing people being sent to collections for healthcare costs. So thereby, North Carolina knows there's a problem with healthcare and the big problem, some of the opposite. They don't consume healthcare in the state actually consumes them in order to consume something yet another value.

The price which are getting in healthcare is like going to grocery store and not being any prices on any of the products they take payment from you at the checkout and four months later you get this bill mail that you don't understand, so the clear pricing project were very honored that since we've launched this, we've had 27,000 providers of healthcare who assigned on the clear pricing project across North Carolina. These are providers of healthcare they want to be a part of open contracts given the controlled consumer and lower cost for this emission were political. This is not political or mathematic emotional processes mathematical.

The fact is that our healthcare and pharmaceutical cost are going up at a much faster rate than the appropriation coming in from the general assembly on top of that which is North Carolina's insolvency of that state health plan is right behind the state of Illinois same Illinois that your listeners have become familiar with his state is not in good shape. They should be asked himself right now has a possible that our insolvencies right behind Illinois and the fact is, we been making promises for lifetime healthcare to be eligible for lifetime healthcare. In many instances after five years and one day of service and no money has ever been put aside for that.

That's why we are spending all of our attention. Attacking this problem of runaway healthcare cost and secret contracts. The people are opposed to us are just attacking us. You mentioned the 27,000 providers there still some key providers that have been holding out fighting this what efforts are undergo are underway now to try to get all the other important players on board everything it takes, and then some year-over-year. We've answered every phone call every email we've attended every meeting by any of these major providers and basically that at the end of the day they trotted to steer us in the something else you know were interested.

After we figure out what were supposed to pay and I say this or sarcastically. You can cut the cost of anything unless you know the cost and UK value.

Anything with us the car you're driving today are the suture wearing UK value. Anything less you know it cost so our strategy is this reference based pricing so we figure out what were supposed to pay. Secondly were going bundling bundling is most associated right now with carpentry, which is knees, hips, and rotator cuffs. Bundling is where you go and you pay one price for this titanium screws the Band-Aids the anesthesia of the physical therapy. He will know exactly what they're getting when they going to get there knee replacement.

They know exactly what the total cost company.

The third factor is alternative payment arrangements and then then we'll see where we go from there.

But the fact is this, the state is keeping the public purse were spending almost over $3 billion of taxpayer money and will know what were getting for is it fair to say that one of the reasons were in the state that we are in right now is that the state health plan is basically seeing his somewhat of a cash cow by healthcare providers that they viewed they might have to see that they might have to pay attention to what they're charging to other folks, but they've looked at the state health plan is a way to just make easy money. We haven't been able to prove that the sort of do your point every string that we've pulled on over the last year regarding clear pricing. We've never gotten to the end of any of it because every time we think were at the end of a string that were pulling on we find something else that we did know about it if you take their words of the of the leaders of the hospital association who are fighting us about almost all clear pricing. If you take a mentor words. One particular major medical center says that and I hope this comes across on the radio that we make up 4% of their business and by cutting cost temp percent were wiped out 40% of their profit. What other mathematical explanation is there for you to your question, then, when you only make up 4% of semi's business by cutting expenses you will wipe out 40% of their profit other than the fact the state health plans been looked upon as a cash cow for us not to be successful in clear pricing means more secret contracts and higher cost but we know one person who wants to see fewer secret contracts at lower costs and continue working on clear pricing project is our state treasurer Dale Falwell. Thanks much for joining us. Thank you will have one Carolina Journal radio just mom. If you have freedom we got great news to share with you now.

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Welcome back to Carolina Journal radio I Michiko guy North Carolina has struggled to improve public school students reading skills. The read to achieve program addresses that goal aims for reading proficiency in the third grade, but state House Democratic leader Darren Jackson recently blasted the program how much is been spent only to achieve since it first passed hundred and $50 million.

So here the facts of what we've gotten hundred $50 million are third grade reading scores have dropped from 60.2% in 2013 to 55.9% in 2017, 18. Drop in third grade reading scores of the time. It is the biggest among all states EEOC's are EEOC exams the drops, and overall performance has been accompanied by widening gap for black students between white and black. There's been no external evaluation of why the scores are following in the first place.

Could it be the teacher cuts starting in the recession when the Democrats were in control and we had cut back.

Could it be because the pre-k that we initiated in 2011 and 2012 as we start tried to pass tax cuts.

Republican state representative Craig Horn of Union County responded to Jackson's criticism. All of us that we have spent hundred $50 million and based on news reports and were not.

Now some people would say it's a reason to do nothing to just go back to do things when we get them before.

