Short Session, Leandro Case and NC Economy | Hour 2

What's going on. Thank you so much for listening to this podcast. It is heard live every day from noon to three on WBT Radio in Charlotte. And if you want exclusive content like invitations to events, the weekly live stream, I Daily Show prep with all of the links, become a patron, go to dpeakclendarshow dot com. Make sure you hit the subscribe button. Get every episode for free right to your smartphone or tablet. And again, thank you so much for your support. Excited to have you with us today. And we're really talking and looking toward a new legislative session starting on Tuesday. It's you know, after the primary, new legislative session coming up. Still don't have a state budget, which is really the focus of a lot of folks who need to be able to plan this year. They're hoping they can get at least so many budgets through. But a really interesting column out just today Hot off the Presses from Senate leader Phil Berger. If you get a chance over to WBT dot com or Carolina Journal dot com, you can find the column there linked to his Burger Press medium. It's interesting, it's got a lot of good perspective that really has been developing over more than a decade. He credits the entire Republican caucus. So if you remember, if you're just joining us here in North Carolina, a little bit of the backstory. Democrats ran the state legislature for more than a century, but in twenty ten, using Democrat John Maps, I would add, Republicans took control of the General Assembly and really shifted the focus. You know. They Republicans got control after about a century, and they made a lot of progress on tax cuts, regulatory reform, keeping spending under control. They got a lot of heat for it, though a lot of folks were not happy about restrained spending. But we also saw a lot of education reforms, a lot more school choice, university stewardship. He's talking. Senator Burgers talks about all of that in his column. But I think the takeaway though, as you're seeing a man who in this column is looking back on a decade and how he as one of the architects of this big shift and change, is celebrating work done and also looking forward to what the legislature has ahead of them in this session. But from a free market perspective, as you dig into it, what Senator Burgers arguing is pretty simple. North Carolina's economic success just did not happen by accident. It really came from discipline, tax cuts, controlled spending, predictable policy environment that businesses can work with and know how to plan. The question, though, is will lawmakers stick with that formula and will they be able to stick with that formula under maybe new leadership starting in twenty twenty seven in the Senate because Philberger will be there. He's going to have the gavel through this next session through the end of twenty twenty six. What comes after that? Right, you know, this is not a new agenda what he's describing, it's defending the existing model. And of course, from the John Locke perspective, North Carolina's growth is really tied to tax competitiveness. Right. We have low income taxes, we have regulatory restraints and fiscal discipline, which is key. We've seen an erosion of that a bit in the last year maybe two. We'd like to see a little bit more because there wouldn't be much of a budget debate if they would just agree to spend less of our money. But at the end, consistency is the policy. Do we keep on the track that we've been on for the last decade, and Senator Berger argues to his colleagues, yes, yes, we should. He's doubling down on tax relief as a core economic strategy for North Carolina. Lower taxes means business invesment and means in migration. That we talked about in the line last in the last hour, property taxes. That's our next pressure point, right, That's what we're going to see a need for more of more relief for property taxes, especially for those who perhaps have been here since you know, thirty forty fifty years perhaps and they don't owe anything on their house, but maybe they are, you know, being strangled by increasing property taxes as our housing values go up. If North Carolina wants to stay a top state for business, we can't drift on those taxes. We have to really focus even at the local level where people are feeling it, and make sure they want to come here, they want to invest, they want to build a life here, and pay their income taxes here in lower rates. So you know, it's it's going to take some intra party you know, collaboration, and you know, in an general election that is in the midterm, you know, Republicans could see some losses they're going to have to work across the aisle to keep that trend moving. There's going to be some just a agreement. That's the battle of the session that we see coming up starting on Tuesday. It's not an ideology. It is how fast should the government grow, how much of their money should they should we be spending, and can they keep spending under control in check to protect financial autonomy, liberty. Growth policies for North Carolinians isn't really whether to grow right, because we're going to be growing anyway. It's how much and whether that growth undermines the tax advantage that got our state where it is. Burger in this column he ties the relief to our state tax policy. States can't control inflation, but they can reduce