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Carolina Journal Radio No. 767: Key school choice application date approaches

Carolina Journal Radio / Donna Martinez and Mitch Kokai
The Truth Network Radio
January 29, 2018 12:00 am

Carolina Journal Radio No. 767: Key school choice application date approaches

Carolina Journal Radio / Donna Martinez and Mitch Kokai

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January 29, 2018 12:00 am

Feb. 1 marks the opening date for applications involving two school choice programs in North Carolina. Parents can apply for the Opportunity Scholarship Program, which provides funding for low-income families to send their children to private schools. Parents also can apply for the new Education Savings Account program. It provides funding to help defray other education costs for students in low-income families. Terry Stoops, John Locke Foundation vice president for research, explains the role of both programs in promoting parental school choice. Nearly 110,000 state regulations help slow North Carolina’s economic growth. James Broughel, research fellow at the Mercatus Center at George Mason University, delivered that message recently to state lawmakers. Broughel discusses his research and explains how a focus on regulatory reform helps improve state economic conditions. The N.C. State Board of Education and the state Rules Review Commission have been fighting in court since 2014. The school board believes its rules are exempt from rules review oversight. The RRC disagrees. That board’s chairman, Garth Dunklin, recently updated state lawmakers on the current status of the courtroom fight. A panel of the state’s leading economists agrees the new federal tax law should produce significant benefits for North Carolina’s economy. Mark Vitner of Wells Fargo, N.C. Bankers Association economist Harry Davis of Appalachian State University, N.C. State professor Michael Walden, and UNC-Charlotte professor John Connaughton shared their analysis of the federal tax changes during the Bankers Association’s annual economic forecast forum. Policymakers preparing for the next state budget debate should focus attention on reining in government spending. That’s the recommendation from Joseph Coletti, John Locke Foundation senior fellow. Coletti says Gov. Roy Cooper is likely to recommend hundreds of millions of dollars in new government spending. State lawmakers will have to scale back Cooper’s proposals to keep state government operating on a fiscally sustainable path.

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From Cherokee to current attack from the largest city to the smallest and from the statehouse into the schoolhouse Carolina Journal radio your weekly news magazine discussing North Carolina's most public policy events and issues welcome to Carolina Journal radio why Michiko got during the next hour, Donna Martinez and I will explore some major issues affecting our state more than 110,000 state regulations help slow North Carolina's economic growth that's the assessment from an expert at George Mason University's Mercator center. You'll hear his concerns me while leading North Carolina economists believe the state is likely to see economic benefits from the new federal tax law. Learn what they had to say at a recent economic forecast for a long-running legal fight between the state Board of Education and the state rules review commission heads to the state Supreme Court soon you'll hear details will learn why the next state budget battle is likely to focus on the level of government spending growth.

Those topics are just ahead. First, Donna Martinez joins us that she has the Carolina Journal headline parents of school-age kids who are looking for an alternative to public school maybe eligible for North Carolina's opportunity scholarship scholarships are awarded to parents with modest incomes and can be used to pay tuition and fees at a private school that better fits the child's needs. Now with the application. Set to open on February 1 we decided we would invite an expert on scholarship to join us here of course is a familiar voice to Carolina Journal radio listeners, Dr. Terry stoops is vice president for research. Also, the director of education studies for the John Locke foundation Terry welcome back. Thank you that you are very high on the scholarship program. I well this provides an opportunity for students with generally low incomes to be able to attend school that better meets their needs and this is something that we see more and more across the nation about 26 school choice voucher programs here across the nation and we have two here in North Carolina, including the opportunity scholarship program every year there are more and more applicants for a limited pool of money to be able to take it to a private school and really when we talk about private school were not talking about using a boarding school or anything expensive like that were talking about a local small private school that is an alternative.

Sometimes the only alternative to the districts.

This apply for the scholarship. Well, these are generally students whose families would be considered free and reduced lunch students so there is an income. It depends on how many individuals are in the household and that information is available from the State education assistance Authority and that is important point to make because a lot of people seem to think that the Department of Public instruction of the Department of nonpublic education.