Maybe so, maybe I failure should never be at the church trying things I don't need to get off the question what my point is in response to your question that we need to take the look seriously at the issue and to engage everyone at every level, as we all all of us have a vested interest in this. We need to do a better job of teaching our teachers how to teach. We need to do a better job of teaching kids how to read. I know it will come as a surprise to anyone with the kids today are the kids that we were. We may think this is a different world. Part of it is because we have a joint problems rather than necessarily our best efforts of problems.

Lawmakers are moving forward with an excellent schools act. It's designed to fix flaws in the existing read to achieve program will return for Carolina Journal radio just about where doubling down on freedom at Carolina Journal radio were proud to bring you stories that impact your life and your wallet. And now get twice as much freedom when you also listen to our podcast headlock available on iTunes headlock is a little bit different. It's a no holds barred discussion that challenges his softheaded ideas from the left and the right, like Carolina Journal radio headlock is smart and timely but with headlock you'll hear more about the culture wars get some more humor as well. We guarantee great information and a good time that's listen to Carolina Journal radio each week and listen to headlock to remember, you can listen to head or subscriber download each week iTunes Carolina Journal radio and headlock just what you need to stay informed and stay entertained both brought to you in the name of freedom by the John Locke foundation will get back to Carolina Journal radio I Michiko guy state lawmakers are feuding over hemp. Specifically, smokable help. The debate revolves around outlawing the substance recent hearing brought attention to the issue Mike Waters as district attorney for Franklin, Granville Vance and Warren counties allowing smokable help is the de facto legalization of marijuana creates insurmountable barriers both in the enforcement level and then also at a court level. As far as convicting persons that are in possession of marijuana. What you're essentially doing is asking a law enforcement officer to tell you the difference between the German Johnson tomato and a cherry tomato plant without even went with.

Without them I was on this is this is how difficult it is all we don't presently have the capability for roadside test we and if we were to develop such a silly, great expense and great cost for these local agencies are strapped and so what's it, but that is going to mean is this going to make it harder and harder for your law enforcement agencies to keep persons that are smoking marijuana from drop vehicles and from doing other nefarious activities. I speak is someone who comes from a community hemp is very important. We have people growing and you moan full support of the but I'm not insulted in support of something that is going to create an insurmountable barrier for a law enforcement officers and for people in charge of enforcing laws of the state.

On the other side of the issue Michael Sims.

He owns a business called Charlotte CBD to make it very clear that we understand this makes it difficult for law enforcement there is options there are test there roadside tests that are readily available. There affordable will be glad in this hemp industry to pay for success with taxes from the spot as we so what you got understand these people were talking about were taken us from our people.

There are veterans there are law enforcement there first responders. There a lot of people that take these products and come in our store to take these products we cannot publicly say so because their fear of losing their benefits in fear of losing their jobs in fear of being turned against other fellow law enforcement officials and things. This is something that farmers are making a great deal of money on my store pays no less than 400 pound directly to the farm and sometimes upwards of $2000 a pound. It is very probable for the farmer is great for our state's economy is great for everything. There's a lot of benefit.

This is it just smokable help lower this is extractable flower. This is a flower that kills zero people, and it helps so many we have people to come in from everything from PTSD to autism and everything else in this is a slippery slope we start banning something that is federally legal. It doesn't stop there is going to go into the world is going to go into the babes and everything else of these people depend on to get through daily life. They depend on it to be active in the community to be an active part of life. They have to have this and are giving all pharmaceutical pills at a record pace yesterday they came out they said 76,000 opioid pills is usually 76 billion Opio pills words prescribed between 2006 and 2012 alone we have an epidemic in this country one of the big fighters in this epidemic we have is help in cannabis we need. This is happening nationwide. Blake Butler is Executive Director of the North Carolina industrial hemp Association understand that smokable hemp has put so many of you in a difficult situation and I do respect our association and all the industry stakeholders have acted in good faith we've met with many of you have met with the SBI with law enforcement and we want to do the right thing this program.

This industry is important to all of us. But this new restrictive language. This amendment will devastate the North Carolina hemp industry. We are currently top five state and him but I can tell you this were getting ready get a lot of press for the wrong reasons. Because getting the calls. Amazingly enough, Tennessee, South Carolina, Virginia, figuring out smokable hemp and what are we doing here were throwing our hands out and declaring to the rest of the nation, with all the technology in the world. We can't figure it out. A lot of you have told me that my people are causing problems for sending emails and phone calls and all of them on everybody in this room. These are not my people. These are our people. These are our farmers, our entrepreneurs and small business folks.