the burden on taxpayers because tax policy really is it's one of the few tools that states have to offset higher cost of living, whether it's housing and anything else. That's clearly where leadership wants to focus. If we look at Burger's column here, you know, if inflation is out of control, housing is out of control, taxes they can control. And he's also saying we need to align some state policy with market based reforms. Whether we say energy, increase our supply, make sure that is low cost, it is efficient that it provides the level of energy that we need in North Carolina to keep our economy humming. And healthcare costs North Carolina is there's a Forde study that came out last year. North Carolina is the most expensive place to be sick. North Carolina has some of the highest healthcare costs in the country. How can we do that. We need to reform certificate need, We need to increase competition. All of those core things that you learn in econ one oh one, we need to see them here. The through line here, though, is letting the markets work instead of expanding bureaucracy. So here's our long term strategy, right. Berger says this in this column. He says, let's look at fifteen years out right, where's North Carolina going to be? Is North Carolina going to be the model of success of policy durability? Right? Can we set out all of these policies that we have laid out and they have proven to work over the last decade. Will it be durable for the long term to keep us moving forward? This is about protecting a model that they have proven and got a lot of heat for over the last decade and not trying to reinvent it every session. Every time a seat changes over, a new generation takes over. Let's look at what that model has been and keep it going. There's gonna be disagreements, of course, There's gonna be signals, and there's gonna be pressures to spend more versus hold the line. Smnson talk in the House about, hey, look, our revenue projections don't look as rosy as we thought they would be. We need to slow reducing taxes. But the real test is whether lawmakers can can resist that temptation to do that. From the John Locke perspective, which is the publisher of Carolina Journal, the column is less about politics more about policy discipline. North Carolina's edge really comes from staying predictable, staying competitive, restrained. You know, we abandoning the formula that's been working, is the takeaway in what Burger is saying. He's encouraging his colleagues not to abandon that strategy because North Carolina's growth story is an important one and it's made North Carolina a policy leader in the United States, and it's and load taxes really only work if you pair them with spending discipline. You can't keep cutting taxes if you're not going to rein in spending. So it's a two sided coin and they've got to be really really thinking about that, working on it. And the biggest risk they have, truly is going to be complacency if they start looking at you know, revenue coming in and growth and saying we've got more we can spend. We really need some discipline. You know. Stories are powerful. They help us make sense of things, to understand experiences. 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They are your life told through the eyes of everyone around you and all who came before you, and they will tell others to come who you are. Visit Creative video dot com. I'm Donna King. I'm filling in for Pete Calendar today on the Peak Calendar Show. On this beautiful Friday. It is going to be a hot one hot over the weekend. We want to hear from you seven four seven one seven nine. Of course, you can also text us seven oh four five seven oh one zero seven nine. The WBT text line is driven by Liberty Bick GMC. You can also check out WBT dot com and Carolina Journal dot com for all the news stories that we've been talking about this afternoon, one that I'm really paying attention to. It has been thirty years in the making, but the North Carolina Supreme Court recently voted four to three to end the thirty two year old Leandro school funding case. So this decision throws out a twenty twenty three court order that would have added about six hundred and seventy seven million dollars in state education spending could have led to billions more in court ordered funding. What does all this mean for public education in North Carolina? The expert Mitch Kokai, senior political analyst from the John Locke Foundation, joins us now to fill us in. Good afternoon, Mitch. Good afternoon, Donna, And yeah, this is going to have a significant impact the end of the Leandro case. I think the bottom line is that this lawsuit that's been lurking in the background of state education policy debates for three plus decades now is finally out of commission, and the debate about how much money should go into North Carolina's public schools and what kinds of program should be funded will head back to the legislature and input from the governor, where most people would think it belongs, and will be at least for now, out of the courts. Sure, now, do you see this as the court weighing in on education policy or is this more correcting and over extension that perhaps went too far. Well, I think you could say that you have both pieces at work here. One is that the initial lawsuit, it was filed in nineteen ninety four was fairly straightforward. It was