Rep. Stam’s 2009-2010 Bills

The 2010 “short session” of the NC General Assembly is winding down with plenty of unfinished business. The Democratic leadership has refused to allow consideration of a number of important bills, primarily sponsored by Republicans.

Recent public opinion polls emphatically indicate North Carolina citizens resoundingly support these Republican initiatives. However, they have been refused a fair hearing in the legislature.

The most important business in the 2010 session has been to complete the budget. Fiscally responsible Republican amendments were either ignored or, if approved during floor consideration, summarily dropped during the budget conference committee deliberations.

Important work left undone this session:

Responsible budgeting decisions – Critical questions remain about the budget adopted last month for the upcoming fiscal year. It remains to be seen whether the budget is balanced as required by the NC Constitution. However, there is no doubt that the refusal of Democrats to make tough decisions in this year’s budget will bring state government to a severe crisis next year. Estimates are that next year’s structural budget deficit will exceed $3 billion. Adopting zero-based budgeting and pursuing thoughtful spending priorities this year would have lessened the pain we all know is coming next year.

Jobs, Jobs, Jobs – The Democratic proposals for job creation are anemic and will do little. We need regulatory relief as well as a reduction in the marginal tax rates so that small businesses will have an incentive to create jobs.

Health Care Freedom – Consideration of a bill to protect the freedom for North Carolina citizens to choose health care and health insurance. Senate and House Republicans requested action on a bill to allow individuals to continue to make their own health care choices and forgo federal mandates under the recently adopted federal health care legislation.

Executive oversight for state employee’s health care plan – Republicans attempted to provide accountability for the fiscal stability of the state health care plan by placing its responsibility in the Executive Branch. This proposal was thwarted by the Democrats.

Eliminate cap on Public Charter Schools – State law caps the number of public charter schools at 100. Demands for these innovative educational options continue to increase. This limitation severely hampers state efforts for federal “Race to the Top” funds. Even so, Democrats still refuse to raise or eliminate the cap.

Marriage Amendment – Consideration was not allowed for a constitutional amendment to provide that marriage in NC is between one man and one woman.

Tax Fairness in Education — A bill to allow parents in North Carolina to choose which school is best for their child. It allows an individual income tax credit for part of the expense of each eligible child who is educated in a nonpublic school or home school. The House used a procedural issue to avoid having a vote on this important issue. The fiscal note shows savings to the state and counties of $50 million per year.

Prohibit illegal immigrants to attend NC Community Colleges – A bill to disapprove the regulatory change by the NC Community College Board to allow undocumented aliens to attend degree programs at community colleges was not allowed to be considered.

“We have a few days left in the session with a lot of business left undone. If Democrats refuse to take care of business the people are entitled to a new governing majority in January,” said House Republican Leader Paul Stam (R-Wake).”

Senate Republican Leader Phil Berger (R-Rockingham) said, “Unfortunately, this legislative session will be remembered as one where there was a complete failure to deal with the fiscal problems facing our state. That failure means that our people will continue to struggle with double digit unemployment and a tax burden that renders North Carolina unable to compete with our neighboring states for jobs. North Carolina’s Democratic leaders have compounded growing health care problems by siding with the Obama administration and national Democrats rather than standing up for citizens in connection with federal health care mandates.”

Democrats Reject “Tax Fairness in Education” Amendment

June 8th, 2010 by Skip

On Thursday, June 3, 2010, the North Carolina House rejected, by a vote of 51 to 65, a procedural motion to allow the House to consider the education expense credit described below. Democratic leaders urged their colleagues to reject this annual savings to state and local government of $51 million. The parents of an estimated 11,521 students were thereby effectively prevented from choosing the best school for their child. Two days earlier the House Finance Committee rejected this proposal 13-16. The floor amendment incorporated the provisions of HB 1988.

HB 1988, “Tax Fairness in Education” is a bill to allow parents in North Carolina to choose which school is best for their child. It allows an individual income tax credit for part of the expense of each eligible child who is educated in a nonpublic school or home school. The bill would go into effect in January of 2011.

Who is eligible? Enrollment is limited to taxpayers whose NC taxable income is less than $100,000 (married, filing jointly). $80,000 (head of household), $60,000 (single) or $50,000 (married, filing separately). The student must have been enrolled in public school the previous year (i.e. Fall Semester then Spring Semester or Spring Semester then Fall Semester) and the student must be under the age of 18.

An individual tax credit would cost taxpayers of North Carolina $2,500 per student per year. A typical child in the public school system costs taxpayers approximately $6,935. The savings are obvious.

A report on the fiscal impact of HB 1988 was prepared by the non-partisan Fiscal Research Division of the North Carolina General Assembly. The note states that the passage of this bill would result in $51 million dollars in annual savings for the year 2011-2012 and subsequent years. Using the middle range estimates, about 11,500 students will be provided alternative education through these tax credits. The public school system will be able to save time, energy and resources – resulting in more money to spend on fewer public school students.

Allowing tax credits for children who attend private schools or home schools will provide a small reprieve for those children whose circumstances have drawn them away from the public school education to which they are entitled. This amendment would open the door for parents to explore educational opportunities available to their children and select the choice that best fits the needs of their family.

House Republican Budget Amendments Adopted

June 8th, 2010 by Skip

The North Carolina House of Representatives on Thursday adopted four significant amendments to SB 897, the 2010-2011 budget bill. These amendments, offered by Republican legislators, will eliminate unnecessary end-of-grade tests and provide funding to teachers for classroom supplies, prohibit the paying of “golden parachutes” to state employees who are terminated or leave their jobs; forbid the practice of allowing in-state tuition for out of state students, and allow funds from the NC Lottery to be distributed equally to charter and traditional public schools.

Rep. Bryan Holloway (R-Stokes), a former high school teacher, offered the amendment to eliminate EOG tests in U.S. history, civics, economics and physical science. These are not required by No Child Left Behind. The $2 million currently spent to administer these tests would be used to provide classroom supplies that had been reduced in previous state budgets. In many cases teachers have been forced to purchase these supplies with their own money.

“The House correctly decided to eliminate ineffective tests that do not measure student accountability. This amendment will use this money in the classroom to truly benefit children,” said Rep. Holloway. “This is a large step in moving toward the much needed reforms our state needs in education.”

Rep. George Cleveland (R-Onslow) successfully sponsored an amendment to require Morehead – Cain and Park scholarships for nonresident and foreign students in the UNC system to be paid at out-of-state tuition rates. Currently, these scholarships are allowed to be paid at the in-state tuition rate. Rep. Cleveland’s amendment will save taxpayers $6 million annually. The foundations have ample assets to pay for these students.

“The citizens of North Carolina won today,” said Rep. Cleveland. “No longer will they be subsidizing out of state and foreign students to the tune of $6 million. This money will now fund a proven program, Career Technical Education, which has a graduation rate exceeding 90 percent in our high schools.”

A third amendment, offered by Rep. Hugh Blackwell (R-Burke), will limit transition payments or “golden parachutes” for state (mainly university) employees. This amendment will stop the practice of maintaining the salaries of separated state and university employees. This so-called university “standard” was revealed last year in the cases of former NCSU chancellor James Oblinger and Provost Larry Neilsen, and former NC A & T Chancellor Stanley Battle who all received lucrative taxpayer financed deals upon their resignations.

“We cannot support paying public employees for work they are no longer doing,” said Rep. Blackwell. “It is time to stop this irresponsible practice.”

Rep. Paul Stam (R-Wake) was also successful in offering an amendment to strike a special provision in the budget bill which would have prevented classroom teacher funds from the NC Lottery to be distributed to charter schools. The effect of this amendment would provide approximately $5.3 million in additional funding to public charter schools.

These Republican supported initiatives, if retained in the legislation by the Senate-House conference committee, will help provide fiscal responsibility to the budget package.

Ethics Reform Bills Should be Heard Immediately

June 2nd, 2010 by Skip

Time To Act On Ethics Issues

Raleigh, N.C. – Since May 19, 2009, three ethics bills (H944, H961, H1136) passed with broad bipartisan support by the House have been sitting in the Senate Judiciary I Committee chaired by Democratic leader Martin Nesbitt. None have been scheduled for committee consideration. H944 requires disclosure of campaign contribution activity by those appointed to critical positions in state government. H961 is aimed at prohibiting conflicts of interest involving political contributions by important state contractors. H1136 would prevent certain employees of the executive branch from registering as lobbyists for six months after leaving employment with the state.

House Republican Leader Paul Stam (R-Wake) said, “Senate Democrats have had a year to consider these common sense measures. It is now time to act.”

In addition, three bills filed by Senator R.C. Soles (D-Brunswick) have drawn criticism from supporters of ethics reform and even from Brunswick County Democrats. (“Brunswick Dems urge R.C. Soles Jr. to withdraw controversial bills,” Cape Fear Watchdog$, 5/28/10) S1341 is a bill that would change the pension eligibility for judicial branch employees who retire after their 62nd birthday with 20 years or more of creditable service. The bill appears designed to benefit Rex Gore, Brunswick County’s District Attorney and a longtime Soles ally, who recently lost his re-election primary. S1340 and S1408 would split the judicial district in Brunswick, Bladen, and Columbus counties.

Senate Republican Leader Phil Berger (R-Rockingham) said, “These bills exemplify precisely the type of self-serving legislation that erodes public confidence in government and elected officials. If Democratic state leaders are truly interested in strengthening ethics in state government, they must make it clear that they will do everything possible to stop these bills from becoming law.”