Run the opportunity scholarship program in Texas state education assistance Authority and they have income guidelines on their website that allow parents determine whether their child qualifies for an opportunity scholarship. So glad you brought up that agency that really administers the application process of four opportunity scholarships. And here's the website in CSE again. That stands for North Carolina State education assistance Authority something once the application period is over how if I apply. How do I find out if I'm a winner.

Well first of all they have to determine eligibility. There are plenty of individuals apply the don't meet the income eligibility requirements or don't qualify for some other reason, such as, they didn't spend their previous school year in a public school which is one of the requirements so they determine eligibility and they find typically that there are a good number of applicants that aren't eligible enforcement for the program they want to be able to participate but they they don't. So it give you some hard numbers on it.

Last year we saw over 10,000 applicants but so far this year only run 6800 have received opportunity scholarships. Some of those are students that decides the last minute that they want to make the jump to the private school, but a good many of the more individuals that want to scholarship desperately need a scholarship for whatever reason, don't qualify.

Why is it limited to families have lower modest income. While this was a decision made by the Republican Gen. assembly when they created the opportunity scholarship program that they were targeted to those who need it the most. I think some of the concern was that you would have if you opened it up to everyone wealthy parents taking a voucher. They really don't need to pay for private school that they can afford and so the idea was to make sure that those who needed the most.

That is, low income households had access to the public funds were not talking about a tremendous amount of money only $4200 maximum scholarships and on average the state education assistance Authority usually wars around 4000 because they will award what is required of the school were not necessarily the maximum amount but not only that, the, the scholarship program. Overall spend around $14 million a year compared to a $13 billion public school budgets was a very very small part of an education budget, let alone our entire $50 billion state budget Terry in the past we've really heard from some parents and some grandparents who been raising children, and they just have such compelling stories about damn kids who are trapped in schools that are failing. The child sometimes a classroom or school may work just fine for a lot of the kids before individual reasons is just not working for some of these children, and damn, these parents and grandparents.

They seem to be other programs best advocate when you hear their stories.

They really are. When you talk to them, you realize that it they look for schools based on more than just academics want their child to be safe. They want their child school to be near where they live there is any number of reasons why they choose to send their child to a private school and safety.

I think being just as important as student performance because you want that child to thrive in an academic environment of the where that child doesn't feel threatened, but you find these amazing stories from parents and grandparents who have seen poverty throughout their life and educational opportunities limited generation after generation.

This is an opportunity for their child that they probably never imagines because they never thought that they would have the means to be able to provide a private school tuition and fees for their child. And here's the state stepping in and giving them up that opportunity. After generations of public schools that frankly didn't always meet their needs. Didn't always give them that upward mobility that we expected to unitary the past few days that those of us who are advocates for empowering parents the choice have been commemorating a national school choice week. North Carolina has an array of options these days for parents and sometimes I think parents may not realize how far North Carolina has come over the last decade or more. It's absolutely remarkable. Our homeschool population. For example, in the last 10 years has increased 79% of we had the just eight years ago we had half the number of charter school students than we have now with 173 charter schools and rolling over 100,000 students and charter schools are public schools that provide some flexibility to parents and to teachers. We also have private schools. 100,000 kids in private schools now of course only a portion of them receive any sort of state aid that allows them to go there but we have a huge private school population in North Carolina with a lot of opportunities for kids if they qualify for voucher to be able to go to one of the 700+ schools, private schools that we have. So when you put it all together. We have well over 325,000 students pursuing some sort of choice, and that doesn't include the privates or the excuse me, the public school students that sometimes have choices for magnet programs and other type of district choices. It looks like there's something new that we can start hearing about as well: education savings account was set education savings account is an account that a parent can use for educational expenses beyond just tuition and fees so there can be expenses for speech therapy or any other sort of qualified educational expense they can use to meet the needs of their child. When this comes online later this year. Parents will have a $9000 accounts for their special needs child to be able to use in a variety of educational and academic settings, not just a private school. Talking with Dr. Terry stoops. He is the John Mark foundation's vice president for research and also the director of education studies. Thanks very much like you say with this much North Carolina journal radio to come in just a moment government plays a key role in your life affecting your paycheck the way you educate your kids the way you do business. How can you tell if government is doing a good job making the right choices. Spending tax dollars wisely. Carolina tackles those questions every day.