five low wealth school districts, you have the school boards of parents and sub students, all filed suit, and they said that the state's education funding system as it stood at that point, was not providing the school systems, who were the planets in the suit, enough money to meet the state's obligation of providing a proper education to students. And so the first ruling from the state Supreme Court in this case, the Leandro ruling of nineteen ninety seven, basically said that the provisions in the state Constitution dealing with education, if you read them altogether, basically say that students have the opportunity for access to a sound basic education. That's the wording that you hear quite a bit. What the court did not say, which was a blow to the school systems that initially filed suit, it did not say that that meant you had to spend more money. Basically just said there is this constitutional right. And then for the next twenty plus years the debate was really, well, what does that mean? What does that mean when the rubber hits the road, Does it mean particular programs, Does it mean we're spending And we really didn't get a clear answer on that. After twenty seventeen, and this is an important day. After twenty seventeen, this case took on a new turn when the new Cooper administration in Raleigh, along with the plaintiffs in the case and the state Board of Education decided to work together basically to come up with this plan to resolve the Leandro case. The new judge at that time who had been installed, was going along with this, and they came up with this plan developed by a consultant from San Francisco called west Ed and it was an eight year plan that called for a bunch of new education programs, called for a lot of spending. There wasn't a final dollar total because some studies that could have produced even more spending, but even what was in the plan by itself was going to mean five plus billion dollars of additional education spending that wasn't already on the books. That order ended up getting to the State Supreme Court when it was still a four to three Democratic majority, and in November of twenty twenty two, the Supreme Court said, yes, the judge can order this spending and can order state officials to move the money without the General Assembly having any role. Well after the Supreme Court flipped to a Republican majority, the case went back. The Court heard arguments in February of twenty twenty four, and after two years of waiting for ruling from the Supreme Court, we finally got it earlier this month when the Court came out with a four to three ruling and said, this case has gotten way off of the mark of where it originally stood. It's completely transform and we don't have the pleadings the arguments in this case that would allow us as a court to deal with this issue. So basically what we're doing is we're going to in the case and we're going to rule that anything that's happened in this case since twenty seventeen is basically void. So the right to a sound basic education still stands, and basically anything else that the courts have said since that ruling in nineteen ninety seven and up for the next twenty years through twenty seventeen, all of that still stays in place. But anything that's happened in this case basically over the last decade is out. And what that likely means is you're going to have Governor Stein, You're going to have the General Assembly coming up with their education ideas, and it's almost certain that someone will file suit over the way that schools are funded now, but the case will move forward as a more straightforward case of challenging what's happening now, rather than continuing to challenge what was in place thirty years ago, and also not relying on this West edg plan that's now out of date because it was written in twenty eighteen and has never been implemented. Basically, things can go back to the starting line and people can try to make their arguments for or against particular programs, particular funding, and if someone doesn't like it, they can sue, but it would be over what's happening now, rather than challenging today what was happening thirty years ago. Right. You make a really important point that I think a lot of folks didn't realize that this wasn't just about, hey, we want more money for schools. They wanted to fund a very specific plan designed in twenty eighteen. And it is interesting to me and that there's also some discussion that you and I have talked about this is really about who controls the pocketbook, right, This is not the court saying, hey, open the wallet and you hand over the money. This is the constitution. It's the state legislature in charge of these things. So the debate over what we spend on education is a separate issue. This particular case was really about constitutionality, right. There were two key pieces to it. One was the more straightforward one of the courts saying that you're failing to meet the obligations, so you need to spend an x amount of money. Courts have ordered the General Assembly to spend money on other things before, but basically in the past, the courts have said, all right, we're ordering the state to spend money, and then it ends there. Either the General Assembly decides yes, we're going to go along with it, or decides no, we're not going to do it and basically ignores the court. In this case, what