These are our North Carolinians that have trusted this state for this new opportunity industrial hemp farmer Fredricka Martin explained her opposition to the battle of smokable hemp as a farmer. We have spent so much money on indoor growing. I have spent up to hundred thousand dollars to grow indoor to produce a flower smokable hemp if you take that away from me and other farmers who have spent hundreds of thousands of dollars on greenhouses. What are we supposed to do X fibers to recoup that money we can't get insurance. The banks are messing with that because if the if the product that no one wants to deal with.

We got into this program because we were looking for a new opportunity to make money if you take away smokable hemp as a farmer know what we would go do pay our bills so you know, I'm just letting down people who own retail you're letting down the farmer you've got to listen to the farmer you've got to hear Our plight. We cannot find another crop here that web pay for all the debt we have inquired to produce this crop.

Fred Baggett represents the North Carolina police Chiefs Association. The law enforcement and prosecution community in North Carolina is unified in its message to and we feel like we are to provide you with information for you to make policy that information from all these elements is this as long as smokable hemp is illegal for sale and use of North Carolina marijuana enforcement is virtually impossible. We only oppose one product that results from the growing of him were not against him farming or the other products including CBD oil and other products but smokable hemp in that form makes marijuana enforcement impossible lawmakers themselves take very different approaches to the issue.

Republican state representative Jimmy Dixon supports a ban on smokable hemp. I think we can overcome any of the obstacles that stand in our way of making hemp production a viable industry in North Carolina, but ladies and gentlemen if we were going to make an error if I could never error in a manner that could have such a disastrous effect on what situation this puts law enforcement in not even to mention the detrimental effects of moving toward legalizing marijuana. Democrat Kelly Alexander offers an opposing view clearly represented Dixon and I have different perspectives on whether or not the legalization of marijuana ultimately is going to bring on the Apocalypse. I don't think it will. If we warded continue along this path will smokable him. Oh what happens when law enforcement stop somebody that has an air freshener that smells like marijuana are we going to outlaw that mixed if they have a body lotion that gives a the aroma in the vehicle are we going out below that mixed you been listening to highlights from debate over one of the most contentious issues in North Carolina's Gen. assembly this year. The future of smokable hemp will return with North Carolina journal radio in a moment real influence. You either have it or you don't and at the John Mott foundation we have it, you'll find our guiding principles in many of the freedom forward reforms of the past decade here in North Carolina. So while others talk or complain or name call.

We provide research solutions and hope our team analyzes the pressing issues of the day jobs, healthcare, education, and more. We look for effective ways to give you more freedom, more options, more control over your life. Our goal is to transform North Carolina into a growing, thriving economic powerhouse envy of every other state.

Our research is help policymakers make decisions that ensure you keep more of what you are. Expand your choice of schools for your kids.

Widen your job opportunities improve your access to doctors. The recipe for stability and a bright future for truth for freedom for the future of North Carolina. We are the John Locke foundation. Welcome back to Carolina journal radio I'm Dina Martina's what were accustomed to paying income tax, sales tax, and maybe even property tax. If your homeowner but some North Carolinians may be subject to another kind of tax attacks on their illegal drugs. Yes it is true or not getting North Carolina imposes a tax on illegal drugs and that is the subject of a new Carolina journal, written by Rene Goforth.

Rene is the newest member of the John Locke foundation team that Benaiah welcome to Carolina journal radio, this is your first chance to be with this. Hopefully the first of many many appearances on the show. Glad to have you think.

So You find out that North Carolina imposes a tax on illegal drugs right so I ways I was writing kind of brief from one of our researchers piece is on the proposed hemp reforms and so there clarifying the status of hand eyes at knots.

One of these unauthorized absences and one of things said just in passing ways that it's no longer going to be subject to these unauthorized taxes and I thought we decide what are those I need to know more about that since I did some research and I thought my God have to write about that saying it in fact he did it. It's a really interesting column to tell us about the taxonomy, how much and how do they impose this right so that the amount for taxes various on and so the amount of each particular drug that you have to have to be subject to the tax varies as well sell for any kind of drug that's not measured by weight its 10 units of that drug.

So stay for something like Xanax for something like moonshine.

It's sneaky, subject to tax in the way that it's supposed to work. It's based on how much you have, you going to North Carolina Department of revenue office and you say I'm here to buy a truck stamp please. Here's my money. Give me a stand and use this to permanently affix it to your drugs.