Anemic Proposals by Democrats Won’t Solve Unemployment

May 26th, 2010 by Skip

HOUSE AND SENATE REPUBLICANS SUPPORT TAX RELIEF

Raleigh – Senate and House Democrats have hyped their recent proposals to create jobs in North Carolina. These proposals leave much to be desired. None of them address the high rates of taxation which is the main problem. These initiatives are clearly designed more for cover than for real job creation.

We received a measure of good news this past week. The unemployment rate in North Carolina receded to a 12-month low of 10.8 percent in April, down from 11.1 percent in March and a record high of 11.2 percent in February. But this good news was overshadowed by the details. With a 7,500 net gain in jobs, 6,000 of the gain was in government employment!!! Is that where they are leading us?

It is the private sector which actually creates productive jobs. Republicans have consistently urged the reduction of marginal tax rates as the way to invigorate employment and bolster our economy. Democrats are focused on the preservation of government jobs.

Unfortunately, recent proposals by Democrats in the General Assembly do not reduce tax rates. Rather, they provide a superficial, expensive approach that will result in few new employment opportunities in our state.

Section 31.2 (a) of SB 897, (the Senate Democrats’ budget bill) caps the individual income tax rate on net business income from a small business at 6.9%, the same rate imposed on corporations. But, if they are operating as a “C” corporation, they are effectively paying a rate of 14.65 percent tax which is the income tax plus the rate paid on dividends. And, this section defines a small business as one whose annual gross receipts do not exceed $850,000. This definition effectively excludes many small employers. A builder who sells 5 houses would not qualify. The criteria should be income, not receipts.

House Democrats introduced H 1721, H.E.L.P. Small Business Act. While some of the provisions are helpful, none will be significant factors in job creation.

A partial analysis of H 1721:

Section 1.1 – INCREASE TAX BENEFITS FOR SMALL BUSINESS EQUIPMENT PURCHASES

State tax break for small business equipment purchases

Analysis: Section 1.1 is referring to the enhanced Section 179 expensing, which allows small businesses to expense equipment in the year it’s purchased rather than over several years. In 2008, Congress increased the amount that can be expensed from $125,000 to $250,000 and added a 50% bonus depreciation for qualifying equipment exceeding the $250,000 limit.

This provision extends the higher limit and bonus depreciation for another year and will help (or more accurately – will keep from slowing) economic recovery.

Section 1.2 – INCREASE TAX BENEFITS FOR INVESTMENTS IN SMALL BUSINESSES

The total tax credit allowed is $8 million (raised from $7.5 million). But if it is oversubscribed, the Secretary reduces everyone’s credit pro rata. That means an employer could hire and invest without knowing until the end of the year what the credit is worth.

Analysis: A recent Congressional Budget Office (CBO) report discussed the relative ineffectiveness of tax credits targeted to small businesses compared to a tax cut that applied to businesses of all sizes.

“Moreover, small firms that do expand have proportionally higher average payroll growth than large firms that expand, so a larger fraction of the tax cut would fund payroll growth that would have occurred anyway. Consequently, CBO concludes, restricting eligibility to small firms would decrease the employment effect per dollar of budgetary cost.”

Section 1.4 – TAX BENEFITS FOR SMALL BUSINESSES THAT PROVIDE HEALTH INSURANCE

Small Business Health Insurance Credit – provides a credit of $250 per employee to businesses that provide health insurance to employees making less than $45,000. Applies to businesses with fewer than 25 employees. The credit was previously enacted and expired this year.

Analysis: This credit is too small to make any difference in job creation. $250 per employee will barely cover one month’s insurance premium for even one young, healthy person. This section may be a good idea – but is irrelevant to the job crisis.

Section 1.5 Tax Benefits for Putting People Back to Work

$1,000 tax credit available to small businesses that create a new, full-time job. The rebates would go to businesses with 25 or fewer employees at the beginning of the taxable year. The rebate will be in the amount of $1,000 per eligible employee who is hired and stays at the company for at least 3 years.

Analysis: The CBO report estimates that the federal proposal of reducing payroll taxes for firms that hire new workers would add between 8 to 18 full-time-equivalent jobs over two years per million dollars of tax credits – about $80,000 per job created.

Tax credits for new hires cost a lot of money with little measurable results.

The CBO report says that such tax credits are less effective than a broad-based approach would be. In other words, limiting the tax credit only to “small businesses” (however defined) would have less job impact than a tax cut that applied to businesses of all sizes.

Other organizations have similar doubts:

The National Federation of Independent Businesses is “skeptical” about these types of tax credits to create many jobs.

“If this proposal turns out to be a tax credit based on new hires, we’re doubtful this type of credit will produce many new jobs.”

“We’re skeptical that it’s going to be a big job creator,” said Bill Rys, tax counsel for the National Federation of Independent Business. “There’s certainly nothing wrong with giving a tax break to a business that’s hired a new worker, especially in these tough times. But in terms of being an incentive to hire a lot of workers, we’re skeptical.”3

Moody’s was also skeptical, saying:

“A lot of it is just confidence,” said Gus Faucher, the director of macroeconomics at Moody’s Economy.com. The tax credit, he said, “may help a bit around the margins, but small businesses need to be convinced that the expansion is going to keep going. I’m not sure the tax credit is going to be that useful into getting them to hire unless they’re convinced that the demand is going to be there.”

Employers look to hire the most qualified candidate who will create the most value for their firm; regardless of how long they have been unemployed. A small rebate is unlikely to change hiring decisions.

Republicans in the House and Senate support initiatives that would provide new vitality to North Carolina’s economy and real job creation based on sound economic principles:

Reduce the marginal rates of taxation. NC has the highest income tax rate in the region, both personal and corporate.

NC businesses need significant regulatory relief.

Rep. John Blust (R-Guilford) introduced an amendment to H1721 in the Finance Committee this morning which would require: “The tax rate imposed on the net business income of a taxpayer may not exceed five percent (5%). For purposes of this subsection, the term business income does not include income that is considered passive income under the Code.” The Blust amendment was rejected on a partisan vote with all Democrats voting against its adoption and all Republicans voting in favor.

Senate Republican Leader Phil Berger (R-Rockingham) said, “The Senate budget does little to aid the job creation efforts of small businesses. Democrats will not abandon their habitual spending hikes and their added spending means we cannot have the kind of broad-based tax relief we need for the economy to get back on the right track.”

Is Gov. Perdue Playing Politics with Ethics Reform?

April 6th, 2010 by Skip

On Monday, Governor Perdue announced a set of legislative proposals and proposed executive orders aimed at reforming the ethical requirements for state government employees, elected officials and appointees to state boards and commissions. Perdue’s ethics reform package comes amidst an ongoing investigation into former Democrat Gov. Mike Easley and Ruffin Poole, a former aide to Gov. Easley, who has been indicted on corruption charges. Perdue has also been criticized for the failure of her campaign to report 17 private flights and $48,000.00 in questionable donations.

In a Press Release entitled, “State Ethics Reform Necessary” dated November 16, 2009; I stated that the North Carolina House unanimously passed bipartisan ethics reform legislation in May of 2009. My press release can be found under Issues – Government Corruption. The press release states:

“During the 2009 Session I was a primary co-sponsor of three bipartisan bills aimed at reforming our State ethics laws. House Bill 944, “Disclosure by Appointees,” sponsored by Reps. Glazier (D-Cumberland), Ross (D-Wake), Stam (R-Wake) and Tillis (R-Mecklenburg), requires disclosure of campaign contribution activity by those appointed to critical positions in state government. House Bill 961, “Pay to Play Regulation” was co-sponsored by Reps. Glazier, Stam, Ross and Goodwin (D-Richmond). This legislation is aimed at preventing conflicts of interest involving political contributions by critical state contractors. House Bill 1136, “Executive Branch Revolving Door,” sponsored by Reps. Ross and Stam, would prohibit certain Executive Branch employees from registering as lobbyists for six months after leaving employment with the State.

All three bills passed the House of Representatives with almost unanimous approval. HB 944 was received by the Senate on May 7, 2009. HB 961 and HB 1136 were received by the Senate on May 14, 2009. However, not one of these bills was considered by the Senate prior to adjournment last August. Recent allegations involving former Governor Mike Easley and Mary Easley, as well as other top Democratic officials, indicate the critical need for ethics law reform.

These bills will be pending in the Senate when the legislature reconvenes next May. I call upon the Senate leadership to make their consideration a priority.”

It seems that if Gov. Perdue were serious about ethics reform, then she would have inspired Senate Democrats to pass the bipartisan legislation aimed at accomplishing the same ethics reform she now seeks while in the midst of her own campaign finance woes.

Rand’s “Technical Correction” Anything But

February 15th, 2010 by Skip

Raleigh – The News and Observer today reported that former Democratic Senate Majority Leader Tony Rand (D-Cumberland) worked in secret to enact a law resulting in enormous increases in medical care costs for NC prison inmates. Rand used a technical corrections bill to strip an essential cost cutting provision from last year’s budget. According to the report, “Rand kept inmate medical costs high,” (2/12/10) , Rand’s involvement in the “technical corrections bill” negated a provision in the previously passed budget initiated by the NC Department of Correction that would have limited medical costs for inmates to the same level as the State Health Plan. DOC spending for inmate medical care has increased over $38 million during the previous decade, according to the N&O.

The effort to inflate medical costs for inmates was carefully hidden kept during debate on HB 836, “An Act to Make Technical, Clarifying, and Other Modifications to the Appropriations Act of 2009.” In fact, an explanation of the bill by House Appropriations Committee Chair, Rep. Mickey Michaux, described Section 15A, providing Rand’s language, as merely “technical” during House floor debate. (For Transcript see below.) Rep. Michaux should take this up with former Senator Rand and his staff.