The John Locke foundation publishes Carolina journal in print each month and on the web each you'll find exclusive investigative reports on topics.

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John Hood's daily Journal news stories and important public and the voices of the newsmakers themselves at Carolina journal radio in print on the air and on the web. You can find the information you welcome back Carolina journal radio I Michiko guy, nearly 110,000 state regulations are weighing down North Carolina's economy. That was one of the messages our next guest delivered recently to state lawmakers James parole is a research fellow at the Mercator's Center at George Mason University. He co-authored a recent study of regulations in North Carolina. Thanks for joining us extra so this is part of a project that you're doing looking at regulations various states across the country house North Carolina stack up.

Sure so we have a project that Mercator center called state rate data and it's an effort to quantify how much regulation exists across the 50 states and right now we've looked at about 14 states so far takes a little time because we use text analysis software to analyze state codes.

So it's a bit of a time-consuming process and we come up with estimates for how many regulatory restrictions are in each of the states codes we've looked at so far, and these are instances of words like shall must may not prohibited. And North Carolina has about 110,000 of these regulatory restrictions in the code, but that actually turns out to be about in the middle of the pack as far as the states we've looked at so far. So at the high-end New York has the most we've seen so far, with about 307,000 restrictions, almost 3 times when North Carolina has on the other end is Arizona that has about 64,000 restrictions. So that's quite a bit smaller than North Carolina's codes you guys are about in the middle. So some people will hear that say that's that's good to be in the middle of the pack, but one of your messages to lawmakers was that even though that fact might sound good. Having 110,000 regulations might not necessarily be the best thing for the economy right the accumulation of all these rules on the books can really be a drag on economic growth.

There's an iconic economist in Washington DC at the progressive policy Institute's names Michael Mandel and he likens the effects of regulation on the economy dropping pebbles in a stream where so the first pebble may not have any noticeable impact, but a thousand pebbles might start to slow the stream hundred thousand, 500,000 pebbles might block up the stream altogether, even though that last pebble really was insignificant in its own right, and this is how the accumulation of regulations can really slow the economy does the research show much detail about where these regulations are starting to accumulate.

Are there particular areas North Carolina there that are much more heavily regulated than others. Yes, so about half of the restrictions in the North Carolina administrative code come from just two titles of the code. One is the environmental quality title has about 26,800 restrictions in it and the second is Health and Human Services which has about almost 24,000 restrictions in it, the third-largest titles occupational licensing boards and commissions and so these are every everything else is a lot smaller than those areas so health environment and licensing tend to be the dominant areas North Carolina most people listening to us would say North Carolina needs to have some rules you can't just let the everything run block your message to lawmakers, I think, is the probably the let's not get not throw out the baby with the bathwater, but perhaps look at ways to scale back the rules. We don't really need absolutely. So I would say there's an important distinction to be made between red tape which is really the unnecessary regulations that are just kind of barriers to entrepreneurship and innovation and maybe don't really serve any useful purpose or maybe they once served a useful purpose, and that problem is gone away over time just just as society evolves, and then the other kinds of regulations are the justified ones that are in place there protecting public health and safety and the environment and the key is finding a way to create strong institutions where the regulators have the incentives to go back and constantly be carefully evaluating the rules under their purview to see which are working which aren't. We are speaking with James parole research fellow at the Mercator center at George Mason University.

I just will return to something you just mentioned North Carolina within the last few years put in place a regulatory review process in the official name is sunset with periodic review and what it really means is that all these rules have to go back in front of the rule makers every 10 years to make sure that there needed cells like that fits in exactly with what you're talking.

