Heard on the Street Posted: Thursday, July 2nd, 2009 How long will the arguing last?
We`re beginning to sound like a broken record. Another week has come and gone without a budget. The House and Senate are engaged in a battle over positions and neither side wants to yield to the other or find a compromise. All but 5 other states have passed budgets.
Some are wondering where Governor Perdue is in trying to help resolve the stalemate. As one longtime observer noted, Governor Jim Hunt would not have allowed this to go on so long. He would have called leadership over to the Mansion, put them around the poker table in the Men`s parlor and made them stay there until they reached a compromise solution. Governor Perdue`s style was different. She held told the press it was time for the legislature to get down to work and get this budget passed, reporting that it was costing the state $5 million a day in budget cuts and increased taxes. She stated that she didn`t really care how they resolved the budget, so long as teachers and education were saved. House Speaker Joe Hackney responded to the News and Observer, "We appreciate (Perdue`s) participation and encouragement and welcome it." Yeah, sure. We understand Senate President Pro Tem Basnight has met privately with the Governor.
We hear there is quite a bit of dissension among the governor`s staff as to the best solution to the tax problem as well as the role she should be playing. If true that the failure to resolve the budget problem is really costing the state $5 million per day Perdue has no higher priority than to get this thing fixed. It is time for her to demonstrate leadership. Insiders say this deadlock could continue well into July if something doesn`t happen. They fully expect another continuing resolution beyond the July 15th date set in the CR they passed this week. Even when the budget is passed there will be a delay in the implementation of a new budget because it takes time to implement pay schedules, tax schedules, and other budget line items.
The fallout from not having passed a budget gets larger the longer this stalemate lasts. Republicans must be licking their chops at the inability to be able to resolve budget differences. In past years when the party in power raised taxes and failed to explain to the voters what they were doing they paid a price in the next elections. Could this be another 1994 when Republicans gained enough numbers in the House to name their own speaker? Might it be another 2002 when the margin in the House was so close that then Speaker Jim Black had to pay a legislator $50,000 to switch parties so that Black would get re-elected? Or it might just be another year when the voters just didn`t pay much attention to what the legislature did.
Republican minority leaders Skip Stam in the House and Phil Berger in the Senate called a press conference and outlined “The Dirty Dozen” tax increases they say Democrats are about to perpetrate on the fragile economy, impacting our citizens. The list includes both the proposed increase in sales taxes and income taxes on upper income wage earners, the various proposals for taxes on services, increased taxes on limited liability companies and taxes on electricity. They left off the sunset of the cap on gas taxes and a prospective tax hike in January.
In the past Republicans have been able to snatch defeat out of the jaws of victory but this time around the GOP chair has a seasoned political operative at the helm, Tom Fetzer, who is probably formulating ads as we write. It will be interesting to watch.
The fight over which tax increase to swallow won`t play well regardless of which option they choose. Citizens do not believe they have really done all that could be done to cut state government. They hear about $25 million fishing piers and $10 million giveaways to athletes in our universities and won`t agree to tax increases until such time as they are convinced lawmakers have done their jobs eliminating unnecessary programs. They know all too well what they have had to do with their personal budgets and want to know the state has done the same.
To hear some really great debate on the budget situation and the fallout this week`s NC SPIN is one you won`t want to miss. Be sure to catch it.
The Charlotte Observer had a good editorial about tax reform titled “Don`t squander this chance for tax reform.” Another interesting read on the subject comes from Creative Loafing`s Tara Seratius, titled “Californification: Part II.”
The NC SPIN Plan
Speaker Hackney sounded the right note on the subject of tax reform. He agreed we are past due in addressing and modifying our tax codes, but said that right now, in the middle of a budget crisis is not a time when we can expect our best thinking on the subject. If we are really serious about reforming these antiquated codes we need to really take the time to consider the impact and revenues that might result from changes.
The worst of all worlds is that we pass a few changes to the tax code and think we have achieved tax reform. The Senate bill would do just that. It just adds new categories for taxing and doesn`t eliminate loopholes, exceptions and preferences in the current code. Plus, it is a blue collar tax hike. If you are going to seriously tax services, you must include lawyers, CPA`s and other “white collar” services. No, the Senate plan is flawed and while some might say it takes baby steps toward tax reform our real fear is that once passed our lawmakers will believe they have completed their task. Not so.
Since nobody else seems to have a compromise solution to raising $950 million in new taxes, here`s ours. We suggest that we adopt a temporary solution…the House plan for tax increases. To convince our citizens this will be only a temporary solution we would further stipulate that the revenue bill raising these taxes provides they will sunset on June 30, 2010. To guarantee this will happen we would include a provision that it would require a 2/3 majority in both houses for the taxes to be continued. This will virtually assure they will expire.
This plan would give our legislators one year to study and revise our current tax codes. In next year`s short session they can deliberate and pass the reforms. If they cannot accomplish this task in one year they deserve to be shown the door. As the dearly departed TV commentator Chub Seawell would have said, “Call your next case.”
“Miles to go before I sleep”
Robert Frost penned those words in his “Stopping by the woods on a snowy evening,” but it pretty well describes the task for our legislature. Since convening at the end of January the body has passed a few key bills like the anti-bullying rules, the Apple computer economic incentives, the sex education bill, but they have plenty of big issues still on the table, such as the beach insurance plan, annexation reform, and more incentives for the film industry and an interesting bill that would defer the taxes home builders pay on homes they construct until after the house sells. If passed, you can expect a line of others who will want preferential treatment.
How would you grade their work to date? That`s the question we put to our NC SPIN panelists this week. You will want to hear their answers on this week`s show. Tune in.