“North Carolina taxpayers have every right to be incensed by this irresponsible action of the Democratic leadership in the legislature. The current budget raised our citizens’ tax burden by almost $1 billion by claiming the deficit was much wider than the facts indicated. Now we see further examples of outright waste,” said House Republican Leader Paul Stam (R-Wake). “It is past time for our citizens to demand accountability from those who have mismanaged our state’s finances for too long.”

***For those interested in the fine details, click here to view the NC Auditor’s Report.

——————————————————————————————————————————————————————————————————————————————–
NC House of Representatives
August 10, 2009

Debate on HB 836 – “Modify Appropriations Act”

Speaker Hackney: “The gentleman from Durham, Rep. Michaux, is recognized to explain the Senate committee substitute.”

Rep. Michaux: “Thank you, Mr. Speaker. Ladies and Gentlemen of the House, this is the usual technical corrections bill to the Appropriations Act and I’ve got about three pages of explanation, but I’ll try to be very brief for you…”

“…14A is basically technical. 15A is technical. 16 extends the period that the Department of Corrections must operate the….”

“…I’d be happy to answer any questions. I urge you to adopt the conference report.”

Speaker Hackney: “For what purpose does the gentleman from Guilford, Rep. Blust arise?”

Rep. Blust: “To see if Rep. Michaux will yield for a question.”

Speaker Hackney: “Does the gentleman from Durham yield?”

Rep. Michaux: “Yes.”

Speaker Hackney: “He yields.”

Rep. Blust: “Rep. Michaux, this bill was first published, Senate Bill 202 that this bill modifies…The conference report was first published over the internet at about eleven thirty or twelve last Monday. It was delivered to our offices Tuesday morning at nine thirty in hard copy. We passed it Wednesday. And now just five days later we’re coming back with 21 or 15 pages of modifications. Might it be reasonable next time to slow this process down so that we don’t have to turn around in five days and modify something that we rushed through?”

Rep. Michaux: “Well, Rep. Blust, the only thing I can tell you is that you can slow it down as much as you want to. Mistakes are going to be made, corrections have to be made, adjustments have to be made. And you can’t…I don’t care how much you slow it down, that’s going to happen.”

Speaker Hackney: “For what purpose does the gentleman from Wake, Rep. Stam, arise?”

Rep. Stam: “To ask Representative Michaux two questions.”

Speaker Hackney: “Does the gentleman yield?”

Rep. Michaux: “Yes, sir.”

Speaker Hackney: “He yields.”

Rep. Stam: “Representative Michaux, does this bill appropriate net additional more money than the bill it modifies?”

Rep. Michaux: “No sir.”

Rep. Stam: “Second question?”

Speaker Hackney: “Does the gentleman yield again?”

Rep. Michaux: “Yes sir.”

Rep. Stam: “Representative Michaux, does this bill impose additional taxes more than Senate Bill 202?”

Rep. Michaux: “No sir.”

Rep. Stam: “Thank you, Mr. Speaker.”

* * *

Speaker Hackney: “For what purpose does the gentleman from Caldwell, Rep. Starnes arise?”

Rep. Starnes: “Will the gentleman yield for a question?”

Speaker Hackney: “Will the gentleman yield?”

Rep. Michaux: “Yes sir.”

Speaker Hackney: “He yields.”

Rep. Starnes: “I just…Thank you Rep. Michaux. I’m just trying to understand the overall fiscal impact of this. I know you said it didn’t raise any taxes. But does it in…Is it basically revenue neutral? Does it raise any….?”

Rep. Michaux: “What it does is it makes, where you see some changes in there where you have moved…You move money from one part to another. It changes…It will change what you see in the availability section. It changes where it comes from and where it goes but it doesn’t change the amount.”

Actual audio of this debate can be found at this link on the General Assembly website.

Audio Sections:

– Reading of the bill: 01:05:26

– Rep. Michaux’s explanation of Section 15A: 01:08:53

– Rep. Blust’s question: 01:10:43

– Rep. Stam’s questions: 01:11:52

– Rep. Starnes’ question: 01:15:22

NC Republicans to Fight a Fed Takeover of Health Care

January 19th, 2010 by Skip

“Republicans will not stand idly by and watch as citizens’ rights to make their own health care decisions are taken from them by the federal government.”

– Senate Republican Leader Phil Berger (R-Rockingham)

Raleigh, N.C. — The Republican leaders of the State Senate and House were joined by the Chairman of the North Carolina Republican Party today promising to fight the federal takeover of health care and protect an individual’s right to make decisions about their own health coverage. The Republican leadership promised a legislative initiative called the Health Care Protection Act (HCPA).

“Republicans will not stand idly by and watch citizens’ rights to make their own health care decisions are taken from them by the federal government,” said Senate Republican Leader Phil Berger, “The people of North Carolina are overwhelmingly opposed to this blatant abuse of power. We are proud to be their legislative voice by putting forth this common sense initiative.”

House Republican Leader Paul Stam (R-Wake) said the initiative should be supported by Democrats and Republicans alike. “This should not be about partisan politics; it should be about the individual freedom of our citizens.” Stam noted that either a general statue or a constitutional amendment will be presented during the short session in May. If the Democratic majority blocks the initiative, it will be submitted again the first week of next year’s session, when he believes Republicans will hold a majority.

NCGOP Chairman Tom Fetzer noted that the topic of a federal takeover of health care is among the first issues citizens bring up as he travels throughout North Carolina. He is proud of the Republican legislative leadership for taking a stand for the people. “This is just another example of the positive leadership that will be provided by a Republican-led legislature,” Fetzer said, “This is an example of public servants who are tuned-in to the voice of the people.”

Time for Democrats to Lead or Follow

January 14th, 2010 by Skip

Raleigh – The Joint Interim House and Senate Finance Committee on Tax Reform has now met four times since November 3. Unfortunately, there has been little progress reforming North Carolina’s revenue structure. It is time for an accounting.

After participating in the first three meetings House and Senate Republicans released their “Proposed Principles for Job Creation through Tax and Spending Reform”. These thoughtful proposals outline how North Carolina can achieve a more equitable tax structure while providing an economic environment to foster business growth and job creation. So far no response has been received from the Democrats, either to the proposals as a whole or to any of the separately stated principles.

“It’s past time for the Democrats to lead or follow in reforming North Carolina’s tax laws,” said House Republican Leader Paul Stam (R-Wake).
Tax
The Republican members of the Joint Interim House and Senate Finance Committee on Tax Reform continue work on this project. However, it is time for our colleagues in the majority to indicate whether they intend to offer a proposal and, if so, what it is.

Senate Republican Leader Phil Berger (R-Rockingham) said, “This process resembles the approach of Democratic leadership at the national level. It leaves the people in the dark and does nothing to address, much less solve, the problems currently facing our state.”

A recent report quotes both the Speaker of the House and House Finance Committee Chair Paul Luebke that they expect no action on tax reform until after the next election. Why? We have seen no proposal from Senate Democrats. We have seen no proposal from House Democrats. What proposal have they rejected?

Revenues are expected to be less than projected in the current budget. Our citizens continue to suffer unprecedented unemployment levels exceeding 10 percent. Tax reform and job creation are needed now. Each committee meeting costs the taxpayers thousands of dollars in staff time for preparation, as well as travel and per diem for the members.

North Carolinians continue to await a response to our tax reform proposals.

Rep. Stam Wins “Sunshine Award”

January 7th, 2010 by Skip

Democracy North Carolina awarded 32 North Carolina State Legislators with their annual “Sunshine Award” which is presented to legislators who emphasize openness and accountability in state government. For more information click here to read Democracy North Carolina’s press release: http://www.democracy-nc.org/reports/researchreports/2009/SunshineAwardsPR.pdf

Principles for Job Creation

December 11th, 2009 by Skip

Proposed Principles for Job Creation through Tax and Spending Reform

Raleigh – The Interim Joint Finance Committee convenes today to continue its consideration of proposals to reform North Carolina’s tax structure. Republican members of the House and Senate Finance Committees released their outline for tax reform proposals to provide renewed vitality to job creation.

The concept of substantially reducing personal and corporate income tax rates and sales tax rates is good. If that reduction is accomplished by broadening the base in a revenue neutral way, that is the right way to go. But it raises four major issues.

Neither the public nor Republicans trust Democrats to keep the rates low. There must be a mechanism to ensure this. Two possibilities:

a) A Constitutional amendment limiting the state sales tax rate at 3% + and the county sales tax rate to an equivalent. The Constitution currently specifies a 10% limit on tax on net income.

b) A Statute that sets out as a Rule of Order, applicable to each House, that an increase in the rate must be separately passed by both Houses and signed by the Governor, and cannot be combined with any other matter unless by a 2/3 vote of each House.

The base widening must delete the exemptions and refunds which are in current law for political reasons/not because of true economic considerations.

Tax Reform must include spending reform that has passed the House in the past – zero based budgeting, and must include:

a) Procedural reforms must allow “off budget” sources of revenue to be considered as part of the budget process.

b) The minority party is entitled to proportionate representation on the Budget Conference Committee.

c) The Governor’s proposed budget must only include the amount of revenue collected in the prior year (with a recession exception).

In determining what is “revenue neutral” the temporary taxes imposed in 2009 shall be treated as if they had expired.

We should also look at other reforms that take advantage on behalf of our citizens as federal taxpayers of federal deductibility issues. This could save our citizens $1 billion a year in federal income taxes.

