Carolina Journal Weekly Report

July 29, 2002

In This Issue:
Feature 1 - New Districts Lead to Dropouts

Feature 2 – Republicans Join Tax Raisers

Feature 3 - College Kids Take Over GTP

Feature 1
New Districts Lead to Dropouts
Several Democratic incumbents see writing on the wall

With the General Assembly's scheduling of voting dates, North Carolina proceeded with its long-delayed 2002 campaign season for state legislative seats. The Sept. 10 primary and Nov. 4 election are expected to produce some of the most competitive races the state has seen in years.

The abbreviated filing period for state Senate and House races lasted just eight days, ending Friday. Several Democrat lawmakers decided against another campaign because of unfavorably drawn districts.

On the Senate side, where Democrats hold a 35-15 majority, new district maps drawn by Superior Court Justice Knox Jenkins, Jr. are expected to help bring party parity to the chamber. As many as eight seats held by Democrat incumbents could now be considered tossups, and another four seats filled by Democrats are now considered solidly Republican because the majority of voters in those districts are registered for the GOP.

Democratic Sen. Cal Cunningham of Lexington decided against running when he was drawn into a new district with 48 percent registered Republicans and 38 percent Democrats. He would have faced Republican Sen. Stan Bingham. According to the Statesville Record & Landmark, Cunningham rejected a suggestion by Republican leaders that he switch parties.

After indicating he would run, Democratic Sen. Charles Carter of Asheville announced he would not seek re-election. His newly redrawn 48th District includes all of Henderson County, a Republican stronghold.

Sen. Aaron Plyler, a cochair of the powerful Appropriations Committee, declined to run again in the 35th District, which includes Union and southern Mecklenburg counties. He has served since 1982. However, another cochair of that committee, Sen. Fountain Odom, D-Mecklenburg, will attempt to overcome the odds and run again. His new district is 45 percent registered Republican and 33 percent Democrat. Why?

“Of course it will be a difficult election, but he’s done an awful lot of things for the state,” said Althea Callaway, Odom’s campaign manager. “It’s really a feeling the people are going to recognize that.”

In a Senate district that perhaps leans favorably toward the GOP, Sen. Oscar Harris chose not to run against fellow Democrat Sen. Allen Wellons of Smithfield, after having been drawn into the same district.

On the House side, Rep. Mary Jarrell of High Point decided against candidacy in a new district that is 46 percent Republican, 38 percent Democrat. Democrat Rep. Daniel Barefoot of Lincoln County also reportedly will not run again because of an unfavorable district.

Ahead of the Curve

• The House tax package passed by a large margin last week (see story, Page 2), but one Senate leader doesn’t expect the Senate to pass the plan. Sen. Tony Rand told the Fayetteville Observer the House plan provides insufficient revenue for both the state and counties. Saying the sales tax should go to 7 percent (as another House plan, which failed, provided for two weeks ago), Rand said, “By stopping the state sales tax half-cent six months early, it just…digs a deeper hole.”

• When Gov. Mike Easley last week ordered the hiring of 1,200 teachers at a cost of $54 million, several legislators responded in anger and puzzlement because the money hasn’t been appropriated. While sympathizing that the governor felt compelled by a court order to fund preschool programs and the reduction of class sizes, lawmakers believed he overstepped his constitutional authority. Some thought Easley would lose more votes on a lottery that he already finds himself falling short on. “It’s not an education lottery anymore,” said Rep. Edd Nye, D-Bladen. “It’s a revenue lottery.” Reported by the Winston-Salem Journal.

• Speaking at the Boone Area Chamber of Commerce, Lt. Gov. Beverly Perdue said Watauga County must share its strong education and growth with eastern North Carolina so that rural areas are strong enough to compete with the “Bermuda Triangle” of Charlotte, Greensboro, Winston-Salem, and Raleigh. Reported in the Watauga Democrat.

Feature 2
Republicans Join Tax Raisers
More in GOP vote for measure than against it

The House on Thursday tentatively approved a tax package that would raise $322 million in additional revenue for the state, drawing support from both Democrats and Republicans. The measure passed 84-26, and a final vote is expected early this week.

