Carolina Journal Weekly Report

October 21, 2002

In This Issue:
Feature 1 - Easley, Legislature Score Low

Feature 2 – NEA: Locked and Loaded

Feature 3 - UNCG Faculty Rescues Staff

Feature 1
Easley, Legislature Score Low
Poll provides views on taxes, local funds, other issues

Likely voters in North Carolina are critical of recent actions by Gov. Mike Easley and the General Assembly, according to a public opinion poll released Thursday by the John Locke Foundation.

The survey found that 51 percent of likely voters wanted state budget deficits to be closed by spending cuts alone, while 35 percent preferred a mix of cuts and tax increases and only 7 percent supported tax increases. Easley and legislators opted to impose more than $1 billion in tax increases over the past two years. Sixty-six percent of voters also disapproved of Easley’s withholding of tax reimbursements to local governments, compared with 19 percent who did not.

The most recent Agenda 2002 poll of 500 likely voters was conducted Oct. 14-16 by Virginia-based Tel Opinion Research. The margin of sampling error is plus or minus 4.5 percentage points. Public disagreement with recent actions on taxes and local funds may be one reason why the poll found low approval ratings for Easley (45 percent) and the legislature (34 percent).

Other key issues addressed in the poll were:

• The legislative process. Since 1998, the percentage of voters who supported reformation of North Carolina’s part-time legislature, rather than keeping it the way it is or replacing it with a full-time legislature — has increased noticeably. In the 2002 survey, 42 percent of respondents, up from 35 percent in 1998, would like the state to adopt a part-time legislature that has a limit on the number of days in each legislative session.

• School choice. An increasing number of North Carolina voters support the idea of providing scholarships or tax credits to parents choosing private or home schools for their children. About 52 percent said they agreed with the idea in general, up from 44 percent in the Agenda 2000 poll.

• Smart Start. The survey found a majority of North Carolinians supporting market-based alternatives to state preschool programs such as Smart Start.

• Health care. Support for private options in health insurance remained strong in the survey. About 77 percent of respondents supported tax deductions or credits (like those repealed by the Assembly last year) for families that purchase their own private health insurance.

“Overall, the findings of the Agenda 2002 poll show that conditions are ripe for a voter reaction against current state leaders and the current direction of state policy — but only if voters know whom to blame and see opposing candidates as offering real alternatives,” said Locke Foundation President John Hood.

Ahead of the Curve

• Henderson County is apparently the first county in North Carolina to vote against raising a local- option half-cent sales tax this year. Since the General Assembly in September granted counties permission to raise the tax, dozens have done so. Local governments sought the extra tax because Gov. Mike Easley earlier kept other taxes that the state formerly collected for the counties and cities. Marilyn Gordon, vice chairwoman of the Henderson County Board of Commissioners, changed her mind about voting for the extra tax. She endorsed a plan to plug the budget shortfall with cuts instead.

Opponents of the tax increase feared the county’s economy would be hurt because consumers could easily cross the state line to make large purchases. Reported by the Hendersonville Times-News.

• Sen. John Edwards of North Carolina announced on the CNN program “Late Edition” Oct. 13 that he wanted Congress to rescind proposed tax cuts “for the wealthiest Americans,” which are scheduled to take effect in 2004. He said such a move would repair and stabilize the economy in the long run, according to a report in The Washington Times.

Edwards also suggested some short-term proposals, including a $500 refund “to each family for these increased energy costs they’re going to pay this winter,” in addition to extending unemployment insurance and additional help for states that had budget deficits.

Feature 2
NEA: Locked and Loaded
Conventioneers arming to fight choice, accountability

The National Education Association is arming for battle with parents, schools, and the federal government over choice and accountability provisions embedded in the Elementary and Secondary Education Act, better known as the No Child Left Behind Act.

Scott Howard, superintendent of Perry, Ohio Public Schools, quoted at the NEA 2002 Representative Assembly session in Dallas this summer, compared the act to a Russian novel: “It’s long, it’s complicated, and in the end, everyone gets killed.”

This summer’s NEA convention addressed many concerns of professional educators, repeatedly stressing the need to collaborate with others who support public education, describing teaching as a patriotic duty, and alerting members to the need to mobilize to elect pro-public education candidates to public office.

Another area of concern was the desire to incorporate a wider range of employees into the NEA. Early-childhood workers are one of the groups that NEA seeks to represent. “There’s a potential for membership out there,” said Patricia Reeves of Tennessee, who believes that, especially in public schools or where early-childhood programs were add-ons, employees need to be organized under the NEA. JoAnn Falk, education support professional of the year, urged those in the English for Specific Purposes program to work together to strive for better working conditions, job security, and respect for support personnel.

Conference participants had an opportunity to gather information and to discuss various issues surrounding the new law, the workplace, and the influence of NEA in shaping the future of American education. Sen. James Jeffords of Vermont was named the NEA friend of education recipient for his efforts to fight vouchers and cuts to federal education funding.