made it different and what made it a major constitutional challenge was that the court said, not only are we going to order the money spent, but then we're going to tell these executive branch officials, the head of the budget office, the treasurer, the controller, you have to move this money out of the treasury and toward these projects that we're demanding that be funded without the General Assembly having any role, and that flies completely against everything that the North Carolina courts have ever said in the past about the fact that the General Assembly has complete control over the purse strings. In fact, when that order came out to the Supreme Court in twenty twenty two, it basically overturned what the same court had said two years earlier in a different fight between Roy Cooper and the General Assembly of Federal Grants. In that case, the court had said, no, the General Assembly has complete power over the purse strings, and this time the court had changed its mind. In the last hour, we talked with Andrew Wilford over at the National Taxpayers Union Foundation. He has a study out. You can find it on Carolina Journal dot com and WBT dot com. North Carolina gets one new resident every seven and a half minutes. Crazy to me, but it does feel like every time I'm in the grocery store or going to church, whatever. Everybody's just moved here from New Jersey, Pennsylvania, California, Illinois, whatever. But we're gonna dig deeper on that. People are coming for lower taxes, nice weather, good universities, lots of good tech, and this sort of small town southern charm thing that I think we all have going on here in Raleigh and Charlotte, of course, but also across our state in wonderful communities in between our metro areas. Joining us now to dig deeper on that issue, talk more about it. Jeff Moore, VP of Communications for the John Locke Foundation, but also a dad and a North Carolina native out there, he's making it happen with his family and a big part of North Carolina's community. Jeff, thanks for calling in today. Glad to be with you, Glad. To be on Yeah, No, tell me what you think about this study. You and I have been talking about this. We've been friends for a long time, raising our families here. Do you think is the most important thing in this trend that we're seeing of all these folks moving to North Carolina? How do you think it's shaping us? And why do you think everybody's coming here? Yeah? Well, I can definitely identify with the anecdotes that you shared about all of the growth and population increases that were witnessing across the state. But I think it's a confluence of things that really comes down to whether or not when you're thinking of a family or a career is if you can see a future there and a future scenario that you actually like. A lot of the states that people are leaving to come to North Carolina, they're facing a future that is very uncertain. They've got taxes and regulations going through the roof making life just harder and harder to actually prosper with. And if you're thinking about your family and your schools, the quality of life that you'll enjoy, I think the combination of those things. The low tax is, the regulatory environment that's relatively positive compared to some other states, and then the quality of life here in North Carolina, where we can touch a little bit of everything from the coast to the mountains, kind of pulled together to bring those people in. And with the growing economy, we have a lot of job opportunities out there, and you see a lot of people taking that ticket and coming to North Carolina. Sure, sure, you know it's expensive though, right It's expensive to raise a family, and even here in North Carolina, prices are going up. Affordability, housing, healthcare, childcare. If you had to pick something, and what do you think from a policy perspective that we can do to make it more affordable to live here, to raise your family here, to put down roots. Yeah. Yeah, it seems as if all the critical areas in consideration for your family are those areas that are seeing the most inflatent in the highest cost. I think in North Carolina we have the unfortunate circumstance of being the number one state for expensive health care, and that's an area where I think the regulation is so thick there are the most opportunities for us to actually reform policy wise, to do that certificate of needs top of mind in that area, just basically allowing health care providers to compete against each other and bring prices down and just offer higher and higher access for all the residents moving to this state. So that's the area I would pick, even though it's really tough because childcare is regulated heavily as well. The inflation is very sharp on that and everywhere else too. But I think healthcare probably offers the most opportunity because we're in that unfortunate position of being so expensive. There's a lot more that we can get a lot more bang for our buck, so to speak, with policy reforms. Sure, I mean, you and I are both Sandwich generation. We've got our aging parents and then we're raising children. Do you think that that population shift, as we do get a lot of retirees here in North Carolina, how do you see that impacting our labor market, our ability to high or make sure everyone is trained, even in skilled labor or tech or whatever it is. Yeah, it's tough, and