That's right. So I think sunset reviews are a this is basically an expiration date that's tied to all regulations ability they will expire automatically unless someone re-authorizes that mother the regulatory agency or the legislature and usually there's some kind of evaluation process that happens before they sunset to determine whether the rules is effective or not and so these are these are a good way to look back and assess whether the rules on the books are working now they don't guarantee that the look back effort will be done carefully or that serious analysis will be done by cost-benefit analysis to determine whether the regulations creating more benefits and costs.

So there's a danger, it can be become kind of a box checking exercise were all the rules are just renewed, but there is some evidence that sunset provisions are associated with lower levels of regulation.

Overall, another thing that legislators have been talking about in recent years is this idea of ensuring that the costliest rules have to be approved by elected lawmakers and not just by unelected bureaucrats is that something that would fit in well with that reducing the regulatory burden so that has more to do with new regulations in general. So this is often goes that that kind of policies often goes under the name the rains act because that's what the federal version is referred to as a been implemented at the federal level, but it's been proposed and essentially what would happen is the costliest regulations would have to get approval from the legislature and prep the governors well before they could go into effect.

So it it it returned some power to the legislature so often people who are very concerned that the legislature has delegated a lot of lawmaking power to regulatory agencies who are then just use that to regulate more and more they often like this kind of policy because it brings back some accountability to the legislature, whose more accountability to the voters. The downside is that often the regulatory actions would also get caught up in this process so any large deregulatory action has to go through the rulemaking process typically and so while this rains act kind of policy it's a higher bar for new regulations.

It also creates a higher bar for modifying or removing or improving old regulations. Your report throws a lot of information at lawmakers what's the bottom line message that you hope they take out of it. I mostly I just want to provide them with information that I don't think that they've had before, so this is really a first of its kind effort to quantify how much regulation exists in the state and be able to compare to your neighbors so this is new information and night and I hope that they use it to carefully think about whether the amount of regulation in North Carolina is a good amount whether they should have more regulation or less regulation now they have information they didn't have and in addition accompanying our report we create it in Excel file that is basically a catalog of where all the words in all the regulatory restrictions are in the North Carolina code you can see it broken down by subtype title, subtitle chapter, etc. and I think that this information could be useful to track how how the level of regulation both in aggregate, but also by title is changing over time you been listening to James parole research fellow at the Mercator center at George Mason first going. Thanks for having will have more on Carolina journal radio and just a moment if you the freedom we got great news to share with you now. You can find the latest news, views, and research from conservative groups all across the state. All in one place North Carolina one-stop shopping for North Carolina St. movement North Carolina You'll find links to John Locke foundation blogs on the days news Carolina reporting and quick takes Carolina journal radio interviews TV interviews featuring CJ reporters and Locke foundation analyst plus opinion pieces and reports on higher education.

All of that from the Pope Center for higher education policy commentary and polling data from the Cintas Institute and news and views from the North Carolina family policy Council. That's right, all of that, all in one place North Carolina that's North Carolina spelled out North Carolina Log on today. North Carolina is changing not just day-to-day but outward to our minute to minute and 2nd to 2nd, how can you keep up with the changes, especially the ones that affect you, your family, your home, your job, make the John Locke foundation and Carolina journal part of your social media diet on Facebook like the John Locke foundation like Carolina. Journal follow us on Twitter at John Locke in the sea and at Carolina journal news, insights and analysis you'll find nowhere else.

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Don't wait for the evening news if it's happening now it's happening here the John Locke foundation and Carolina journal. Have you covered with up to the second information like us on Facebook the John Locke foundation and Carolina journal follow us on Twitter at John Locke in C and at Carolina journal did you know you can now advance freedom and free markets just by shopping with Amazon it's true online shopping is now a great way to support the John Locke foundation just shot using the Amazon smile program and designate assess the work foundation to receive a portion of your purchase amount that's right you shop and Amazon donates money to last the John Locke foundation. So here's how it works long time to Amazon smile. It's the same Amazon you know same products same prices is much better. Amazon donates .5% of the price of your eligible purchases to pass the John Locke foundation to try it.

