The News & Observer is replete with reports of exceedingly bad ideas affecting Raleigh and Wake County today:

A breakdown of each issue after the break:

First, the state’s denial of nearly $80 million’s worth of hospital construction is — or ought to be — criminal in a free society. The N&O reports:

State regulators rejected plans by WakeMed and Rex Healthcare to continue building satellite campuses in rapidly growing sections of Wake County. … The proposals would have brought urgent care centers and other services to North Raleigh, Cary, Holly Springs and Garner.

Analysts from the state’s Division of Health Service Regulation questioned hospital officials’ projections that involve market share and the rate at which services would be used. The officials suggested that the areas are already adequately served.

This incredibly statist power owes to Certificate-of-Need laws, which my colleague Dr. Roy Cordato researched in 2005:

North Carolina is one of 35 states retaining CON laws. Originally, the rules were developed to satisfy the provisions of a 1974 federal mandate. When Congress ended the mandate in 1987, some states repealed their CON laws while others kept them in place, thus allowing for useful comparisons across the country about the effects of the regulations.

The CON system was intended to keep health care costs lower by restricting access to costly medical procedures, but Cordato observed that basic economic principle and real-world experience pointed to a different outcome.

“One sure way to raise the cost of something is to give producers power to restrict output and production,” Cordato said. “Politicians understand this when the issue is OPEC and oil, but when the issue is health care, they think the way to protect people from higher costs is to restrict the supply of medical facilities and equipment.”

Cordato said that states that got rid of their CON laws did not see the increases in health care costs that would have occurred if the laws truly worked to keep costs down. Instead, several studies showed that CON laws drove up health care costs while restricting services.

“It’s a hidden tax,” Cordato said. Competition, not government-sponsored health cartels, is the key to driving health care costs down, he added.

“If you were to describe the certificate-of-need process to someone who had never heard of it before,” Cordato said, “he’d probably think you were describing a crazy, Soviet-style system — not a policy at work right now, here in North Carolina.”

Next is Raleigh’s leaders wanting to raise water rates now. The N&O reports:

Raleigh probably will follow Durham’s lead and raise water rates this year — in part, ironically, because conservation is working — city officials said Tuesday.

Because of the city’s mandatory water restrictions and voluntary conservation, Raleigh is selling about 20 percent less water than this time a year ago — and earning 20 percent less revenue. …

Even though the Triangle is emerging from a yearlong drought that drew Raleigh’s water source, Falls Lake, perilously low, Raleigh remains the only city in the Neuse River basin with mandatory water restrictions, Crisp said.

If Raleigh lifts its Stage 1 restrictions, water use will rise, he said, though lawn irrigation probably will be more tightly regulated than in years past.

“I don’t think we’re going to let usage go up as high as it did last year, because we’ve learned that irrigation is such a heavy demand on our system,” Crisp said.

The enormity of this as a bad idea owes to consideration of how Raleigh leaders reasoned their way to this conclusion:

  • Don’t raise the rates temporarily during a shortage, when higher rates would lead to voluntary conservation.
  • Instead, impose mandatory restrictions but keep rates as is; i.e., try to force conservation through other means.
  • After the shortage is over, keep the mandatory restrictions.
  • After the shortage is over but restrictions are still in place, blame lower water consumption for falling revenue.
  • Only then seek to raise rates, permanently.

It seems patently evident by now that Raleigh leaders are not that concerned with water revenues, but with maintaining control over people. That is the only way to make sense of the decision-making process used by Mayor Meeker et al. (I suppose one could theorize oafishness on their part instead of power-maximizing, but I reject that theory on the grounds that the averred oafishness is too aligned with decisions that would maximize political power for them to be coincidental.)

Incidentally, this plan gives them power over citizens in other Wake County towns as well:

Residents in Raleigh, Garner, Rolesville, Wake Forest, Wendell, Knightdale and Zebulon who get their water from the city are still under Stage I water restrictions.

Finally, and following logically, is the desire to double Raleigh’s impact fees. Per the N&O, this idea is so daffy that even the city’s Planning Commission couldn’t support it:

On Tuesday, the commission voted 8-4 to recommend against the increase, saying it was a bad idea given the deteriorating economy. … “We are practically in recession,” commission member Waheed Haq said. “It’s just not the right time.”

A majority of City Council members have expressed support for raising impact fees, which the city charges on new development to help pay for roads and parks. Raising the fees emerged as a key issue in last October’s election, which resulted in two incumbents being defeated by challengers who embraced higher fees.

While the economic situation has gotten progressively worse in recent months, Mayor Charles Meeker said Tuesday that he still supports the increase. … The council voted to raise impact fees by 72 percent in 2006, but Meeker and several other council members wanted a much larger increase at the time.

The ostensible idea behind “impact fees” is that growth raises costs on the community, and that’s not fair to current residents, so let the new guys pay. Actually, impact fees amount to a tacit admission on the part of city leaders that the tax burdens they have placed on current residents are far too onerous for them to be able to impose new burdens.

Being politicians, they are as loathe to restrict the growth of their own budgets and power as they are to harm their chances of reelection, so impact fees present them with an elegant compromise. They get bigger budgets and more power without overly provoking current residents, and the new guys won’t have personal memories of greater freedom in Raleigh to be upset, or so goes the hope.

Of course, every civic booster from time immemorial has started with the understanding that growth is good for the community, just as every basketball player starts with the understanding that points are scored by getting the ball in the basket. In other words, to have to research the issue to prove that growth is good approaches the level of “Well DUH” research, except that since it relates to statist politicians and understanding economic matters, it really is necessary.

So Professor Michael Walden, the William Neal Reynolds distinguished professor of economics at N.C. State, has done exactly that:

“Professor Walden calculated the total economic impact of building 100 new single-family homes and 100 multi-family housing units in the Triangle,” Sanera said. “He used a more comprehensive measure of public costs than Duncan & Associates. Along with roads and open-space costs used by the City of Raleigh, Walden included costs related to schools, police and fire protection, solid-waste disposal, and water and sewer services. But he also calculated their impact on tax-revenue sources: property taxes, local sales taxes, utility excise taxes, inspection and permit fees, and motor vehicle taxes.”

Although Walden’s research looked at the effect of growth on Triangle cities and counties, Sanera and Peña say his comprehensive methodology is something Raleigh should use in deciding whether an impact fee is justified. By taking growth’s economic benefits into account, even while using a more complete assessment of growth’s costs on the community, Walden found that local revenues outpaced public costs by nearly $77,000 per year over a 10-year period. He also found that the -home construction led to $64.7 million in new economic activity and almost 600 new jobs.

“By looking at both sides of the issue, Walden discovered that growth more than paid for itself,” Sanera said. “This is just common sense. Everyone knows it’s good for a community to grow.”