Stam Amendment Could Have Helped Tax Payers

December 11th, 2009 by Skip

Dell Incentives Repayment Could Have Been Assured By Stam Amendment

Raleigh – Representative Paul Stam (R-Wake) offered an amendment to the 2004 legislation which authorized a massive tax incentives package for Dell, Inc. This amendment would have removed any ambiguity about repayment, with interest, of all incentives paid to the computer manufacturing firm. The amendment failed when legislative leaders claimed that any amendment would drive Dell to Virginia. Dell Inc. announced on October 7, 2009, that it was closing its Forsyth County plant and laying off at least 900 workers after receiving millions of dollars in state and local tax credits and grants as enticements for locating its plant in North Carolina.

In a special session in November 2004, the NC General Assembly passed legislation specifically targeted for Dell, to provide millions of dollars in incentives to the computer manufacturer. Most, but not all of the grants had strings attached which required repayment if the company violated terms of the agreement to create jobs and meeting other criteria.

Rep. Stam’s amendment to Senate Bill 2 “Computer Manufacturing Tax Incentives” is as follows:

“Expiration and Forfeiture – If the taxpayer fails to attain an increased employment level of at least 1, 200, either directly or indirectly or in conjunction with its strategic partners and related entities, within five years after beginning construction of the facility with respect to which a credit is claimed, the taxpayer may not take any further credits under this Article with respect to that facility and forfeits any credits allowed under this Article with respect to that facility.

A taxpayer that forfeits a credit under this Article is liable for all past taxes avoided as a result of the credit plus interest at the rate established under G.S. 105-241.1(i), computed from the date the taxes would have been due if the credit had not been allowed. To secure a forfeited credit under this section, the taxpayer shall grant (1) a deed of trust on the interest in real property of the recipient business and (2) a security interest in the equipment and inventory of the recipient business to the State. The priority of the deed of trust may be subordinated by the State through the Department of Commerce to financing for the acquisition of real property and the construction of improvements, financing for operating capital and the refinancing of these obligations.”

The past taxes and interest are due 30 days after the date the credit is forfeited; a taxpayer that fails to pay the past taxes and interest by the due date is subject to the penalties provided in G.S. 105-236.” (emphasis added)

Recent statements by Dell officials indicate they believe it qualified for previous credits and is not liable for repayment. They maintain that credits cannot be taken away retroactively. Stam’s amendment would have required all credits to be refunded to the state with interest.

“Dell Balks at Tax Credits”, Winston-Salem Journal, Dec. 08, 2009:

http://www2.journalnow.com/content/2009/dec/05/dell-balks-at-tax-credits/news-ncpolitics/

State Ethics Reform Necessary

November 8th, 2009 by Skip

NC Senate Fails to Consider Important Ethics Legislation

During the 2009 Session I was a primary co-sponsor of three bipartisan bills aimed at reforming our State ethics laws. House Bill 944, “Disclosure by Appointees,” sponsored by Reps. Glazier (D-Cumberland), Ross (D-Wake), Stam (R-Wake) and Tillis (R-Mecklenburg), requires disclosure of campaign contribution activity by those appointed to critical positions in state government. House Bill 961, “Pay to Play Regulation” was co-sponsored by Reps. Glazier, Stam, Ross and Goodwin (D-Richmond). This legislation is aimed at preventing conflicts of interest involving political contributions by critical state contractors. House Bill 1136, “Executive Branch Revolving Door,” sponsored by Reps. Ross and Stam, would prohibit certain Executive Branch employees from registering as lobbyists for six months after leaving employment with the State.

These bills will be pending in the Senate when the legislature reconvenes next May. I call upon the Senate leadership to make their consideration a priority.

Exaggerated Budget Deficit Exposed

September 25th, 2009 by Skip

How The Democrats Raised Your Taxes Just Because They Could

Raleigh – A recent report by the State Controller provided an accounting for the total spending by North Carolina for the 2008-2009 fiscal years. In a surprising revelation, the “gap” between the expenditures last year and the anticipated revenues for this year, without tax increases, was only $338 million. This is in stark contrast to the Democrats’ constant assertion of a budget hole exceeding $4.5 billion for the current fiscal year. Democrats increased taxes almost $1 billion to cover their exaggerated imaginary shortfall.

During the run-up to proposing a new state budget, the Democratic leadership issued warnings to teachers, mental health providers, state employees and other receptive groups that without massive tax increases essential jobs and programs would be slashed (“NC House Eyes Stark Spending Cuts”, N&O June 4, 2009). As recently as July, the News and Observer reported, “Revenue next year is expected to be more than $4 billion below what it would have taken to keep funding programs and services at recent levels, and Democrats have described the deficit as $4.5 billion or more.” (“The New Plan: More Taxes For All”, N&O July 22, 2009)

The State Controller reported 2008-09 total expenditures, including federal stimulus funds of $19,652,500,000. According to the official General Assembly estimate, revenues for the upcoming year would have been $17,916,564,000 (without the tax increase) with an additional $1,397,863,857 in federal stimulus money for a total spending availability in 2009-10 of $19,314,427,857. This leaves a difference or “gap” of $338,072,142. Taxes were increased by Governor Perdue and the Democrats a total of $990 million. This will provide $652 million more revenue than required to spend the same as during the previous year.

The recently adopted Democrat crafted budget anticipates spending $20,412,796,056 in the upcoming year for a robust 3.867 percent increase over the $19,652,500,000 in 2008-09 (see page 3 of 15 in the report).

“In previous public statements and during floor debate, I presented to the House statistical information that the real gap between expenditures in 2008-2009 and planned spending for 2009-2010 was ultimately $1,008,727,709 (counting stimulus money) or $953,320,558 (not counting stimulus money),” said House Republican Leader Rep. Paul Stam (R-Wake). “Now that accurate numbers have been ascertained from the Office of the State Controller and the General Assembly’s Fiscal Research Division, we now know the real gap was only $338 million. This is far less than the $4.2, $4.4, $4.7 billion gap consistently proclaimed by Gov. Perdue and the Democrats allies. Clearly, we could have balanced the budget without any tax rate increases simply by continuing the level of spending that had been in effect since approximately January 2009.”

###

“The Gap”

Counting Stimulus Money

State expenditures 2008 – 2009: $19,652,500,000*

Availability for spending without raising taxes and fees for 2009 – 2010: – $17,916,564,000**

Federal Stimulus – ARRA Funds for 2009 – 2010: – $1,397,863,857***

Total 2009-10 Spending – $20,412,796,056

An increase of 3.867 percent***

The Real Gap: $338,072,143

*2008-2009 Total Appropriation Expenditures, Office of State Controller (report of 8/31/09)

**Total General Fund Budget Revised Appropriation 2009-2010, SB 202, Conference Report Availability Statement, lines 15-27

***NC General Assembly Fiscal Research Division

Chart prepared by the Office of Rep. Paul Stam – 9/23/09

Rep. Stam’s 2009-2010 Bills

September 16th, 2009 by Skip

HB 4: Good Faith Exception/Exclusionary Rule (Stam)

Judiciary I: 2/12/09

HB 65: Students Under 16 May Attend Comm. College (Tolson, Stam, McLawhorn, Wiley)

Ch. SL 2009-46: 6/1/09

HB 104: Clarify Legislative Confidentiality

(Glazier, Lucas, Stam, McGee)

Presented to the Governor: 8/11/09

HB 162: Elec. Record Interrogation/B1, B2, C Fellony (Glazier, Blue, Ross, Stam)

Judiciary II: 2/16/09

HB 190: Medicaid Improper Claims Software/Funds

(Stam, Blust, Dollar)

Appropriations: 3/11/09

Earle budget amendment in Appropriations 6/9/09

– Sole Source Medicaid

SB 311/SL 2009-215: Continuing Budget Authority

Sec. 8A.(a) & (b)

Final Budget: SB 202/SL 2009-451 Sec. 10.58B.(a) & (b)

HB 192: Child Witness Testimony/Codify Crim. Law

(Ross, Stam, Glazier)

Ch. SL 2009-356: 7/27/09

HB 193: Electronic Notice of Public Hearings

(Stam, Howard)

Judiciary I: 3/4/09

Defeated 5-6 in Judiciary I

HB 252: Horton Independent Redistricting Commission

(Current, Samuelson, Brown, Stam)

Rules: 2/23/09

HB 277: Honor Fuquay-Varina’s Centennial (Stam)

Rules: 3/5/09

Companion bill SB 435: Ch. Res 2009-4 (3/5/09)

HB 335: Tax Fairness in Education

(Stam, McComas, Killian, Barnhart)

Education: 3/2/09

Defeated 13-16 as amendment to SB 202 in Finance (6/10/09)

HB 360: Authorize State Bar to Borrow Funds

(Haire, Blue, Daughtry, Stam)

Ch. SL 2009-82: 6/11/09

HB 384: Fuquay-Varina Quick Take (Stam)

Ch. SL 2009-155: 6/23/09

HB 430: Voter Identification (Moore, Current, Stam, Killian)

Election Law: 3/9/09

HB 443: Increase Class Size in the Public Schools

(Stam, Wiley)

Education: 3/9/09

SB 202 (final Budget): Section 7.8(b)

HB 516: Increase Revenues Without Raising Taxes (Stam)

Rules: 3/10/09

Similar bill – SB 420: Redirect Master Settlement Funds (Clodfelter)

Senate Appropriations/Base Budget: 3/5/09

HB 581: Partition Sales/Extend Report & Answer Times

(Bryant, Spear, Stam, Michaux)

Ch. SL 2007-155: 7/27/09

HB 687: Tax Credits for Children with Disabilities

(Stam, Wiley, Randleman)

Education: 3/23/09

Failed 21-26 in Education on June 23, 2009

HB 748: Electioneering at Early Voting Sites

(Ross, Stam, Weiss, Dollar)