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It's that easy. So now not only will you enjoy what you buy will also support freedom. Don't forget log on to today by something nice and help defend freedom. Support the John Locke foundation. Welcome back to Carolina journal radio I'm Ashoka the state Board of Education and the state rules review commission have been battling in court since 2014. The source of the fight.

The state school board believes its rules are not subject to outside review rules review commission chairman Garth Dunklin recently offered update on the case for state lawmakers.

Why is this case important. As a general matter, the bottom line. Use the entire concept of the administrative code from the rulemaking process is about shop sunshine and process making sure there's an opportunity for the public to have input to know what rules are being made on flip process to be plain and open to everybody and for the result to be within the authority of the people adopting rules and clear and understandable by the public at the pretty straightforward concept home so generally that's the concept of supply the state Board of Education filed a lawsuit back in 2014 to say that they don't have to do that. Chapter 151 15 C2 we think says clearly to the contrary because it is the elementary and secondary education statute and it says very clearly to our way of thinking that rules enacted governing this subject matter or to follow the administrative procedures. The more corrosive Board of Education filed a declaratory action in 2014 saying they don't fall within the definition of an agency. This is not an appropriate statute, as applied to unconstitutional the legislature is the only body that has the authority to do this and that they don't have to comply with chapter 150.

All we we have beg to differ. Now for almost 4 years, clearly explained to lawmakers that the cases taken twists and turns, with each side winning at different levels of the state court system has gone to a Superior Court ruling that ruled in favor of the state Board of Education saying that they were not required to comply with the administrative procedures act.

It went up to the Court of Appeals who said they didn't have jurisdiction that was appealed to the Supreme Court who issued an order that sent back to the Court of Appeals and said essentially yes you do decide the case on the merits. A year passed after oral argument, and in September the Court of Appeals issued an opinion that the rules review commission does have authority to review rules promulgated by the state Board of Education and reversed judge goes for the Superior Court judge decision, but the appeals court ruling was split to the one that means the cases heading to the North Carolina Supreme Court and soon justices will decide whether the rules review commission has authority over rules dealing with state education policy will return with more Carolina journal radio animal really influence you either have it or you don't and at the John Locke foundation. We do, and that's not bluster in a private survey of more than 250 North Carolina political insiders 87% said we influence them either a great deal a good amount. So while others talk and complain. We get to work providing research solutions and help 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. Our goal is to transform North Carolina into a growing, thriving economic powerhouse that is the envy of every other state. Our research is actually help policymakers make decisions that ensure you keep more of what you earn.

Expand your choice of schools for your kids. Widen your job opportunities and improve your access to doctors.

The recipe for stability and a bright future. The John Locke foundation were dedicated to making North Carolina first and freedom were dedicated to you what the back Carolina journal radio I'm Ashoka the new federal tax plan should mean good news for the North Carolina economy by a panel of economists explained recently during the North Carolina bankers Association's annual economic forecast for Mark Bittner of Wells Fargo in Charlotte says the tax changes have helped boost economic growth projections, which had been set at 2.1% of recent years. This year were 2.7 looking for stronger growth. We think that the tax cuts are going to have a larger impact than the general consensus is that we put it about 3/10 of a percentage point added on to GDP growth but in a nutshell this as we look for a bigger impact than the general consensus professor John competent of you and see Charlotte points to one piece of the recent tax plan that critics of ignored all the naysayers who have been critical of the 12 tax package or the congressional tax package your tax package have focused on the fact that in the past and really haven't seen a big hit as a result of a decrease in taxes for the past two tax decreases. Nothing on the corporate side and this is where this one is much much different. And it's not the individual income tax reductions, but I have a big effect on the economy is on the corporate side this can have a big affect US companies, corporations have been essentially noncompetitive in the world. In the past 10 years. All of our major trading partners except France have reduced their corporate income tax rates during that period of time are specifically aligned with the work rest of the article competition. Bittner says taxpayers and workers will see a real impact the real impact is that we are going to free up a lot of capital with whom the silence I spent all my time working with small and midsize companies. It's ever bread-and-butter and a lot of folks have been substituting labor for capital over the last two years because that was more flexible. They have very little faith in the economy, social, and have such low productivity growth folks were revolted. The grant wages because they were substituting labor for capital investment and long-lived assets.

