“Dick Rowland Image”

”Shoots (News, Views and Quotes)”

Editor’s note: Good news and bad news department. The good news is that
our state is looking better all the time because other jurisdictions are
shooting themselves in the foot. The bad news is that the USA overall
seems bent on self-destruction. See below.

– North Carolina Near Top in Tax Hikes

New report finds only two states have raised taxes more since 2001

RALEIGH – While defenders say the state’s political leaders have only
followed the national trend in raising taxes to fill budget holes, a new
report suggests that North Carolina is almost alone in enacting
large-scale, broad-based tax increases every year since 2001, which may
help to explain why the state’s economy continues to lag the national
average.

The John Locke Foundation, a Raleigh-based think tank, used surveys from
the National Conference of State Legislatures and the Rockefeller
Institute of Government in New York to identify 20 states that have
enacted major, statewide tax increases in either 2001 or 2002. (The
report notes that several additional states, including North Carolina,
are also considering tax increases in 2003, though it is not yet
possible to judge the outcome).

Among the 20 tax-increasing states, said report author and Locke
Foundation President John Hood, only New Jersey (at $1.5 billion) and
California ($1.37 billion) have enacted larger tax increases than has
North Carolina (just over $1 billion). Adjusting for the size of the
state, Hood found that only three states — New Jersey, Indiana, and
Tennessee — had enacted larger tax increases per person than North
Carolina in 2001 or 2002.

Furthermore, only two states, New Jersey and North Carolina, enacted
major tax increases in both years, and of those only North Carolina is
likely to enact another major tax increase in 2003 — the third year in a
row.

“The fact that few states have matched North Carolina’s record for
raising taxes, particularly on income, helps to explain why our economy
continues to underperform,” Hood wrote.

He noted that since the middle of 2001, North Carolina’s personal income
growth (3.98 percent) has lagged its neighbors’ (5.03 percent) and the
national average (4.23 percent). Also since mid-2001, North Carolina has
lost 119,000 jobs, or more than one-third of all the net job losses in
the South. At the same time, North Carolina saw more growth in
government employees than any of its neighbors did. The state’s
private-sector workforce actually lost 150,000 jobs during the period
from mid-2001 to early 2003 — dwarfing the losses of any comparable
state.

“There are obviously a number of factors in play in North Carolina’s
economy, including technological change, foreign competition, and the
impact of national economic slowdown,” Hood said. “But these factors are
also evident in many of our neighboring and competing states — yet their
economic recovery has been broader and stronger than ours.”

He observed that even in Tennessee, where lawmakers enacted a tax
increase in 2002 approaching $1 billion, the state’s tax burden remains
significantly lower than North Carolina’s.

“Potential entrepreneurs and investors must pay one of the highest
income tax rates in the United States if they choose North Carolina,
while in Tennessee their income-tax rate is essentially zero,” Hood
said.

The new Spotlight briefing paper on state tax increases can be viewed at
http://www.johnlocke.org/spotlights/2003060475.html. For more
information on fiscal policy issues in North Carolina, call John Hood or
Dr. Roy Cordato at 919-828-3876.

The above article is quoted from John Locke Foundation, CJ Daily Update
6/4/03 http://www.JohnLocke.org

– Lawsuit Imperils Department of Citrus

http://www.miami.com/mld/miamiherald/news/state/6038790.htm

Six of Florida’s largest citrus growers have sued the Department of
Citrus on First Amendment grounds, challenging its ability to tax the
growers on each box of processed citrus and then use the money to pay
for generic advertising, the Miami Herald reported Sunday.

A victory by the growers could eviscerate the department if it is forced
to end the box tax and get out of the advertising business. Two-thirds
of the agency’s $65.5 million budget comes from the box tax on processed
oranges and grapefruits. Money spent on generic advertising represents
almost 80 percent of the department’s annual budget.

In 2001, the U.S. Supreme Court ruled that a mushroom program violated
growers’ First Amendment rights by forcing them to pay for advertising
they did not support.

JMI Executive Vice President Curt Leonard wonders why the government got
into the citrus advertising business in the first place:

“It is silly that the Department of Citrus ever took on the role of
‘promoting’ Florida’s citrus industry through tax-financed advertising.
Why should the state increase the costs of a product to its purchasers
by expropriating tax money and running ads for its purchase elsewhere?

“The marketplace has already done an end-run around this ancient tax
policy with growers now establishing exclusive relationships with juice
product manufacturers. They no longer ‘need’ the help of the State of
Florida Public Relations Firm.

