Since 2010, when voters put Republicans in charge of most state governments across the United States, North Carolina became one of about a half-dozen states where conservative reformers have frequently — and sometimes spectacularly — faced off with progressives in ways that have attracted significant national attention.
In 2011, the new GOP-majority General Assembly defeated then-Gov. Bev Perdue’s attempt to re-impose a massive sales-tax increase. Two years later, Republican lawmakers and then-Gov. Pat McCrory initiated a multi-year process of reducing and reforming North Carolina’s tax and regulatory burdens.
At the same time, North Carolina leaders began changing the way the state budgeted its dollars, funded its roads, delivered education, and administered public assistance. Most conservatives here and around the country cheered. Progressives fought, fumed, and forecast doom.
There isn’t enough space here to adjudicate all the resulting policy disputes. But I can give readers a peek at how North Carolina conservatives tend to evaluate our policies. Specifically, here are six key statistics we’ve been watching, and why:
Rainy-day Reserves: No matter what side of the political spectrum you’re on, you should want state politicians to budget against worse-case scenarios, rather than count on rosy scenarios. Both meteorological and fiscal storms are inevitable. According to the latest Pew Research Center study, North Carolina has a full month’s worth of state spending saved in our rainy-day account, ranking us 14th-best in the nation.
Highway Cost-Effectiveness: While progressives seem to equate the value of government programs with how much taxpayers are forced to spend on them, conservatives place a higher priority on getting the biggest bang for the buck. They know that empirical research doesn’t show any consistent link between state expenditures and economic progress, but the latter is often associated with higher levels of service quality or outcomes.
So, for example, we want North Carolina to have good-quality roads and bridges, not necessarily to spend the most tax money on transportation. According to the Reason Foundation’s latest state-by-state comparison, North Carolina ranks 14th in the cost-effectiveness of our highway system. Thanks in part to policy reforms, we best the national average in both rural pavement condition and urban congestion.
Education Cost-Effectiveness: I wish there was a similar set of rigorous, annually updated national comparisons on school spending and outcomes. According to a U.S. Chamber of Commerce study published in 2014, however, North Carolina ranked 8th in the nation when it came to the ratio between student performance on independent tests and per-pupil expenditures.
Tax Competitiveness: North Carolina’s tax reforms have yet to be fully implemented, but their effects are already evident. According to the Tax Foundation’s State Business Tax Climate Index, North Carolina currently ranks 11th, up from 41st before tax reform began in 2013. Conservatives follow this statistic because, unlike state spending, state taxes do exhibit a statistically significant (and negative) relationship with economic growth.
Economic Growth: Since 2012, the price-adjusted annual rate of growth in North Carolina’s gross domestic product has averaged 2.5 percent, according to the U.S. Bureau of Economic Analysis. That’s the 13th-fastest growth rate in the nation. Some of our regional competitors have outpaced us here, at least so far, but keep in mind that they have usually been governed by conservatives longer than we have.
Labor Market Improvement: When it comes to unemployment, most people tend to look at the “headline” rate — which is 4.5 percent in North Carolina at the moment. That measure leaves some important people out, however: discouraged workers who’ve given up looking for jobs; marginally attached workers who are currently moving, getting retrained, or tending to family emergencies; and part-time workers who’d rather have a full-time position but can find one.
If you count them all, North Carolina’s “U-6 unemployment” rate is 8.2 percent, down from 16.3 percent in 2012. That’s the biggest improvement in a state labor market in the South, and the 6th-biggest in the nation.
Conservatives recognize that North Carolina continues to face many challenges. But we see progress, and celebrate it. Now you know why.
The preceding article was written by John Hood, chairman of the John Locke Foundation, and first appeared at the Carolina Journal Online on April 4, 2018. It is reposted here with the kind permission of the author.