Assets that last for three years or more as a share of our economy is the lowest it's been since 1937 and so that that's why productivity been so is what that's also why pay has been increasing and now that we've we've cut the corporate rate put incentives and for capital spending. We're like to see this investment significantly outpace what we've seen the last few years of extensive that's one second and third quarter were so strong investments but is about double what was previously before the tax cut that I was mainly due to rollback and regulations, so, so I think that that's one big change in behavior. The others were to see this repatriation of corporate profits overseas and near to read a lot about this in the papers is more more companies begin to move capital back to the US and there's a concern that a lot of these folks are to use it to buy back shares are to pay a dividend. I don't care, that's fine. It it it it it's very simplistic to think that the companies that bring the capital back are going to build factories with they may not need factories so we would with the tax reductions are going to do is going to allow capital to flow to its highest risk-adjusted rate of return and that more optimal use of capital is going to give a stronger GDP growth you're listening to highlights from the North Carolina bankers Association's annual economic forecast for John competent of UNC Charlotte explains one of the major advantages of boosting economic growth from 2% to 3% 2%. You don't need to do much to maintain your market share.

You can substitute labor for capital and years, you'll be competitive with the market picks up a little bit more workers you're good to go. That's not the case of a 3% growth environment 3% growth environment.

You can lose market share quickly.

You gotta be on your front foot and you gotta take some risk now. The downside of what this tax plan is likely to generate in the near future, not in 2018 is much as 2019 is a fact. The companies are going to start to be a little bit more risky in their decision-making and that might have caused the problem down the road in 18 months or two years into state economist Mike Walden likes one major omission from the final federal tax plan. One thing that I might say that the tax plan. It is what it didn't do early on in these negotiations in the house. Particularly, there was talk of an import tax that didn't make it. I think that's good. Mostly analysis economists have done. I've done some from North Carolina indicate if we were to do that actually would hurt our economy with her job.

Judy so I applaud the tax writers for doing good things and I agree hundred percent of them essentially what this tax law does improve incentives for working for investing for producing and I applaud them for what they did not. The tax plan helps boost Walden's projections for North Carolina's annual economic growth .8 2.9 GDP growth will add 2 million 2 million 1/2 jobs nationwide. Maybe another 70,000 here North Carolina unemployment rate by the end of the year for both the nation, North Carolina. Down in the mid-mid-threes 3.53.6 the bankers Association's own economist Prof. Harry Davis of Appalachian State University points to other important pieces of the federal tax plan. Bill also allows expensing for capital projects.

Plus the $3 trillion. There were to get back to sitting overseas and like you I don't care with just get back over here by backstock put in the plant equipment whatever, but at least into this country. Business investment was anemic in 2015 and 2016. In this country. Last year it about doubled from the right of 2015 to 16. I believe part of that was, in anticipation of a tax bill and now that the tax bills passed. I think were going to see a dramatic increase in business investment, which will lead to greater productivity.

And finally, perhaps some real growth in salaries and wages in this country will all of these changes lead to higher wage growth date. This think so corporations in our search are clearly going to have more money to the bottom line we've already seen some corporations are not announcing bonuses particulars corporations that pay a very effective tax rate now for those corporations lowering their tax rates, 21% is a real bonus and are passing part of a bonus along to their employees think that's a very good thing.

There's very little in the bill other than the doubling the standard deduction will of course help people, but beyond that, there's not a lot of individual in terms of just the tax benefits.