Senate Judiciary I: 5/5/09

HB 908: Election Administration Amendments Sec. 22.(a) & (b)

HB 765: Revise Elective Share Statutes (Stam)

Ch. SL 2009-368: 7/27/09

HB 776: No Bullying Anyone at Public Schools

(Stam, Neumann, Stevens, McGee)

Education: 3/25/09

No Action

HB 784: Execution/Physician Assistance Authorized

(Moore, Stam)

Ways and Means: 3/26/09

Decided by the N.C. Supreme Court and therefore the bill is unnecessary

HB 904: Legal Services Clarification

(Bryant, Rhyne, Stam, Ross)

Judiciary I: 4/1/09

Companion SB 763: Ch. SL 2009-231 – 6/30/2009

HB 937: Innocence Commn./Limited Witness Immunity (Glazier, Ross, Stam, Lucas)

Ch. SL 2009-360: 7/27/09

HB 944: Disclosure by Appointees

(Glazier, Stam, Ross, Tillis)

Senate Judiciary I: 5/7/09

HB 961: Pay to Play Regulation

(Glazier, Stam, Ross, Goodwin)

Senate Judiciary I: 5/19/09

HB 1021: Designate U.S. Highway 17 Scenic Byway

(Tucker, Hall, Cleveland, Stam)

Ch. SL 2009-198: 6/26/09

HB 1048: Modify Campaign Ad Laws

(Faison, Ross, Stam, Moore)

Senate Judiciary I: 5/5/09

HB 1111 “Campaign Finance Amendments”: Sec. 7(a) & (b), 8(a) & (b), 9(a) & (b) and 10(a) & (b)

HB 1136: Executive Branch Revolving Door

(Ross, Stam)

Senate Judiciary I: 5/14/09

HB 1190: Preservation of DNA & Biological Evidence

(Glazier, Stam, Ross)

Ch. SL 2009-203: 6/26/09

HB 1268: Eminent Domain

(Blue, Stam, Lewis)

Notice of recall fails – bill remains in Judiciary II: 8/3/09

HB 1316: Realign Wake Superior Court Districts

(Stam)

Election Law: 4/9/09

HB 1368: Amend Future Advances Statutes

(Love, Stam, Moore, Blue)

Ch. SL 2009-197: 6/26/09

HB 1396: Superior Court Criminal Case Calendaring

(Glazier, Ross, Stam)

Judiciary II: 4/13/09

HB 1656: Inviting the Governor

(Rhyne, Tillis, Stam, Folwell)

Rules: 6/22/09

2009 Legislative Session Wrap-Up

September 16th, 2009 by Skip

This is a report on the 2009 Legislative Session. Here is a list of all the bills of which I was a primary sponsor. You can click on the link and read the latest version and discover what happened to each bill. These bills range from Medicaid financing, child testimony, redistricting, school choice, property rights and ethic changes such as “pay to play” regulations and the revolving doors. I hope you will find it interesting.

In addition to my own bills my task as Republican Leader of the House required opposition to the Governor’s large tax increases. See my press release entitled, “Democrats’ Three Ring Circus Still Playing in Raleigh” for an explanation of the budget.

There were two bills that I opposed that inserted a distinctly anti-family element into the public school curriculum: the so-called “bullying bill” and the euphemistically titled “healthy youth act”. Each was full of irony. It was already against the rules to bully anyone for any reason in the public schools. I offered a bill (with 62 co-sponsors) and amendments to make that rule a law. But the left needed to specify that this was specifically directed at those of different sexual orientations and gender identities and refused to allow an amendment to make clear that pedophilia and sado masochism were not sexual orientations. The sex-ed bill started out as a drastic “anything goes” reversal of our abstinence until marriage curriculum. However, the final version maintained the abstinence until marriage curriculum and made a few changes, which were not helpful but not dramatic.
We were unable to get a vote on the Marriage Amendment in spite of its sponsorship by a majority of the members of the House. The leadership refused to bring it up. Almost the same fate befell legislation protecting property rights against abusive condemnations although it did receive two procedural votes before being killed.

This Session will be remembered for its large tax increases imposed during a recession and for little else. We will go back in May 2010 hopefully to redeem the time and the Session.

A Missed Opportunity to Cut Waste

September 5th, 2009 by Skip

Budget Conferees Refused to Eliminate Golden Parachutes

The practice of the University of North Carolina to pay large salaries to administrators who resign to return to teaching positions survived the budget knife. According to the News and Observer, this policy has cost NC taxpayers more than $8 million over the past five years. The House overwhelmingly adopted a provision to eliminate these extraordinary payments throughout state government. The budget recently signed by Governor Perdue continues these “golden parachutes.”

An amendment to the budget to prohibit these so-called “transition payments” sponsored by Rep. Hugh Blackwell (R-Burke) passed the House 68-45. However, the House members of the conference committee ignored their obligation to advocate for the House position on this provision.

UNC administrators who “retreat” back to faculty teaching positions retain their previous higher salaries as they prepare to assume new responsibilities. This practice gained widespread attention recently as the Mary Easley scandal at NC State University exposed the salary retention packages of former provost Larry Nielsen and former chancellor James Oblinger. The News and Observer reported that 117 UNC system administrators took advantage of these lucrative deals over the past five years.

“During the recent budget debate, we heard many legislators pledge to ferret out unnecessary spending and waste. Yet a House provision to eliminate pay for state employees who are no longer doing the work failed to be supported by the Democrat leadership. This is inexcusable during a recession when Democrats are forcing $1 billion of new taxes on our citizens,” said House Republican Leader Rep. Paul Stam (R-Wake).

The writer represents Southern Wake County in the North Carolina House of Representatives

Prohibitions of Abusive Condemnations Sidetracked by Two Parliamentary Maneuvers

September 3rd, 2009 by Skip

Prohibitions of Abusive Condemnations

Sidetracked by Two Parliamentary Maneuvers

Raleigh – There is no doubt the public is overwhelmingly opposed to abusive condemnations. HB 1268, providing a referendum on a constitutional amendment to protect private property rights from abusive condemnation was sponsored by a large bipartisan majority of the House – 52 Republicans and 31 Democrats. But even this support failed to prevent Democrats from mustering 60 votes on July 7 to remove the bill from the floor and refer it back to committee in order to kill it for this session. All 52 Republicans and 5 Democrats opposed this motion. The committee never met in four weeks to hear the bill even though repeated requests were made to the Committee Chair.

Rep. Paul Stam (D-Wake) offered a motion to recall HB 1268 from committee. Speaker Hackney ruled the motion out of order and Rep. Stam appealed the ruling based on House Rule 39. Many sponsors voted to sustain his ruling, effectively killing their own bill on a party line 62-48 vote on August 3. A total of 67 House Democrats voted to kill the bill on either July 7 or August 3, 2009, (excluding only Rep. Bill Owens).

The proposed constitutional amendment with the pending amendment reads:

“Private property shall not be taken by eminent domain except for a public use. Public use does not include the taking of property in order to convey an interest in the property for economic development. The preceding two sentences do not apply to takings for access to property. Just compensation shall be paid and, if demanded, shall be determined by a jury.”

If ratified, the people of North Carolina would have voted May 10, 2010, whether to make it a part of our constitution.

Fallout from Kelo v The City of New London, the U.S. Supreme Court’s decision in 2005 inspired states to affirm protections for private property, setting limits on eminent domain. In Kelo, the High Court ruled local governments could exercise eminent domain to seize private property and then to transfer it to others for a private purpose. House Bill 1268 would have ended this practice in North Carolina. It would also join other states in guaranteeing a jury trial in condemnations and require timely payment of “just compensation.” North Carolina is the only state with no constitutional guarantee of a jury trial in these cases.

“The people of North Carolina want to feel secure – that their property will not be arbitrarily taken by the government,” said Rep. Paul Stam (R-Wake).

Will Governor Perdue Keep Her Promises and Veto the Budget?

August 6th, 2009 by Skip

Budget Raises Taxes During Recession and Cuts Per Pupil Education Funding

Raleigh – Governor Bev Perdue has consistently pledged to North Carolina citizens she will not sign a budget that raises taxes on working people or cuts funding for education. The budget passed yesterday by the General Assembly does both.

As a candidate and as governor, Governor Perdue has solemnly promised she would not support raising taxes on working families during a recession. The budget places an increase in the regressive state sales tax squarely on the backs of all citizens.

Governor Perdue pledged as a candidate, “I don’t believe that you can raise taxes in an economy with folks struggling the way they are.” (News and Observer 10/23/08). The budget increases the state sales tax to 5.75 percent from 4.75 percent – an increase of 20 percent. The total tax increase in this budget is almost $1 billion this year and $1.3 billion next year.

Governor Perdue earnestly promised that the budget would increase funding for education. The Governor stated in her State of the State Address, “And yes, even in these tough times…we will increase per-pupil spending in our public schools.” She would clearly renege if she signs the budget currently on her desk. Under the bill adopted by the legislature, per pupil spending by the state is cut by 4 percent from $5,523 to $5,090. (See calculation below.)

“The Governor promised our citizens she would never sign a budget that raises taxes on working families during a recession and cuts per pupil spending,” said Rep. Paul Stam (R-Wake). “Her signature on this budget would break both of these of promises. I call on Governor Perdue to reject this budget and insist the legislature adopt a fiscally responsible bill consistent with her pledges to the people of North Carolina.”