The sizable margin raised the question of whether the state GOP could still claim it is the antitaxation party. Twenty-seven of its members, after maintaining party unity against previous tax-raising measures, crossed over to support a plan that increases some taxes and delays other tax breaks.

“You have to analyze the whole vote,” said Bill Cobey, chairman of the N.C. Republican Party. “I know the Republican representatives were under tremendous pressure back home to help out the counties.”

The bill offers a compromise from a measure last week, which after much effort to win support, failed. The state last year had enacted a two-year, half-cent sales-tax increase that was to end June 30, 2003. At that point the half-cent tax would then go to local governments in exchange for the elimination of tax reimbursements the state used to collect for localities. The bill that failed last week would have accelerated that plan so that counties and cities would receive the extra tax beginning Sept. 1, 2002, while the state still collected its additional half-cent as well. In effect that would have raised the sales tax in North Carolina to seven cents, which was unacceptable to most Republicans and a few liberal Democrats.

The compromise that passed Thursday moves up the transfer of the extra half-cent sales tax from the state to local governments to Jan. 1, 2003, if counties and cities vote to implement the tax. The overall sales tax throughout the state (except for Mecklenburg County) would still not exceed 6 1/2 cents.

The bill also delays by one year a planned increase in the child tax credit and the elimination of the state’s “marriage penalty,” costing eligible taxpayers a previously promised $51.7 million in tax breaks. Rep. Art Pope, R-Wake, asked during debate how many representatives promised their constituents last year, when the General Assembly raised other taxes, that those tax credits were coming this year.

“That commitment is being reneged on,” he said. Others questioned whether the reduction would survive next year, with more projected deficits on the horizon.

“How are you going to give it back to them if we’re going to have another shortfall next year?” wondered Rep. Don Davis, R-Harnett. “We’ve lied to the people.”

Others who opposed the bill objected to additional tax burdens on businesses in the current recession. The bill delays the ability for businesses to depreciate investments, allows the state to tax more revenue for multistate businesses, and “corrects” a franchise tax rule on limited-liability corporations. Rep. Fern Shubert, R-Union, said accelerating business depreciation encourages investment.

“You can’t fund essential services by running people out of the state who pay the taxes,” she said.
Still, more Republicans voted for the plan than against it, mostly because they felt compelled to help local governments.

“The Democrats are working hard to paint our people into corners,” Cobey said. “When you’re in the majority you can do those kinds of things.”

Capital Quotes

“I reiterate; I say it over and over again, and I repeat myself: I will not vote for anything that raises the tax. I just can’t do it unless I get some assurances that [the amendment] will get a fair hearing and a fair shake.”
— Rep. Mickey Michaux, D-Durham, as quoted by the Herald-Sun of Durham, addressing the House on why he was opposing an increase in the sales tax to 7 percent with the extra 1/2 percent going to localities. Michaux’s amendment would have kept the rate at 6.5 percent with the same increased percentage to localities.

“I can tell you if 49 states are going in one direction and North Carolina is going in the another direction, we are at high risk.”
— Bill Weatherspoon, spokesman for the North Carolina Petroleum Council, commenting to the Associated Press on the state’s sulfur standards for gasoline. In 1999 the state adopted tougher standards to take effect in 2004. The following year, the federal government adopted generally similar standards, but which will not fully come in to force until 2006. The N.C. Senate is now considering legislation to delay implementation of the standards, fearing that it might lead to spikes in gas prices.

“It’s bait and switch. Obviously there is inflation, but this is not Argentina. And they always ‘forget’ stuff.’”
—Wendell Cox, Illinois-based transportation expert, discussing the soaring price tag of Charlotte’s mass-transit system with The Charlotte Observer. In 1998, voters approved an extra 1/2 cent local sales tax to fund what was described as an $831 million project. Today, the estimated price tag is $2.1 billion, including $265 million for inflation, and an extra $1 billion for increases in the scope of the project. Charlotte Transit now plan, for example, to increase the number of buses from 280 to 740 — 290 more than was envisioned just four years ago.