Real benefit will comment stronger economic growth through business investment grade corporate profitability and what that means in the job market in terms wages and salaries. Walden says North Carolina will see particular benefits from the federal tax plan here North Carolina and everything we said about the nation. Positive benefits of this tax bill on the economy goes double for North Carolina in the sense that we are one of the states, it's been growing fascination this yesterday I received a report. United Van lines and I think we ranked eighth among the states the nation in terms of net in migration in 2017. People are still moving here.

They see opportunities they sealed were corporate state tax rate here North Carolina so this is bullish for coordination. Very bullish for North Carolina Bittner of Wells Fargo says the wage growth issue extends to more than just Charlotte in the triangle. I think it will lead to wage growth we have seen stronger wage growth. The tribal employment rates 37 right now. Wage growth is that of the 4%. Your years of work, twice the wage growth of the nation as so so we are seeing that in, and I think that part of the country. The been growing rapidly running a bit faster but if you look at where the incentives are in this with the tax cuts, tax reform, symptoms, capital spending this in the live parts of the Midwest and parts of the South that really didn't see a lot of growth in in the early part of this expansion of the expansion so far and so it should lift. It should help broaden growth of that's of this been missing North Carolina. There a lot of a lot of industries that are outside the triangle in Charlotte that are that are going to see some real benefits as we see increases in capital spending. That's Mark Bittner of Wells Fargo.

One of the featured speakers at the North Carolina bankers Association's annual economic forecast for will return with more Carolina journal radio moment. Full color throughout every issue more visual storytelling. We've revamped Carolina journal to make it easier to read a new look and a new feel. But one thing hasn't changed and it never will. That is our commitment to truth and transparency in government, you can still count on Carolina journal for investigations into government spending revelations about boondoggles and vetting of corruption. No permission to shine the light on what North Carolina government and the bureaucrats who run it are doing in your name and with your money will never wane and because of that our reach and influence are growing through all of our distribution outlets we reach more than 1 million N. Carolinians every month so make sure you stay informed. Read the monthly print edition of Carolina journal. Then check in several times a day, Carolina that's where you'll find fresh stories, opinion pieces and updates on government politics and your money.

Carolina journal. We hold government accountable to you. Welcome back to Carolina journal radio I'm Donna Martinez.

How much does it take to run the state of North Carolina.

Well just over 23 billion.

When it comes to the states general operating fund for this year is the North Carolina population grows River 10 million now there are demands for more services and pressure from advocates and elected officials alike to spend more money.

Our next guest has some educated advice for policymakers as they face these pressures will Colletti is a senior fellow for the John Locke foundation Joe welcome back to the show. Always fun to be here so the state budget director. A gentleman named Charlie Peru seeking for an end of year assessment. I just at several weeks ago talked about where the state stands in the financial terms. Tell us about what he said and then let's talk about your reaction to ensure Charlie budget director talks about the slow revenues that we've seen so far this year, according to the Gen. assembly's fiscal research were about $90 million behind schedule, which is not not a lot in terms of $23 billion budget but it is something that that people are starting to be.

Just take a look at and then he added what the difference what what in effect tax reform since 2013 is had an and added some of the ideas that the governor has for spending for next year about $500 million of new spending. If you took take a look at all of the ideas that there that they were mentioning in the press conference.