Public Schools FY 2009-10 Per-Pupil General Fund Funding Comparison


Option 1: 08-09 Authorized GF vs 09-10 Proposed GF

	2008-09 Authorized Budget	2009-10 Budgeted General Fund
K12	$8,355,945,293	$7,456,261,240
ADM	1,476,566	1,464,914
$/ADM	$5,659	$5,090


Option 2: 08-09 Expenditures vs 09-10 Proposed GF, plus Federal Funds (THE DEMOCRATS’ BUDGET TALKING POINTS)

	2008-09 Adjusted Budget	2009-10 Budgeted General Fund	2009-10 ESF*	2009-10 IDEA & Title I**	2009-10 State + Federal
K12	$8,154,545,293	$7,456,261,240	$379,668,352	$333,578,650	$8,169,508,242
ADM	1,476,566	1,464,914			1,464,914
$/ADM	$5,523	$5,090			$5,577

The Real Per Pupil Comparison

$8,169,508,242

– 333,578,650**

– 60,000,000***

$7,776,000,000 ADM÷1,464,914 = $/ADM $5,308

Decrease of $215/student or a 4 percent DECREASE

* replaces state $

** does not replace state $

*** diverted from public schools – corporate income tax Availability Line 35, Sec. 2.2(f) of the Conference Report

Democrats Move Forward with Job-Destroying Tax Increases

August 4th, 2009 by Skip

Democrats Refuse to Cut Spending, Balance Budget on Families, Small Business

Raleigh, N.C. – Despite the fact that North Carolina has one of the highest unemployment rates in the nation and economists regularly say that higher taxes slow job growth, Governor Beverly Perdue and legislative Democrats have failed to cut state spending and instead decided to move forward with their plan to balance the state government’s budget with higher taxes on North Carolina’s families and small businesses. The tax hikes include higher income, sales, cigarette, and alcohol and beer taxes; there are also new taxes on internet commerce.

Democrats’ $20.3 billion budget represents the same level of spending by state government as the recently completed fiscal year. At a time when families, businesses, and local governments are balancing their budgets with spending reductions, Governor Beverly Perdue and her Democratic colleagues in the legislature have failed to reduce the level of actual spending at the state level. Using several “creative” accounting methods, the Democrats claim that they have reduced state expenditures; a closer look at the budget reveals that spending in the 2009-2010 budget year will not be any lower than spending in the just completed 2008-2009 fiscal year. North Carolina Democrats balance the state budget entirely with tax increases.

The Democrats’ one cent increase to the sales tax will generate an estimated $803.5 million in new government collections. The internet tax will account for $11.8 million while added levies to taxes on cigarettes and alcohol will total $68.8 million. Working families will be subject to roughly 90 percent of the Democrats’ new taxes.

There is also a new tax in the form of a two (2%) percent surcharge to the income tax liability of individuals making more than $60,000 a year. For those who earn more than $150,000 a year, the surcharge will be three (3%) percent. This “tax on taxes” will adversely affect small businesses which create the majority of new jobs in North Carolina.

Senate Republican Leader Phil Berger (R-Rockingham) said, “During her campaign for Governor, Beverly Perdue said she would not raise taxes because to do so would harm the economy. Then, after being elected, she proposed an increase in taxes in her first budget proposal. Last week, she scuttled a proposed budget negotiated by her fellow Democrats saying she could not support raising taxes on working families. Now she endorses this budget deal which hikes taxes working families, in fact it hikes taxes on every person in North Carolina.

“It is significant that this Democratic plan does not reduce overall state spending from last year’s level; they have not cut spending. After years of bloated budgets and wasteful spending, Democrats have decided on higher taxes rather than smaller government. Governor Perdue and legislative Democrats balance this budget on the backs of working families, destroy jobs, and delay economic recovery for North Carolina.”

House Republican Leader Paul Stam (R-Wake) said, “Apparently Governor Perdue and the Democrats think that the people who pay the sales tax either don’t work or don’t live in families. But of course they do. Using a nondeductible tax for 80 percent of her tax package is $120 million gift to the federal government. Why would she think that is a wise choice?”

-Joint Caucus Press Release : Sen. Phil Berger and Rep. Paul Stam

What is Governor Perdue Talking About?

July 28th, 2009 by Skip

Raleigh, N.C. – According to news reports, Governor Beverly Perdue told reporters yesterday that she does not care which combination of tax increases the Democratic Legislative leaders agree on as Democrats continue closed door negotiations about the state budget. Governor Perdue also reportedly contends that the state is missing out on $5 million a day in budget cuts and tax increases because of the delay. (“Perdue: Indecision costs $5 million a day,” News & Observer, 7/2/09)

Senate Republican Leader Phil Berger (R-Rockingham) said, “Governor Perdue was elected only months ago promising new leadership and new priorities for North Carolina. What we now see is no leadership and continuation of old, failed priorities. Not only has she failed to attack the problem of waste in state government, she has made it clear that she would rather raise taxes on North Carolina families and small businesses than take on the special interests. Now is the time for serious leaders with a clear vision and bold ideas.”

“Governor Perdue needs to start caring. It is the Governor’s job to care about policies and to care about people. If the Governor is going to propose $1.5 billion in job-destroying tax increases, she needs to care about what their effects will be on North Carolina families and businesses.”

House Republican Leader Paul Stam (R-Wake) said, “Governor Perdue desperately wants to raise taxes. The people don’t agree. Her approach will harm the people. As long as this Continuing Resolution remains in place, the people are saving about $3 million per day in unjust taxes.”

###

61 House Democrats Vote for Racial Quotas on the Death Penalty and for a Moratorium on Executions of First-Degree Murderers

July 28th, 2009 by Skip

On July 15, 2009 61 House Democrats voted for the “NC Racial Justice Act” SB461. Federal and State law already prohibit racial discrimination in imposing death sentence for first degree murder (and any crime). This bill goes far beyond that by allowing use of statistics in a particular county or district to prove that since some other person was possibly discriminated against, that this murderer may not be subject to the death sentence for first degree murder notwithstanding lack of real evidence of actual discrimination. And since there is not a single county or district in the state with enough numbers for a valid statistical study, the evidence presented will be complete nonsense (based on population proportion rather than offender proportion).

Murderers have not agreed to this quota system and will continue their crimes. But they do appreciate the effective moratorium on executions.

WHO LOSES?

1. Primarily, the families of victims of first degree murderers currently on death row. It is only the worst of the worst of the first degree murderers who actually get the death sentence. Some of the families of these victims have been waiting 8 to 15 years (typical) and up to 20 and 25 years for these sentences to be carried out. This bill will lengthen that period by several more years. Why? See Section 5 below. And none of these victims had any choice in the race of the person who murdered them.

2. Future homicide victims. We have presented to the public and the press detailed studies gathered by the Attorney General that demonstrate the strong deterrent effect that a sentence of death for murder has on future homicides. Conservative estimates of the number of additional innocent homicide victims for every year during a moratorium would be about 50. We estimate that if this bill becomes law it will add 3 to 4 additional years to the time on death row and that much time before any executions are carried out in this state. A death penalty that is not carried out has no deterrent effect. These 150+ additional victims are predominantly African American. We do not know their names, yet, and may never know their names because this is only the excess number of homicides caused by this moratorium. But they are real people whose families will grieve over their deaths.

3. A half-dozen Democrats who promised their District Attorney or Sheriff that they would not vote for this legislation but did so. How will they explain that to the chief law enforcement officers of their districts? How will they explain it to the taxpayers and citizens of their districts, and how will they explain it to the families of the victims? The Sheriffs Association and the conference of District Attorneys strongly opposed the bill. These associations are majority Democratic by party.

4. Taxpayers. Democrats are planning to raise an additional $1 billion in new taxes on our people in the middle of a recession. Is it really an appropriate use of resources to spend tens of millions of dollars to give additional hearings to 163 first degree murderers already on death row? Each of these have had multiple hearings already in front of 47 different judges (typically) over a span of 8 to 15 years, or even more. Could these funds not have been used to prosecute this year’s murderers or to hire teachers?

5. A functioning law enforcement system. Attached are letters from four District Attorneys explaining this process.

Tom Keith, District Attorney for Forsyth County, explains the tremendous cost involved not just in money but in diversion of time from prosecuting all the new murderers and rapists that need their attention.

District Attorney Peter Gilchrist of Charlotte, explains why this bill is so disingenuous.

District Attorney Jeff Hunt of Transylvania explains all of the procedural protection that every person on death row already enjoys.

District Attorney Locke Bell of Gaston County explains this irony: Under this bill (in his district, and this is true of many districts) that prosecutors who want to comply with its mandates will have to make sure to seek executions of more African Americans so that they will not be prohibited from executing white first degree murderers who have otherwise exceeded their quota for the county.

The Winners

There are a few winners by this legislation. The 163 blood thirsty criminals convicted of first degree murder now on death row are the principal beneficiaries. Collectively, 162 of them have committed 270 murders, 58 rapes, 40 kidnappings and hundreds of other violent felonies. Almost 1,200 felonies in total. Let me share with you some of their stories. You decide whether they are on death row because of their race or whether they are there because of their crimes.

Inmate Wallace (Meckleburg): 9 murders / 13 rapes

Inmate Frogg (Forsyth): 6 murders

Inmate Robinson ( Bladen): 6 murders

Inmate Phillips (Moore): 5 murders

Inmate Smith (Buncombe): 4 murders / 1 manslaughter

Inmate Wilkinson (Cumberland): 3 murders / 5 rapes

Inmate Lane (Wayne): 1 murder / 1 child rape

For more details on these and other murderers see this link at the Department of Corrections.

