Research Reports: Government Reform

North Carolina’s auto insurance system is unfair to low-risk drivers because it overcharges them in order to subsidize some of the state’s more risky and dangerous drivers. Every insured driver pays a hidden tax, and private insurance companies are guaranteed a profit. This report recommends reforms to improve the system.

North Carolina has one of the most expensive Medicaid programs in the Southeast, and Obamacare will expand enrollment from 1.3 million people to potentially over 2 million people in 2014. Without Medicaid reform or tighter eligibility, North Carolina will need to cut some services and payments to doctors. Both options will mean worse care for every person on Medicaid. Gov. Bev Perdue and the General Assembly need to push Washington for exemptions from Medicaid restrictions and greater ability to innovate with premium support and encourage patient control of their own care.

This budget proposal would spend $18.4 billion and return spending to the same levels, adjusted for population and inflation, as in the mid-1990s. In addition to ending the temporary sales tax and income tax surcharges, this budget would reduce the tax rates on personal and corporate income, setting the stage for future tax reform.

The North Carolina Education Lottery was sold as a way to boost education spending, but N.C. boasts the same problem found in other lottery states: a declining rate of spending for education, especially in comparison with the rest of the state budget. Furthermore, poverty, unemployment, and property tax rates remain the best predictors of lottery sales.

There is optimism that an eminent domain amendment will pass this upcoming legislative session. This Spotlight explains how to craft the amendment carefully to best protect property owners.

This report highlights eleven action items that North Carolina’s new General Assembly should seek to implement in the first 100 days of the 2011 legislative session. These items touch upon a cross section of public policy areas, including education, economic development, property rights, energy and the environment, health care, the budget, and transparency. We at the John Locke Foundation believe that these items represent straightforward actions that would greatly enhance the liberty and prosperity of North Carolina’s citizens.

North Carolina’s regulatory environment is poor, especially in comparison with other states’. Gov. Beverly Perdue signed a new executive order to modify the rulemaking process and help reduce the costs of regulation, which is a good start, but much will depend on how it is implemented in practice. For true regulatory reform, the legislature needs to build upon the executive order and apply reforms to all agencies.

Outgoing Cherokee County commissioners are asking voters to approve a $600,000 tax increase, an amount equivalent to a property tax increase of 1.5 cents per hundred dollars of value. County voters already rejected all three county commissioners who proposed the tax hike, but those lame-duck commissioners have since committed nearly $10 million to expand and renovate the courthouse.

Orange County commissioners are asking voters for a $2.3 million tax increase at a time of high unemployment. Since the special county taxing authority was established by the legislature in 2007, voters have turned down 68 of 85 requests for tax increases, sending the message that county commissioners must be more responsible stewards of taxpayers’ hard-earned money.

Business incentives are like lottery tickets, providing big rewards for governments if you don’t count the costs. Iredell County modeled the financial costs and benefits of an incentive offered in 2009 and showed a positive net present value for the incentives, but neglected to factor in the opportunity cost of forgoing the next best use for the funds and the likelihood the investment would have happened without an incentive.