Feature 3
College Kids Take Over GTP
Business plan to be released, consultant says

The latest plan to keep the Global TransPark alive was unveiled Thursday at a forum in Greenville. Isaac Manning, a consultant recently hired by the GTP Foundation, told a select group of invitees to the forum that a team of five college students is developing a business plan for the project.

The students working on the project also doubled as well-dressed parking attendants who greeted them in the parking lot before the event, forum attendees interviewed by CJ said. The students are from East Carolina University and two other state universities.

Started in the early 1990s, the GTP was meant to become a futuristic manufacturing and transportation complex that would give factories access to large airplanes and world markets. The emphasis was on just-in-time manufacturing. Since its inception, the project has failed to attract any new manufacturing facilities.

The setting for the forum was ECU’s new Strength and Conditioning Center. The meeting was hosted by ECU Chancellor William Muse and N.C. Department of Transportation Deputy Secretary Gene Conti. Conti is also vice chairman of the GTP Authority. Beer, wine, and appetizers were served. Refreshments were paid for by the GTP Foundation, a private fund-raising organization affiliated with the publicly funded GTP Authority.

According to the invitation, the meeting was labeled a “public forum to discuss the GTP,” but all the panelists were strong supporters of the GTP. There were no panelists calling for the project to be shut down. There were about 60 people in attendance. They were either public officials or business leaders from the 13-county GTP region.
Manning was an official with the Alliance Airport in Fort Worth, Texas. Two attendees told CJ they learned that Manning is being paid $15,000 per month by the GTP Foundation.

“When I came here I asked for a business plan. We’re making one. It will have what the TransPark can do, what the product is, what we can sell, and when we’re done, we’re going to take it up to Raleigh and answer the question everyone has been asking, which is how can this project make money and start to turn around,” The Free Press of Kinston reported Manning as saying. Manning said the study will be released in two weeks.

The discussion also included the GTP’s campaign for passenger service in Kinston. Officials at the New Bern and Greenville airports have voiced concerns about unfair competition with their airports.

Both Gov. Mike Easley and the N.C. Senate have proposed only $1.6 million in funding for this year. The House has yet to make a proposal. Rep. Nelson Cole, D-Rockingham County, told CJ he was frustrated with the lack of progress at the GTP. Five years ago he began asking GTP officials for a business plan. Cole is chairman of the House Appropriations Subcommittee on Transportation.

Last week editorials in the state’s largest two newspapers discussed the future of the GTP. The News & Observer of Raleigh said that based on the lack of success and the state’s budget situation, GTP advocates “have reason to hold on by their fingernails.” The Charlotte Observer was much stronger, saying, “Lawmakers should stop sending money to the TransPark and give this fine rural airstrip to Kinston or Lenoir County.”

On The Cutting Edge

Teacher Quality

• A report to Congress from Secretary of Education Rod Paige calls academic standards for U.S. public school teachers “appallingly low.” The report’s data confirm his assessment.

Twenty-nine states use the Praxis Pre-Professional Skills Test to assess teachers’ abilities in math, reading, and writing. Only Virginia sets the passing score at the national average in reading — while in the rest of the states, teachers can “pass” the exam if they read below the national average. Passing scores for Florida, Texas, and the District of Columbia are set at below the 20th percentile — and California requires that teachers pass a basic skills test set at only the 10th-grade level.

Twenty-seven states have no requirement that teachers demonstrate mastery of the content of the subjects they are hired to teach — the results of teachers’ colleges emphasizing how to teach, not what to teach.

A further problem is outdated certification systems that simultaneously maintain low standards and high barriers. Paige endorses alternative-certification programs that welcome candidates from other professions who don’t meet traditional criteria — but whom states scare off with demands of needless theoretical “education” courses.
To address the problem of teacher shortages, New York has its Teaching Fellows Program, which bypasses teachers’ colleges and brings true professionals into classrooms in highest-need districts. Observers describe the program as “incredibly successful."