With its Legislative Program, the NEA takes an active role in responding to issues that affect the quality of public education, student achievement, the rights of employees in the workplace, and other policy concerns. “We strive to create a program that gives lobbyists the flexibility they need to respond to emerging issues,“ said Gail Rasmussen of the Standing Committee on Legislation

Resolutions adopted at the convention cover a broad range of areas, including the federal law, public financial support of schooling; nontraditional school options; early-childhood education; immigrant education; issues of gender, diversity, health, environment, and philosophy; comprehensive social services; licensing; and evaluation of teachers and education employees; religion; violence; and school-to-work policies.

Federal law and federal funding are two of the largest issues on the NEA agenda. While the NEA takes the position that the No Child Left Behind Act is a great threat to the union, and that its members need to galvanize to oppose provisions that shift power from the union, resolutions A-14 and A-15 advocate substantial increases in federal funding for programs.

The NEA is expressly opposed to distributing that funding among states, particularly since states may opt to use them for sectarian or private schools. “The Association opposes providing any public revenues to sectarian pre-K through 12 schools,“ and “The Association opposes any federal legislation, laws, or regulations that provide funds, goods, or services to sectarian schools…”

Capital Quotes

“It’s been a nightmare of frustration.”

— Melvin Davis, former chairman of the First Flight Centennial Commission, speaking to the Virginian Pilot, about his experience working on efforts to commemorate the 100th anniversary of the Wright Brothers’ first flight on Dec. 17, 1903 in Kitty Hawk. The commission created the nonprofit First Flight Centennial Foundation to raise money for the celebration, though in practice the two organizations rarely pursued the same agenda. Partially as a result, the state’s planned yearlong celebration has been cut to just five days.

“Is it a fair agreement? No. It’s one-sided. But that’s what cities wanting expansion teams have to do.”

—Marc Ganis, Chicago-based sports marketing consultant, commenting to The Charlotte Observer on the terms Charlotte obtained in its negotiations to land a replacement NBA franchise to replace the departed Hornets. Under the agreement, the new team would begin play in 2004, and the following season move to a new, Uptown Charlotte arena. The new facility would cost about $250 million, with the city picking up most of the tab.

“Reimbursements have been a static source of revenues for a number of years. The sales tax is progressive and a growing source of revenue.”

— Randy Keaton, Pasquotank County manager, explaining to The Daily Advance of Elizabeth City his county’s rationale for increasing the sales tax from 6.5 percent to 7 percent effective Dec. 1. The General Assembly gave counties the power to raise the tax to partially offset the state’s withholding of certain taxes that it collects for and ordinarily distributes to localities. Economists generally consider sales taxes to be regressive, not progressive, as poorer individuals will spend a higher percentage of their incomes paying the tax than wealthier individuals do.

Feature 3
UNCG Faculty Rescues Staff
Educators donate money to ease denial of pay raise

The faculty at the University of North Carolina at Greensboro has provided state legislators and others a lesson in responsibility and charity in the face of dire fiscal times.

The budget recently approved by the General Assembly provided no pay raises to state employees. That means at UNCG none of the about 1,000 staff members will receive increases this year. Faculty members at UNCG, however, have received raises from this year’s tuition increase.

Now the about 700 faculty members at UNCG are raising money among themselves to give to the university staff. As word of the faculty’s generosity got out, alumni and citizens joined in.

The idea got its start in the spring in the faculty Senate, where UNCG faculty members first heard that they would be getting raises but that the staff would not. Chairman Ben Ramsey, associate professor of religious studies, started the discussion and got other faculty members involved through a letter-writing campaign.

Ramsey said the goal is to raise $250,000 for the staff in time for Christmas.

Not only did the legislature schedule no salary increases for state workers, the revised budget that legislators approved appears certain to harm workers, especially poor workers, across the state. According to an analysis by John Locke Foundation President John Hood, the new budget directly raises the state tax burden by about $157 million. The increase owes primarily to changes in business taxes and the cancellation of tax cuts — cuts intended to help families weather last year’s $700 million increase in sales and income taxes.

Worse, the revised budget would probably provoke tens of millions of dollars in property-tax increases, Hood said, thanks to the state’s confiscation of $333.4 million in tax reimbursements to local governments. That’s on top of the $75 million increase in property-tax increases by city and county governments in 2002-03, because of withheld tax sharings and reimbursement dollars, that was previously estimated by the foundation.

“These tax increases couldn’t have come at a worse time for our state’s businesses and families, many of whom are struggling with layoffs, declining wealth, and at best an uncertain future,” Hood said. “Our leaders should be debating which of North Carolina’s relatively high taxes to cut to get our economy moving again, not which ones to raise to preserve government programs.”

Last year 66 faculty members and administrators at N.C. Central University chose to forgo a scheduled raise in order to help the university offset budget cuts, especially to help prevent positions from being cut. The combined amount forgone by the N.C. Central faculty ended up being about $41,000.

The effort at NCCU wasn’t a group effort, but a combination of individual sacrifices, Faculty Senate Chairman Percy Murray, a professor of history, told the Herald-Sun of Durham.