the effect that it will have is actually probably good for the people taking the jobs, and that it'll put some upward pressure on the salaries and wages of workers. Here in North Carolina. We've got more job openings than we have workers, as opposed to the state like California that has less workers than job or I'm sorry it was reversed, but we've got the pressure that would actually put the wages to the upside and the popular the demographic demographic shifts are obviously going to change and shape North Carolina. And what it really looks like. Are we having more and more retirement communities and towns that cater to those retirees. And is that a bad thing If they're bringing in a lifetime of savings that they're prepared to actually spend in their retirement North Carolina, that may be good for everyone else, but you do get concerned. You start getting lopsided in this demographic shift where you've got more and more people over sixty five and less and less people eighteen and under, it starts to get imbalanced. So I think kind of a full look at the regulatory environment here and all of those different factors that feed into making life expensive and prospects uncertain for family formation, business formation, and the rest of it. Those are things that we could attack to actually keep that balance in a positive light. Very interesting. Yeah, here's some of the numbers to go along with exactly what you're saying, Jeff. North Carolina has seventy six workers for every one hundred job openings. I mean, that's got to be good news on salaries. And now you were just saying the state's medium ad medium age is forty sixty five and older is supposed to double by twenty forty and by twenty thirty one, not that far from now, there'll be more people over sixty four in North Carolina than under age eighteen. That puts a lot of extra pressure, certainly on our education system. So we'll be talking more about that, of course. Jeff Moore, VP of Communications for the John Locke Foundation, Thanks so much. For taking time today. I appreciate all your insights. Thank you nice speaking with you. A lot of news happening this week. We're all sort of bracing for the state legislature planning to come back on Tuesday. Today, Hot off the Presses, Senate Leader Phil Berger puts out a column calling for unity ahead of the twenty twenty six legislative session scheduled to get underway on Tuesday. One of the things that he really is pushing in this column. You can find it at WBT dot com and at Carolina Journal dot com. He's asking lawmakers to stay the course, to keep building on years of conservative policy at the General Assembly as they go into twenty twenty six that they've enjoyed since taking control of the state legislature in twenty ten. If you don't know the backstory, if you're new to North Carolina, I know. Here's what happened. Democrats controlled the state legislature for about a century, and then in twenty ten, voters elected a Republican majority for the state legislature, and there was a huge policy shift during that time. During certainly in the recession of two thousand and seven two thousand and eight, there was a we were talking about teacher furloughs. We had tax rates up in the sevens. We were just in a financial crisis here in North Carolina, and we saw a gradual shift over the first few years of Republican leadership. Taxes started coming down, our rainy day fund, which certainly we've tapped into, and hurricanes that has started going up. And that's what Berger is talking about in this column. And I think it's interesting, a bit poignant as he's looking toward perhaps the last few months of serving in the state legislature, certainly as Senate leader this time around. If you aren't aware, Senator Berger did not win his primary election, so he won't be on the ballot there in November, but still leads the state Senate here until December. So what does he want his colleagues to know? He's saying, Look, as we make that shift into twenty twenty seven, The argument is simple. North Carolina's economic success did not happen by accident. It came from discipline. It came from discipline, tax cuts, controlled spending, a pretictable policy environment where businesses can come here and know what they're going to get. The question is, do lawmakers have the stomach to stick with that formula. It's not a new agenda. He's really defending the model that they have built over the last few years. Tax competitiveness, regulatory restraint, fiscal discipline, consistency is the policy. That's what Burger is encouraging among his colleagues as they look toward a new generation they are leading. The General Assembly certainly is going to be key to this. Right So November as a midterm election, Republicans may be you know, a bit on their back, on their heels because historically whichever party is in the White House doesn't do as well in a midterm election, and they may be facing that as they go into November. So this election is called to them. We're seeing a ton of fundraising. Fundraising numbers came out and if you look at just the Senate race, North Carolina's Senate race alone, Democrat governor former Governor Roy Cooper is out raising right now the Republican candidate Michael Wattley, you know, three to one. But is this going to be about money? Probably has a big part of it, certainly, But familiarity. Governor