Okay so when we're saying illegal drugs. You mentioned a couple of them are we also talking things like math heroin any classified as against the law, not prescription medication anything like that but illegal drugs so it's really kind of boggles my mind to think that someone would walk into a state agency office and say hi. I'm here to tell you that I I am like a drug user or a drug dealer and I want to be compliant with the state rules on taxes. That just sounds crazy. Bernie yeah it does sound crazy and you know, drug dealers and drug users don't do that, they don't go into the North County Department of revenue office and ask first. Since the law was implemented in the 1990s hundred and nine orders for the stamps and that's believe that most of those were from stamp collectors in reality is actually collected after you get charged with a crime or criminal penalties. You get whatever else and then the MTTR comes after you for back taxes and that is how most of this tax ends up being collected. Now that's a fascinating point because that people who may not realize it because there in the drug dealing business.

For example, once they are caught by the cops. They also get a tax bill. Yes they do know there's actually three different ways that the you can find for a drug crime. The first one is the criminal penalty from the crime that you did the second is less a forfeiture so any of your assets that are associated with the crime money from the crime automobiles house that you stored your drug name can be taken and then there's this thing the unauthorized absence tax, which is the third find that can be imposed on you, so there's lots of different ways that you could be liable to the government after you've committed when struck.

Do we know how much money this actually brings in for the state right so it varies by numbers we have are between 6 million, and $11 million a year so that's chump change. It brings in a good amount of money that is really fascinating. I'm wondering if some of our listeners might be thinking will wait a second. This sounds so unusual. I do other states do this. Do we know that or is anyone trying to challenge this in court right so a couple of other states have tried to do this and this is not the first unauthorized absence tax, the United States actually did this back in 1937 they imposed a drug tax on it was struck down in the late 1960s because they found that it violated the fifth and I made self-incrimination applies.

It required you to give up your criminal activity, and therefore it wasn't constitutional. Tennessee did as well.

When it these taxes and found it unconstitutional and North Carolina's tax originally. I didn't hold constitutional muster, because the taxes were so high.

North Carolina Supreme Court said fails the double jeopardy clause in the Constitution, your century charging prison for the same crime twice has anyone actually gone in and tried to go through the process just to experiment and and say I want to see how this actually works on. You mentioned that there'd been acting with hundred nine people who had applied for these types of unauthorized a substance that stamps lot of them stamp collectors but do we have any personal experiences with this yet. So just earlier this year, Jonathan Holberg, who is a professor at the UNC school of law he went and to see if he could get when you if this is at all possible. And the answer is that North County Department of revenue offices do not carry these stands and so the way that you would have to get them is to mail in a form which of course is not anonymity that would be uniform itself information there because in order to get the stamps back through the mail. You have to provide a return address and so that's not exactly be like hey Mr. police officer coming get me. If you apply for these things right right interestingly enough they needed in the lobby to make it anonymous because the Department of revenue. If anyone dared discloses your purchase of a truck stamp to the police.

They are guilty of a class I misdemeanor. Yes That is supposed to keep it from you know being self-incrimination is not privy to some of you have to send it through the mall, you know that's not a Department of revenue officer who would be giving you up to the police were Nate you are of the millennial generation in the newest member of the John Locke foundation team. By the way, we are glad to have you here at the John Locke foundation does it surprise you is you look at tax policy that and have you talk to people of your generation about what North Carolina is doing.

Yes, I had everybody that I've talked to about it is so surprised that this is something that nobody's heard of before. From my generation and its is something that crosses generational divide and that we had seen the negative effects of the war on drugs and how it has been less than effective not as effective as we would've liked it to. And for the incentives to be pushed in this way that the police get 75% of the money that comes from this tax incentivizes them to go after these drug crimes have proven to be an effective way to drug and to not go after me be some sort of policing that would be better for the community.

It's a really fascinating article written by Bernet Goforth and Rene, thank you very much that's all the time we have for the show this week. Thank you for listening on behalf of my cohost Mitch. Okay I'm Donna Martinez hope you'll join us again next week for another edition of Carolina Journal radio Carolina Journal radio is a program of the John to learn more about the John Locke foundation including donations support programs like Carolina Journal send email to John.or call 1866 GLS info 166-553-4636 Carolina Journal radio is the John line foundation, Carolina free-market think tank Carolina broadcasting system, Inc. all opinions expressed on this program are so clearly reflect the station. For more information about the show. Other programs and services of the foundation timeline toll-free at 866 JM would like to thank our wonderful radio affiliates across Carolina and our sponsors. Carolina Journal radio. Thank you for listening. Please join us again next week

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