Faculty at N.C. State in 1996-’97 volunteered to forgo $4.2 million in new tuition money, which was scheduled to go toward increasing their own salaries, and directed the money instead to improving the library. Their contribution was a key factor in a decade-long effort of improving the library at N.C. State.

On The Cutting Edge

Divorce and Class

• Because Americans hate the idea of social classes we try to pretend we don’t have any. Up to 80 percent of survey respondents will tell an interviewer they are “middle class.” Being middle class is in some sense part of being a real American, observers say.

But social class is the most important determinant in family structure, experts say, and the decline in the traditional two-parent family has hurt social mobility and will be a major cause of social stratification in the next century.

Married couples in the upper- income groups are much more likely to be in intact first marriages — simply put, divorce is much less common among upper-income groups. Among mothers who married, 77 percent of those in the bottom income one-fifth divorced at least once, while for those in the top two- fifths, only 21 percent divorced.

Experts found that the differences in family structure between upper- and lower-income households are effectively unchanged by correcting for the effects of divorce.

Among non-Hispanic whites in the bottom income one-fifth, only about 19 percent of the households with children consist of intact first marriages, while 78 percent of the non-Hispanic white households with children that fall into the top income group consist of intact first marriages.

Experts conclude that as a result of the dissolution of the traditional family since the 1960s — a phenomenon that has taken root particularly among poorer families — class segregation will increase and social mobility at the bottom will decline. And America’s image of itself as one big middle-class society will wither away.

Reported as “Family Decay Hurts Equality,” American Enterprise, April/May.

Obesity Economics

• Obesity has serious economic consequences because of its impact on labor supply and health care. Body weight is itself influenced by economic variables, often in complex ways.

Some economists argue that there are two distinct economic drivers of body weight: a supply-side effect caused by higher incomes and lower food prices, and a demand-side effect caused by the increasingly sedentary nature of work.

Rich countries tend to have relatively low food prices and more sedentary jobs than do poor countries, making them fatter on average. But within rich countries, everyone faces the same food prices and similar technology, so differences in weight are influenced by other factors, like education and income.

More schooling tends to reduce weight, by a relatively modest amount. Being black or Hispanic tends to increase weight, by a quite significant amount. Being in a sedentary occupation for a year leads to a small increase in weight; but staying in that occupation for 14 years causes a significant increase.

The weight gain over the last century is equivalent to a 30-pound gain for a 6-foot man. But only in the last 10 years have the calories per- person per-day climbed significantly over 1909 levels. This suggests that most of the weight increase is due to too-little exercise, not too many calories.

Using Bureau of Labor Statistics ratings of occupations by how physically strenuous they are, economists were able to determine the average amount of exercise associated with each person. They found that about 40 percent of the growth in weight in the last 20 years has been caused by the increased supply of food and 60 percent by the increase in sedentary employment.

Reported in the New York Times, Sept. 26.

Local Phone Companies

• Did federal regulators help put startup phone companies on the road to bankruptcy with misguided policies? Several recent studies say they did.

One of these studies, by the Progress and Freedom Foundation, concludes that the Federal Communications Commission may have pushed for too much investment in local markets. Congress passed the Telecommunications Act of 1996 to spur competition in local phone markets.

But when PFF analyzed the regulatory filings of 24 competitive local exchanges carriers (CLECs) from 1996 to 2001, researchers found:

Market exuberance and the FCC’s 1997 decision to require low phone companies to rent phone lines and switches to rivals encouraged too many startups.

At least $30 billion was invested in local phone markets by 1999, and apparently that was too much.

Of the 300 CLECs that existed three years ago, only 70 remained as of mid-2002, according to the Association for Local Telecommunications Services.

New local players, the FCC said, couldn’t afford to build networks similar to the Bells, at least in the near term. Local Bells sued, charging the prices were unfairly low, but the U.S. Supreme Court upheld the FCC’s pricing method earlier this year.

But critics say the FCC rules led the CLECs to expand too fast via leased lines, rather than encouraging startups to build their own networks.

Reported in Investor’s Business Daily, Sept. 27.

Coming Up

• R. James Woolsey, former director of the Central Intelligence Agency, will speak at a special John Locke Foundation dinner at 7 p.m. Oct. 30 at the Brownestone Hotel in Raleigh.

Woolsey is a partner in the law firm of Shea & Gardner in Washington, D.C. He returned to the firm in January 1995 after being director of the CIA for two year. He has been a member of the boards of directors of several corporations.

Woolsey has also served in the U.S. government as: ambassador to the Negotiation on Conventional Armed Forces in Europe, Vienna, 1989-1991; under secretary of the Navy, 1977-1979; general counsel to the U.S. Senate Committee on Armed Services, 1970-73; and adviser (during military service) on the U.S. Delegation to the Strategic Arms Limitation Talks (SALT I), Helsinki and Vienna, 1969-1970.
He earned a bachelor of arts degree in 1963 from Stanford University (with great distinction, Phi Beta Kappa), a master of arts degree from Oxford University, and an LL.B from Yale Law School in 1968, where he was managing editor of the Yale Law Journal.

For more information or to preregister, contact Kory Swanson or 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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