Teach for America, a nonprofit program that places recent liberal arts graduates in failing schools, is reportedly another success story. Paige said there is evidence TFA teachers “may in fact elicit greater academic gains from their students than non-TFA teachers.”

Reported in the Wall Street Journal, 7-5-2002.

Cost Overruns

• Cost overruns for large public works projects have stayed largely constant for most of the last century, according to a study by Bent Flyvbjerg of Aalborg University in Denmark. The study concentrated on 258 projects in the United States, Europe, and elsewhere and is being published in the Journal of the American Planning Association.

Project estimates between 1910 and 1998 were short of the final costs an average of 28 percent, the study found. The biggest errors were in rail projects, which ran, on average, 45 percent over estimated costs. Bridges and tunnels were 34 percent over estimates, and roads, 20 percent. Nine out of every 10 estimates were low, and cost estimates are no more accurate now than they were 90 years ago.

“Either the people who do the estimates are incredibly stupid, but that is highly unlikely,” Flyvbjerg said. “The other possibility is they manipulated the budgets to make sure the projects are approved,” he said. A number of American experts familiar with the field tended to agree.

Estimates for New York City’s Holland Tunnel, completed in 1927, were 52 percent lower than the final $48 million cost. The Channel Tunnel between England and France came in 80 percent over cost; and Boston’s Big Dig, which began 15 years ago with a projected cost of $4.5 billion, now has a price of $14.6 billion.

The study found that the public was largely unaware of overruns because the media coverage is inconsistent.
Flyvbjerg said he had difficulty getting builders to discuss the subject. “People run away screaming,” he said. “It doesn’t look good for the profession.”

Reported in the New York Times, 7-11-2002.

Hybrid Cars

• The latest studies show electric automobiles and “hybrid” cars are destined for failure. The attempt to reduce auto emissions and reduce energy consumption, which are sometimes incompatible goals, through emissions and mileage mandates is foolish, researchers say.

The added cost of hybrid technology, which uses a combination of conventional internal combustion engines and electric batteries, is 1.5 to 3 times the costs of other improvements that could achieve the same environmental performance improvement.

Production of ethanol gasoline additives and bio-diesel fuel demands vast quantities of electric power, making them less energy- efficient than using conventional gasoline-powered vehicles.

What’s more, buyers don’t care: Fuel economy ranks 25th among considerations in the decision to buy a particular car.

Most seriously, improving car mileage by reducing a car’s weight increases traffic fatalities. According to the U.S. Department of Transportation, passenger-car standards, which have been lowered to accommodate fuel mandates, have already caused an additional 2,000 deaths and 20,000 serious injuries each year.

Research by Jay Lehr, “The Car of the Future (Hint: It Looks a Lot Like Today’s Cars and Trucks),” Environment & Climate News, Volume 5, Number 6, July 2002, Heartland Institute.

Coming Up

• Dr. William Peterson, an adjunct scholar and senior fellow at the Heritage Foundation in Washington, will speak on The Forgotten Man: How You Fare In America’s Two Democracies, at a John Locke Foundation Headliner luncheon Aug. 20.

Peterson’s vast experience in business and government includes service as economist and assistant to the chairman of the Finance Committee of the U.S. Steel Corporation, senior economic adviser to the U.S. Department of Commerce, and economics speechwriter on the campaign staff of Richard Nixon.

Peterson has published articles in the Harvard Business Review, Freeman, Challenge, Monthly Labor Review, Christian Science Monitor, New York Times, Dun’s Review, Business Week, Journal of Business, Journal of Economic Literature, Kihon Keizai Shimbun, die Zeit, Farmand, Australian (Sydney), and Sunday Times (London). For 14 years he wrote a regular column for the Wall Street Journal entitled “Reading for Business.”

The luncheon will begin at noon at the Brownstone Hotel in Raleigh. The price of the luncheon is $15 per person. To preregister, contact Kory Swanson at (919) 828-3876.

The cost of the luncheon is $15 per person. For more information or to preregister, contact Thomas Croom at (919)828-3876 or [email protected].



Material published here may be reprinted provided the
Locke Foundation receives prior notice and appropriate credit is given.


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