“It is not the state’s role to promote through advertising any
agricultural product, or any product, for that matter, made by private
producers. They can pay for their own advertising, just like Proctor &
Gamble, Microsoft or Coca-Cola.”

Above article is quoted from The James Madison Institute, Madison Policy
Digest 6/9/03 http://www.jamesmadison.org

”Roots (Food for Thought)”

– Being in Business is Not the Government’s Business

By Paul Guppy

We often hear that government should run more like a business, but most
people don’t
think that means the government should be in business. Yet that is just
what King
County Executive Ron Sims has in mind with his proposal to enter the
solid waste
disposal market. The King County Council recently approved spending
$8.68 million to
buy a 12-acre site on Seattle’s Harbor Island to create an intermodal
transfer facility.
There county garbage will be loaded onto rail cars and hauled to remote
landfills.

Not that the council had much choice. By the time councilmembers learned
of the
proposal, the Executive had already paid a non-refundable deposit and
agreed to pay the
seller $100,000 every month until the council provided the purchase
money.

A new facility of some kind will be needed because the Cedar Hills
Regional Landfill,
where county refuse is now deposited, is slated for closure in 2012. But
why should
taxpayers assume the cost and risk of building a new facility when the
private sector
has not even been asked whether it could do the job for less?

Some county officials say they support starting a government-owned
operation in the
name of increasing competition. Right now only two companies, Waste
Management
and Allied, haul garbage in King County. But this duopoly is not the
result of some
breakdown in market forces. Under current restrictions, these are the
only two solid
waste companies that are operating in the county. The County’s rules
created this
problem and now, in a fit of empire building, it is using the situation
to justify starting its
own business.

Naturally, everyone wants to work in a growth industry. That is a major
reason there is
constant pressure to expand the public sector. Managers at private
companies want to be
part of a growth industry too, but there is only one way for them to do
so: they must
persuade people to choose the particular product or service they are
offering. By its
nature the relationship between a private company and its customers is a
voluntary one.
In contrast, many aspects of the relationship between citizens and their
government is
involuntary. When a local government starts a business, its “customers”
have no choice
about whether to pay for it, unless of course they want sell their homes
and move out of
the area.

King County is not the only local government seeking to expand. Tacoma
ratepayers are
funding the Click! cable network whether they receive the service or
not. Click! has
lost over $100 million since its inception in 1997, adding about $709 in
new costs for every
Tacoma power customer, most of whom do not receive Click!’s cable
service. Under a
plan being promoted by Kitsap County officials, taxpayers there would
help pay for a
new government-owned cross-Sound passenger ferry service, even though
the legislature
recently allowed private companies to provide ferry service on Puget
Sound.

Economists agree that government agencies are much less efficient than
for-profit
companies in providing services to the public. Private firms use price
signals that inform
company leaders about the long-term health and direction of the
organization. Private
managers know that if they don’t handle money responsibly they will soon
be looking for
other work. In the public sector there is much less personal
accountability. Public
managers seldom face really serious consequences when project costs soar
and public
money is wasted. Political scientist James Q. Wilson put it best when he
noted, “… a
public bureaucracy can persist in doing the wrong thing for years. The
Ford Motor
Company should not have made the Edsel, but if the government had owned
Ford it
would still be making Edsels.”

By entering the solid waste business, King County will force its
citizens to take on
financial risks that normally would be borne by private stockholders.
The county has an
essential role in ensuring the removal of solid waste, but being a
market competitor is not
one of them. Government works best when it creates conditions that
permit businesses to
thrive, not when it enters the market to compete against its own
citizens. The simple and
direct solution is for King County to end restrictions that bar
competition and invite more
companies to bid for the county’s solid waste work.

Above article is quoted from Washington Policy Center Commentary on The
Issue July 23, 2003 http://www.washingtonpolicy.org

”Evergreen (Today’s Quote)”

“The people made the Constitution, and the people can unmake it. It is
the creature of their own will, and lives only by their will.”
— Supreme Court Justice John Marshall, Cohens v. Virginia [1821]

”’Edited by Richard O. Rowland, president of Grassroot Institute of Hawaii, 1314 S. King Street, Suite 1163, Honolulu, HI 96814. Phone/fax is 808-591-9193, cell phone is 808-864-1776. Send him an email at:”’ mailto:grassroot@hawaii.rr.com ”’See the Web site at:”’ http://www.grassrootinstitute.org/

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