And while on the subject of the legislature we promised some discussion on things that would improve our legislature. Read our comments in My Spin, found on our website www.ncspin.com
Disclosing medical malpractice
We reported to you that negotiations were underway to provide the public with a list of doctors who had paid large medical malpractice awards. The NC Medical Board was charged with the task of making recommendations to lawmakers. They came back recommending that docs who had paid out $25,000 or more be included in the list. The NC Medical Society objected, saying the threshold was too low. Many insurance companies will insist on settling suits for small amounts rather than incur the costs of going to court, they said. They wanted the settlement limits adjusted to $150,000. Too much, said the Medical Board. The legislature compromised and Governor Perdue now has on her desk a bill that would publish the names of doctors who have paid malpractice awards of $75,000 or more.
Mary, Mary. Quite contrary?
Former first lady Mary Easley served notice that she is appealing her firing. Some are surprised, others appalled that she won`t just let this whole embarrassing episode die. Why is she doing this many are asking?
Answer: she believes she will receive a settlement from NC State. Mary Easley is a smart lawyer. Her husband is not only the former Governor but was also the Attorney General in our state for years. In that position he prosecuted and defended many lawsuits for the state involving contracts. While the actual contract for Mary Easley has not been released (or at least reported) these two lawyers would not risk further embarrassment and criticism unless they were pretty confident they could prevail.
Easley`s appeal will begin with the faculty Senate and will likely drag out for awhile. In the end, look for NC State to settle. Some say the quicker the University settles the better. But they don`t understand. State has already lost donors and esteem. A settlement without a fight would look like another wrongheaded move in an already bungled affair. No, they want to be forced to settle. That way they can defend having to payoff Mary Easley as a decision by the courts.
Highway Patrol changes
Several weeks ago we reported the sudden retirement announcement of Colonel Walter Wilson as head of the State Highway Patrol. Wilson had only held the post 13 months and was reportedly implementing recommendations from a task force to clean up our Patrol. The Colonel serves at the pleasure of the Governor so therefore can be replaced when the Governor is no longer pleased. Why wasn`t Perdue pleased with Wilson?
We hear several answers to that query. Perdue wanted Lt. Colonel Randy Glover because she has known him for a long time. He was head of the troop in her home district when she was a state Senator. Some speculate that Wilson took the fall for the disappearance of former Governor Easley`s travel records. We`ve even heard that Perdue wasn`t happy with recent news of her security detail.
But even more discussion has focused on Wilson`s replacement. Glover served in Harnett County for many years and there is some buzz about why he was transferred from that post. Folks in Harnett are talking. Immediate and negative response from the western part of the state indicates they aren`t happy with yet another easterner leading the patrol. You can be sure this appointment is getting scrutiny. We hear two major news organizations are digging into the story.
Not if, but when
When the Entertainment Group of North Carolina ran ads on NC SPIN advocating the regulation of video poker in our state there was an immediate and negative response from newspapers, citizen groups, and even legislators.
According to a press release this week, the group is once again restating their belief that North Carolina should regulate and even tax video poker. Recent court rulings have determined it unlawful to allow video poker in one part of the state without allowing it statewide and subsequently declared the legality of video sweepstakes and “Pot of Gold” games. These rulings will result very shortly in video poker machines popping up in convenience stores and other venues across the state from any and almost everyone who wants to get into the business. Without regulation we will return to the freewheeling days of the “wild wild west,” according to the trade group.
They will tell the House committee considering House Bill 1537 next Tuesday that the question is not if the state will pass regulations to control video poker but when they will do so. Their position is that the state should be proactive rather than reactive in establishing controls. This will be an ongoing debate.
July 4th
Our state, like others, is preparing for a hot July 4th celebration and holiday. To be sure there will be plenty of picnics, fireworks and trips to the lake or other destination. We`re told that people won`t be traveling as much this year as last, presumably because of the economy. This isn`t good news for our tourist industry.
Those who do travel need to know that law enforcement officers are very conspicuous and there are blue lights all along the roads as our officers want to ensure that those who do travel our roads do so safely.
This is a time to reflect on the 233 years that have passed since a group of men representing the 13 colonies came together in a hot summer to deliberate a monumental break from England. Perhaps you have seen what follows but someone sent us this piece this week and we thought it worth including in this edition.
What happened to the signers?
Have you ever wondered what happened to the 56 men who signed the Declaration of Independence?
Five signers were captured by the British as traitors and tortured before they died. Twelve had their homes ransacked and burned. Two lost their sons serving in the Revolutionary Army; another had two sons captured. Nine of the 56 fought and died from wounds or hardships of the Revolutionary War.
They signed and they pledged their lives, their fortunes and their sacred honor. What kind of men were they?
Twenty-four were lawyers and jurists. Eleven were merchants, nine were farmers and large plantation owners, men of means, well educated, but they signed the Declaration of Independence knowing full well that the penalty would be death if they were captured.
Carter Braxton of Virginia, a wealthy planter and trader, saw his ships swept from the seas by the British Navy. He sold his home and properties to pay his debts, and died in rags. Thomas McKeam was so hounded by the British that he was forced to move his family almost constantly. He served in the Congress without pay and his family was kept in hiding. His possessions were taken from him and poverty was his reward. Vandals or soldiers looted the properties of Dillery, Hall, Clymer, Walton, Gwinnett, Heyward, Rutledge, and Middleton.
At the battle of Yorktown, Thomas Nelson, Jr. noted that the British General Cornwallis had taken over the Nelson home for his headquarters. He quietly urged General George Washington to open fire. The home was destroyed and Nelson died bankrupt.
Francis Lewis had his home and properties destroyed. The enemy jailed his wife, and she died within a few months. John Hart was driven from his wife`s bedside as she was dying. Their 13 children fled for their lives. His fields and his gristmill were laid to waste. For more than a year he lived in forests and caves, returning home to find his wife dead and his children vanished.
Think about it.
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