The Debate

You may want to hear the July 14, 2009 debate on this bill. See the House audio archive at this link. The debate starts at 34:57 minutes into the session and ends at 03:09:45. If you want to see a shorter debate between the principal sponsor, Sen. Floyd McKissick, and Rep. Paul Stam on UNC TV’s Legislative Week in Review, visit this link and click on the July 3^rd video. The discussion starts at 28:00 minutes into the video and ends at 41:38.

###

Democrats’ Three-Ring Circus Still Playing in Raleigh

July 28th, 2009 by Skip

More Taxes in Store for Everyone

The Governor and Democratic leadership of the Senate and House still have not drafted a balanced budget — a full month overdue. The drama being played between Governor Perdue and the Democrats in the Legislature is pointing to ineptitude by those in charge to deal with the real cause of the budget deficit.

Why do Democrats really want to add $1 billion in new taxes to your bill? They will tell you that it is all for the children. But priorities like education, law enforcement and the environment can be met with the first $19 billion that we have available to spend, without raising tax rates.

While Governor Bev Perdue supports a huge regressive sales tax increase, she claimed to be “stunned” by the revelations of the Democratic leaders in the Legislature that the budget draft contained an income tax surcharge. Republican members and most reputable economists remain stunned that massive tax increases are being proposed during a severe recession.

While the following suggested cuts may not be supported by all, they are examples of current spending that can be reduced or eliminated to balance the budget instead of increased taxes. But Democrats have taken these issues completely off the table for discussion.

Annualized Savings in millions – Source of savings

$280,000,000 – Use $70 million of Golden Leaf diversions from the budget to get a 3-1 match with federal funds – The Neumann amendment to accomplish much of this was rejected 50-64 by the House. Sen. Clodfelter’s S420 would have had a similar effect.

$100,000,000 – Expand charter schools to allow North Carolina to receive federal stimulus money for “Race to the Top”

$30,000,000 – Tuition Tax Credits (HB 335) – rejected 13-16 by House Finance Committee (additional yearly county savings of about $20 million are projected)

$5,000,000 – Tax Credits for Children with Disabilities (HB 687) – Rejected by the House Education Committee 21-26 (additional yearly county savings of up to $5 million are projected – see attached Fiscal Memo)

$14,000,000 – In-state tuition for out of state athletes

$20,000,000 – Racial Justice Act (S461) – Fiscal note is $6 million but the true cost is approximately $20 million (See attached letter from Forsyth District Attorney Tom Keith.)

$8,000,000 – Capital Procedure/Mental Disability (HB 137) – Fiscal note is over $1.5 million but the true cost is $8 million/year for several years (See attached letter from William Hart at the Dept. of Justice)

$25,000,000 – Nags Head Pier (one time)

$5,000,000 – Apple Incentives – to bring 50 jobs to NC

$40,000,000 – Extend Film Credits – after 1^st year

$2,000,000 – Roanoke Island Commission

$50,000,000 – UNC-CH Bain efficiency study – on an annualized basis

$50,000,000 – Centers and Institutes at UNC systems– total about $100 million – about half could be saved (UNC-CH included in #13)

$4,000,000 – Close Dobbs Youth Center with another nearby

TOTAL: $633 million

The Democrats completely dismiss the idea of finding another $340 million of waste and abuse. But recent months have demonstrated:

$635.3 million in Medicaid fraud and waste for community services over 3 years

$30 million wasted on faulty construction on I-40 and $13 million to repair a botched paving job on I-795

$38,000 spent to buy crab pots for one person

And the list goes on and on . . .

North Carolina needs jobs. The Democrats are giving us more taxes.

###

Open Enrollment Policy

January 15th, 2009 by Skip

To the Fuquay Varina Independent

Dear Editor,

The Wake County Board of Education brings unnecessary grief on itself by its annual reassignment exercise. This year’s plan would move 25,486 students to another school over the next three years. Parents are understandably upset at the inconvenience and the unfortunate outcomes that result for their children. This year’s battle reminded me of a recent conversation:

I drove from Apex to Holly Springs to shop for groceries. At checkout the cashier asked for identification. He told me that since I did not live in town I could not buy his groceries.

“What? I prefer your fresh meats and esoteric argula. And your prices are lower”.

“It doesn’t matter”, he said. “It’s a new policy. Everyone is now going to shop where the County Commissioners decide. They have created shopping zones. No more going from town to town to ‘cherry pick’ the best deals. You are fortunate that they did not assign you to a grocery zone in Raleigh which never has fresh argula.”

“But your store is on my way to work. It is more convenient for me to shop here.”

“It doesn’t matter”, he said. “The county thinks you should shop where you are assigned and not try to get an unfair advantage over someone else just because you have a car.”

“But”, I replied. “This is not the American way, freedom for all.”

“Listen, buster. I don’t know what America you grew up in. The grocery stores in your zone are going to go to pot if they are allowed to ‘skim the cream’ of the best customers.”

Have your ever heard such an insane conversation? We would never put up with such a system for groceries. But we do with our public schools.

Each school district has attendance zones. It does not matter whether that school is the best for your child or not. If you are on one side of a line drawn on a piece of paper your child will go to that public school.

Next time you pass one restaurant to go to another give thanks that the people who thought up the school system don’t control the entire economy.

Maybe you can urge the Wake County Board of Education to adopt a modified open enrollment policy on a first come, first serve basis. Those who attended the year before would have priority. Those with a brother or sister enrolled would have priority to enroll in the same school. And no one could claim entitlement to transportation at public expense to go to a school beyond an agreed distance. There would be other practical limitations.

But the principle is sound. Let’s get freedom – American style – back into school assignments with an open enrollment policy.

An Interview with Andrea Danchi

January 5th, 2008 by Skip

Trying Being a Representative
By: Andrea Danchi

Have you ever heard someone say, “Why should I vote? It doesn’t make any difference anyway.” And, if you do vote, do you ever say to yourself, “Ok. I voted for the good guys, so now what are they going to do for me? Do they really care, and are they going to support my values?” After all, that is what you voted for them to do. However, things like the latest scandal in the former leadership of the North Carolina State House shake the people’s faith in their leaders.

So, we ask, “Are there any elected officials that are truly looking out for the people’s interests?” There are. One such individual is State House Representative Paul Stam. Representative Stam has served the state of North Carolina honorably for many years. He firmly stands for the people of this state and for things that are best for them. He is a strong Christian and supports values that are grounded in his faith. Over the years, he has consistently shown that he respects the position of leadership that the people of this state have placed in his care. He has not only stated what he believes, but has also proven what he believes by standing firm in his positions against constant opposition. Not only is Representative Stam serving the people as a House Member, but he also became leader of Republicans in that body. I recently had the opportunity to ask Mr. Stam about his work in the legislature.

I started by asking Representative Stam how he became involved in politics. He jovially related the following story: He actually became involved in legislative politics almost accidentally. In 1984, he was active in Wake County Right to Life. The chairman of the state Republican Party approached him and asked if he would put his name on the ballot as a candidate for the State Senate. This would give the Republicans thirty days to find a “real” candidate, after which he could then withdraw from the race. Since the deadline was noon that day, Mr. Stam agreed to step into the position until a real candidate could be found. However, five minutes later, in Harnett County, another person registered to run. According to election rules in those days he could not withdraw from the race. “Unfortunately for me, I was stuck,” he stated with a chuckle. “So I decided I would try to win.” He went on to win the primary, and although Mr. Stam ended up losing his first election, with some quick figuring, he realized that he could probably win his State House district. After one try and failure, he ran again in 1988 and was elected to the House.

According to Mr. Stam, the main responsibilities of a House Representative are to propose new laws, and to vote on laws proposed by others as well. Being a lawyer has helped him in his work in the legislature much like having studied medicine would help a surgeon in a hospital. “It helps you to know what’s going on,” he said. He further explained that, as a lawyer, he knows the existing laws and therefore knows which ones need to be changed. I also asked him how his spiritual beliefs affect his work. Promptly, and with enthusiasm, he responded with three clear ways that they affect him as a legislator. Number one, they are the motivation for his work. “You’re not in it for the glory,” he said, “and certainly not for money.” Secondly, as a Christian, on specific issues such as life, death, and justice, Mr. Stam stated, “(one’s) beliefs from the Bible change the way you vote when there are relatively clear Biblical principles.” Finally, Mr. Stam said that his spiritual beliefs change the way he deals with people. He stated, “Christians should deal more transparently and forthrightly as opposed to the secrecy and the wheeling and dealing by which many representatives operate.”

I asked Representative Stam how the legislature works. He said that during an odd year, the session begins at the end of January and goes through August. During an even year, the session lasts from mid May through August. On occasion, there will also be special sessions. One of the main objectives of a legislative session is that the legislature pass a state budget. Without a budget little money can be spent by the state. He commented, “A lot of government services require that a budget be passed.” Services such as teachers and Medicaid fall into this category. They are provided via appropriations, and almost all appropriations are in the annual budget.

For 2007-2008, Representative Stam was elected leader of the Republicans by his fellow Republican house members. I asked him how much his job had changed because of his appointment. He stated that there was a great increase in the amount of work. He said, “I had to make hundreds of additional phone calls and visits.” He also commented that his job this year was much more involved, and that he was in charge of coordinating a lot more things. “On the flip side of that,” as he put it, he was able to delegate much of his previous work to other house members. Thus the changes were not overwhelming. His new position also required more people skills. When he became leader of the Republicans, he had two main goals. Number one, he wanted to get the House Republicans voting together. The Republican Caucus had been disjointed for many years because of deep divisions in their midst. His second goal was to get the Republicans to vote more conservatively on issues. Representative Stam seemed to be very pleased with Republican Caucus’ work in both of these areas. “Towards those goals, we made great progress,” he said with confidence.