A lot of it on headlines that the crises of the day the hurricanes though. Crisis the prison safety issues but no details on any of that just roughly half $1 billion of new spending that they would like to have Joe you mentioned something really interesting about 90 million or so behind in terms of projections of where revenue should be right now. So should we be concerned about the wish always be concerned about what where when revenue is coming in, but last year it was a different kind of year, especially towards towards the end of 2017 because we had Washington going through major tax reform and news article in investing article started to talk earlier. It is as early as November and probably a lot of folks were taking a look at the at their money even earlier than that, but taking a look at how you plan your income for the year and so people started to if they have the option to hold off invoices if they were an independent business or if they had if they were had some kind of large check coming in started planning on maybe I can take that in early 2018 and so incomes at the end of lateral probably suppressed a little bit and most in we should start seeing that this year. In addition, a number of companies. In the end of December, said that they would start providing raises and bonuses to employees and so there may be higher paychecks on outside which those get withheld that that's becomes the regular payments for this year so we should be concerned, yet in terms of what the budget pictures, look like if numbers are still behind schedule this month and in February, and especially by the time we get to April, then that's when you start to. That's when you start to have to do things, but right now you know $90 million is well within the range and and given whatever was happening up in Washington you would expect numbers to be a little lower for will will we see a surge in state revenues. Once we get into kind of the heart of tax time assist people start saying okay I got a bill to pay the state of North Carolina.

So here's my check. That's always so right. That's what we let folks who are let's take a look at the budget to talk about the April surprise, because in April.

That's when the final payments on estimated taxes are due and so those can come in and so if you had a good 20 17th and you end up with a lot of extra payments at the end because you don't want to pay rent. Everybody who has refund we start filing a genuine fear that we have to pay we've held off until April 15 so that that's where the real measure comes in. But we should start to see some differences.

Beginning this month as as the as those raises and bonuses start to connect some of those delayed payments come in and then it in February when the withholding starts to change.

So this is the revenue side of the equation when it comes to operating state government, but interesting in your writings and and folks can read headline. If your piece is perfect prepare for the next state budget by focusing on spending and one of your key messages at Joe in this pieces. Keep your eye on revenue, but keep your eye may be open a bit wider when it comes to spending. Why quote just like an appurtenant family income in a family situation. The spending comes before the taxes and that's been recognized by everybody from from Jean-Jacques Rousseau back in the 1700s to Milton Friedman the 1970s that if you if government spends money now they have to pay for and whether that's true, taxes or inflation or debt monies coming somewhere, and in both an intact, and that eventually has to be paid by taxes. So that's why if you can keep spending down now. Then you can provide for lower taxes into the future so we do that then because sounding over living in a growing state and there are those who say looking at all these people coming and they're going to demand services, even if it's the existing services that are in place more people is going to cost more to those people who come in as they take jobs and start paying taxes, buying property, paying property taxes is what they are paying and to stop cover essentially what it's gonna cost to provide them services for it depends on who the person is if they come in with with children who enter the school system if they are older and retired in and have some of their income and deferred pensions. Whether that's government or military. Then, maybe not, but for the most part businesses start to generate income and the the key thing with with all of that is that if we can keep the services keep the cost of what it caught of what it takes to provide services, then keep that down than that. And that's where we can. That's all we can have an impact on we can necessarily control who comes into the state, especially if you're coming from another state in the past few years, some state legislators and then Gov. Pat McCrory had really tried to keep spending down at least the growth of spending down each year they did a pretty good job they did a terrific job of that, and the concern is that now that were so far into it and their economies been been doing well for for as long as it has that they might start to accelerate spending a little bit more.

I think most of the folks in the journalism. We understand the need to continue the the the disappointment they've had, what would be your advice then to lawmakers jealous. They take a look at this and how do they avoid that feeling of a kind of fat and happy, so why not spend a little bit more of the I guess one way is to take a look at the economy that is not going quite as fast as you would hope on national basis and the other thing is to keep taking a look at where you want taxes to be an that that leads to the discipline of taking a look at existing program, seeing which ones can be resent which ones can be cut and which ones and taking the look of the efficiencies of the others and how do you optimize the value that you get from what you're spending. What's great advice. It's been written by our guest Joe Colletti. He is a senior fellow with the John Locke foundation gel thanks very much. Thank you. That's all the time we have for the program this week. Thank you for listening on behalf of my cohost Mitch. Okay Donna Martinez hope you 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 radio send email to development John Locke call 1866 jail left info 1-866-553-4636 Journal radio station airline is all opinions expressed on this program nearly mentioned about the show or other foundation is any airline sponsored Carolina radio again

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