Civitas Review

NC House Finance Committee to Hear Two Bad Bills

Mar
03

Today's House Finance Committee is scheduled to debate two recent bills featured as Civitas Institute Bad Bills of the Week.

One of the bills is HB 117 – the NC Competes Act. This bill would expand the state's Job Development Investment Grant (JDIG) program, extend tax refunds for American Airlines' purchase of fuel, and expand tax breaks for datacenters.

The other bill is SB 20 – the bill earlier approved by the Senate that would drop the gas tax in the immediate short term, but result in a billion dollar tax hike over the next four years.

As reported by The Insider – a subscription based news service – however, the House Finance Committee is expected to alter the gas tax bill to keep the gas tax floor significantly lower than the Senate-approved bill, while not lowering the tax as much in the near term.

Stay tuned to track the progress of these bills.

UPDATE: The House Finance Committee changed the gas tax bill so that the tax would fall from its current 37.5 cents per gallon to 36 cents per gallon until the end of this calendar year. At that point, the tax would return to its previous calculation formula. Legislators claimed this would be a temporary measure to encourage a permanent solution before the end of the year. This new measure passed out of committee.

The "NC Competes Act" also passed committee, by a vote of 30-9. Both bills are expected to be debated in the House Appropriations committee this afternoon.

UNC cuts ties with Poverty Center

1
Feb
27

Well it happened. Despite the disruptions of two dozen protestors, today the UNC Board of Governors (BOG) voted to accept the recommendation of a BOG working group and close three university- based centers, including the UNC Center on Poverty Work and Opportunity, headed by the controversial law school professor Gene Nichol.

Civitas has written numerous articles about the Poverty Center’s questionable activities (see here, here and here). So I won’t go into an assessment of Poverty Center’s work.

As expected, much of the University community viewed the decision to close the center as an attack on academic freedom. It wasn’t. If the BOG's actions were an assualt on academic freedom, why didn't anyone protest the closures of the two other centers? The criteria the BOG used in making their recommendations is clearly laid out in Draft Report Board of Governors Working Group on Centers and Institutes.

The UNC Center on Poverty, Work and Opportunity was supposed to be an academic center that conducted research and developed scholarship on the subject of poverty. If you look at the Center’s web site, it looks like those activities were in short supply. Many of the publications listed on the web site are dated. As is a listing of Policy Briefs. Events held by the Center encourage advocacy more than scholarship. The right side of the Center’s web site are links to causes that have little to do with poverty like immigration, health care and corporate speech.

It is interesting that the left says they decry the BOG’s action as an attack on academic freedom. At the same time they say the Poverty Center was not receiving any public money. If that’s the case, why the outcry? Practically speaking the Poverty Center will continue to make the case for private funding, just like everyone else.  Of course, you do wonder why if the Poverty Center is a privately-funded organization, why is the Center’s address a PO Box in the UNC law school?

New Research: Medicaid Expansion Would Cost NC Nearly 94,000 Jobs

Feb
27

One of the reasons used by advocates of Medicaid expansion in NC is that expansion will be an economic boost, creating tens of thousands of jobs. That claim, however, was based on a foundation of completely false assumptions – as I discussed last month in this article.

But that's not all. Research, and common sense, tells us that expanding Medicaid will also reduce participation in the workforce. For North Carolina, that could mean a loss of nearly 94,000 jobs. Because Medicaid expansion primarily reaches working-age childless adults, it creates a new "welfare cliff", meaning that new enrollees may face losing significant benefits if they take a job. The prospect of losing these benefits makes work even less attractive, and causes more people to choose to stay unemployed and not risk losing their Medicaid benefits. This Forbes article describes the details of the research:

But the truth is that expanding Medicaid to able-bodied adults will discourage work, create massive new welfare cliffs and ultimately shrink the economy, not grow it. A new report by the Foundation for Government Accountability outlines how Obamacare expansion could affect the labor force.

A comprehensive study released by the National Bureau of Economic Research, for example, found that past Medicaid expansions to enroll able-bodied, childless adults reduced the likelihood of working by up to 10 percentage points. This means Obamacare’s Medicaid expansion could cause up to 2.6 million Americans to drop out of the labor force entirely.

Analysis of these figures shows that NC would lose nearly 94,000 jobs under Medicaid expansion. A CBO study also indicates Medicaid expansion will discourage work, and academic research on states that have expanded Medicaid finds Medicaid expansion causing decreases in employment as well.

State Senate Questions Corporate Welfare Program

Feb
26

HB 117 , known as the NC Competes Act, would, among other things, significantly increase the amount of taxpayer dollars in the state's Job Development Investment Grant Fund (JDIG).

Yesterday, a Senate Finance Committee put the program under some scrutiny, perhaps signaling some opposition to bill should it be approved by the House and move to the Senate. According to The Insider, a subscription-based state politics news service:

Senate Republicans asked pointed questions Wednesday about the effectiveness of the state's flagship economic development program, the Job Development Investment Grant, which Gov. Pat McCrory and a House bill seek to replenish with more taxpayer funding. The questions came during a meeting of the Senate Finance Committee, indicating that the incentives bill might not skate through the Senate. House Bill 117 would raise the cap on JDIG awards to $45 million through the end of 2015, a $15 million increase, as well as modify and extend other economic incentives programs. The state has $25,000 left to award out of $22.5 million available this biennium.

….

(Sen. Bill) Rabon also asked whether there was any way to know whether companies hire local people or bring workers with them from outside the state. JDIG doesn't require that type of reporting, legislative staff said. Sen. Bill Cook, R-Beaufort, asked about the success rate of companies that receive JDIG grants. Aubrey Incorvaia of the Fiscal Research Division said 201 JDIG grants have been awarded from 2002 through 2014. Of those, three have gone the full term of the award and 73 have either been terminated or withdrawn, with the rest in various stages of the 12-year agreements.

Another question I'd like to see regarding JDIG and other similar corporate welfare schemes is how many local hires made by the incented company were unemployed versus hired away from another company. That would be another measure to gauge the impact these companies actually have on job creation.

Fiorina Makes Inroads in NH

Feb
25

Former Hewlett-Packard CEO Carly Fiorina is making inroads in the 2016 presidential race, according to this report.

As the Real Clear Politics writer says:

Recent conversations with plugged-in Republicans across [New Hampshire] reveal a consensus that Carly Fiorina—the former Hewlett-Packard CEO—is positioning herself well as a potential dark horse White House contender capable of making a serious run.

She has an inspiring life story most people don't know about. She started as a secretary and became the first woman to head up a Fortune 500 company.

Ms. Fiorina will be speaking at our Conservative Leadership Conference on March 27-28. Click here to learn more and sign up.

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