Cooper has high name id. Virtually everybody in North Carolina knows who he was. He was in state elected office for the last forty years. Michael Wattley is a lesser known candidate because it's not run before. He was head of the RNC, the Republican National Committee, head of North Carolina's GOP, so he still has that uphill battle to introduce himself to North Carolinians. Roy Cooper isn't going to have to do that, so you know, we may see him carry some weight as folks go through the elective process for state legislature. So Senate Leader Berger is saying, as we move forward, we need to double down on tax relief as our core economic strategy because lower taxes bring business investment in migration, something we've been talking about all afternoon today. But the next pressure point that I think we're going to see here coming from the legislature, it looks like, is property taxes. There was a committee hearing this week that said, Okay, we are interested in supporting the idea of a constitutional amendment to go on that November ballot that would put a levy limit on how much growth local communities could see in their taxes, so it doesn't cut local property taxes, doesn't force a cut among these local and county governments, but it does say you're only allowed to grow by a certain amount of formula. So we've got like more than seventy percent we've pulled this idea, and more than seventy percent of North Carolinias are in favor of a constitutional amendment that would cap the growth of property taxes. And I think a lot of this is because, hey, it was April fifteenth, just a couple of days ago, and we are seeing a little bit lighter in the wallet, and so we're paying more and more attention to our property taxes. What does government doing with our money? All of these things are becoming more and more important. And can those lawmakers Democrat, Republican, can they make the case when they go home to their constituents and saying, yes, we're doing a good job, we know where your money is going, we know how we're spending it, We're spending in a smart way. They're going to have to be able to make that argument going home. Property tax could be one of those things that they could take home if they decide it's going to be on the ballot, and then that'll bring out their candidates, make sure they turn out in November We're going to be following all of that as this particular piece of legislation moves through the state legislature. But you know, they're going to have to find some kumbai ya, you know, across the aisle a little bit. This intra party disagreement on spending is something that pops up every single time. You saw that. Governor Stein was out on the road this week calling for way higher spending what he calls a critical needs budget. Keep in mind, at North Carolina, the governor does not set the budget. The state legislature sets the budget, but he does have kind of a wish list that he puts out in Cooper and then now Stein. It's much much higher than the fiscal discipline that Phil Berger is talking about. So he's been out on the road saying we need to spend more, spend more, spend more. And will lawmakers be able to hold the line on this. That's something that we're going to be watching. It'll be really the big battle. It's not really about ideology. This is about how fast should government grow, should it grow at all? How much dild it be spending? And we have to pay attention because we have crises here in North Carolina, we have something called hurricane So we end up spending a lot of money when those things happen. So it's not about whether to grow. We're going to grow. We've been talking about folks coming in. It's how much and whether that growth will undermine the tax advantage. That strategy, that economic strategy that got our state here, and that's what Burger is talking about in the state policies. State can't control inflation, we're seeing increases all the time and housing costs, certainly in healthcare costs, but we can control our tax structure and that's something that we need to think about as we go into a tax policy is one of those few tools that states have to offset those higher costs. And from a free market perspective, we need to talk more about policy when it comes to things like energy and healthcare. North Carolina is one of the most expensive places in the country to be sick, and that is something that we are dealing with every single day, particularly as our population ages. By twenty thirty one. If you've been with us for a little bit here, you heard us talking to Jeff Moore twenty thirty one, we're supposed to have more people over sixty five than under eighteen, and that's something to think about. With our healthcare costs, we have things like our Certificate of Need policy, all of those things. They're critically important as we go into an aging population and what happens with those folks and how they're going to get the healthcare and be able to afford it. All right, that'll do it for this episode. Thank you so much for listening. I could not do the show without your support and the support of the businesses that advertise on the podcast, so if you'd like, please support them too and tell them you heard it here. You can also become a patron at my Patreon page or go to dpetecleanershow dot com. Again, thank you so much for listening, and don't break anything while I'm gone.