Since they were able to accomplish those things this year, I asked Representative Stam how the recent changes in leadership had affected this past session. “Well, it was night and day,” he said. “In 2006 we had a criminal up there as leader.” He stated that although the new Speaker of the House Joe Hackney has very liberal values, he is a well-respected man who isn’t engaged in criminal activities. He said that the new speaker was much easier to deal with.

I asked if Speaker Hackney was willing to work across party lines to achieve common goals. Stam said, “Well if it’s a common goal, yes, but he won’t help us at all on things that he doesn’t like.” For example, the speaker single-handedly killed several bills including the Marriage Amendment. However, Mr. Stam felt that many of the Republicans’ triumphs this year were behind the scenes, stopping bad bills and helping to shape the budget.

Looking towards the future I asked if he had any specific bills that he would like to see passed during the short session (2008). He mentioned two: The first is House Bill 878 “Eminent Domain.” This bill would keep the government from taking private property for anything other than public uses. That means that the government could not take your property and sell it to a hotel chain just because they would pay more taxes or because the government thinks the hotel chain would utilize it better. If the bill passes the Senate in 2008 (and the House agrees to any changes), because it is a Constitutional Amendment, it would be subject to a referendum by the people.

He also has hopes for House Bill 388 “Tax Credits for Children with Special Needs.” This bill would give a $6,000 credit per year to the parents of moderately or severely disabled children so that their parents can afford to send them where they will receive the best education possible. Currently the public school is their only option if they can’t afford other avenues. In most cases these parents cannot afford alternative forms of education because medical expenses make it financially impossible. Often the public schools cannot provide the best education for that child. Representative Stam’s bill would give the parents the ability to find the best way to educate their son or daughter with special needs. Mr. Stam said, “Those are my two personal goals for the 2008 session.” I also asked him what he is working on now during the break between sessions. He said that, aside from practicing law one of his duties is to raise enough money to get conservative people elected to seats in the House of Representatives in the next election (2008).

I ended by asking Representative Stam some questions on a lighter note. I asked him what his favorite bill was that he ever sponsored. Interestingly, he said, “The first bill I ever sponsored was maybe not that significant to other people, but to me it was.” It was House Bill 13 “Non Resident Guardian for Minor” filed in 1989. This bill changed North Carolina law that said if both the parents of a minor passed away, the clerk of court was to appoint a guardian for that minor. But it was required that the guardian be a resident of North Carolina. Mr. Stam’s first bill sought to change that law so that the guardian didn’t have to be a North Carolina resident.

One of the things Representative Stam enjoys the most is debating on the House floor. “I love making speeches on bills,” he said. “A great joy is to defeat a bad bill. When you look on the scoreboard, and one goes down to defeat, it’s great.” He spoke this with an air of great triumph. When I asked him what activities he enjoys when he’s not working, he answered, “Well, tennis,” he paused, then with a smile he continued, “and playing with the grandchildren. Those are probably the two fun things for me.” My final question was whether he would be running for office in the next election and, if so, if he expected to have an opponent. He eagerly jumped in, “I will, and I’ve already got one. He announced before I even started my term.” I asked Mr. Stam if he thought he could take him easily. He chuckled and said, “I know I can take him, I don’t know about easily.”

This interview confirmed for me that there are good men and women in office who are standing for what’s right, and for what is best for the people. The reason a person like Mr.Stam can be in office is because people with conservative values voted. Now he works very day to protect the values you believe in.

Land Transfer Tax is a Bad Idea

August 15th, 2007 by Skip

The new state budget for 2007-2008 (HB 1473) allows counties to impose a tripling of the land transfer tax from .2% to .6% if approved by the voters in an advisory referendum. But there has been little discussion about the merits of this tax and why it is a particularly odd choice. I hope you enjoy my reasons for opposing this tax.

William Pitt, the Younger, asked the British parliament to double the stamp tax in 1797. Since then politicians have been intrigued by transfer taxes because the tax is imposed when money is on hand. This puzzles most economists who prefer to tax production, income or value added – rather than transfers.

A .4% land transfer tax on a $200,000 house would be an added tax of $800.00 every time the house is sold.

A land transfer tax is not new. This proposal just increases the existing excise tax on land sales by 200%. The seller of a $200,000 house already pays a tax of $400, even if the seller has no profit in it and even if the entire nominal profit is only inflation.

If the house is new a second tax that is paid is the sales tax on materials. A $200,000 house includes $80,000 worth of materials. At 7% that is $5,600 in sales tax. Approximately $2,000 of this will go to the County and that is used mostly for schools.

There is a third “new house tax.” The builders and laborers must report the sale of a house and their labor as ordinary income which is taxed at varying rates – an average of 20% Federal and 6% State for a combined 26%. A $200,000 house would have labor and profit of about $50,000. That’s $13,000 in income tax. Add all these together and you have a “new house tax” of $19,000.00 on a home selling for $200,000.

In addition there are sewer and water acreage and capacity fees as well as inspection fees, averaging $12,000 which, added to taxes of $19,000, means $31,000 goes to the government from the sale of this $200,000 home.

And I could add the property taxes on the land between the time it left agricultural use and the time that the development process started – all of which goes to the county and cities. And all the laborers pay FICA/Medicare. And the material suppliers pay income tax on the value they add to their products.

To all these taxes and fees totaling $31,000, some want to add an $800 tax each time the house sells!!

But it gets worse: A land transfer tax imposes this new tax on sellers of older houses as well as new houses – even if the new owner has fewer kids or fewer drivers than the selling family. As a way to make “growth pay for itself” this new tax is wildly misaimed. The Smith family (with 3 cars and 3 kids in public school) – sells to the Jones family (with 2 cars and 2 kids who are already in college). That’s another $800 tax even though our “infrastructure” is less burdened. If two identically situated families trade houses so that each can live closer to work, that’s another $1,600 in taxes – even though the burden on the roads is lessened.

Or take two identical houses – one on Elm Street and another on Maple Street. The Elm Street house is owned by the Smiths who have two cars and two kids who mature from birth to age 25 until they are out of the nest. The Smiths die and will the house to their children. No tax. The Maple Street house is owned by the Allens who sell to a succession of 5 owners who each have two cars and two kids at the same ages as the Smith children. This house pays an extra $4,000 in tax – a bizarre difference.

“Don’t tax me, don’t tax thee, tax the fellow behind the tree” is the battle cry of demagogues who want to extract more money out of other people. But we have met the taxpayer and we are it.

The writer represents Southern Wake County in the North Carolina House of Representatives.
Stam for House/Blue Ribbon Transer Tax-Point of View

2006 Legislative Session Report

December 5th, 2006 by Skip

I was principle sponsor of:

Enforcement of Power of Attorney encourages acceptance of authority granted under powers of attorney, providing ways to prove that powers-of-attorney are valid. SL 2005-178.

Adjust Adoption Procedure where the birth father is not really involved. SL 2005-166.

Swift Creek Management Plan/Standing to Enforce clarifies the procedure for those adversely affected by a violation of the Swift Creek Management Plan. SL 2005-7.

Register of Deeds-Certifications passed the House but became law as part of a companion Senate bill. Then changed to a much needed correction of the law concerning Notary Publics. SL 2006-59.

I was one of four sponsors of:

Homeowner Association Amendments, SL 2005-422, which changed the law in dozens of ways-many clarifying and improving procedural protections for homeowners:

Capping late fees on assessments and capping attorneys’ fees in uncontested actions
Reducing the maximum fine that may be imposed from $150 to $100
Providing owners notice before attorneys’ fees and court costs may be assessed and allowing the owner 15 days from the date of the mailing to pay without the attorneys’ fees and court costs
Prohibiting payments to any officer or member of an association’s board unless the payments are made for services and expenses on behalf of the association and given prior approval by the board
Requiring executive boards to provide homeowners an opportunity to attend and speak at meetings
Requiring associations to maintain detailed records and to provide access to owners
Limiting restrictions on the display of the flag

HB 1439 Exclusionary Rule- The Good Faith Exception is needed and will be studied by the Legislative Research Commission. Murderers and Rapists need to be separated from their loopholes.

HB 2730 Tax Credits for Children with Special Needs- This is one of my priorities for 2007.

Towards the end of session Conference Committees are formed to help the House and Senate agree on the text of bills that are being held up due to disagreements. Generally the conferees are those who have been most active in shaping the bill. I was assigned to several conference committees including: SL 2005-460- Driving From/Leaving the Scene of an Accident; SL 2005-329- No Lasers Pointed at Planes; SL 2005-408- Consumer Credit Counseling/Debt Management; SL 2005-456- Amend Lobbying Laws; and SL 2005-455- Amend Fisheries Law. As well as HB 1048 DWI which provides for improved detection of impaired drivers; improves methods of determining how underage drivers obtain alcohol; changes procedures for investigating, arresting, charging and the judicial processing of impaired driving offenses. And HB 1323 Establish Innocence Inquiry Commission which reviews claims of factual innocence by evidence not previously presented.

2006 Budget

I voted against the 2006 BUDGET which spends $18.9 billion this year (2006-2007) of state funds. Why?

This Budget includes $1.67 billion dollars in new spending (2006-2007 over 2005-2006) – a 9.7% increase in spending. This figure does not include as “spending” credits to the “Rainy Day” reserve. If this budget had increased by the sum of population increases plus inflation it would have increased by about 5.65% (TABOR) and the surplus could have been used to straighten out future structural deficits.
The budget continues to spend and accrue hundreds of millions of dollars in ineffectual and discriminatory corporate giveaways, like the Bill Lee Act, JDIG, the ONE North Carolina Fund and the Cigarette Export Tax Credit. The Bill Lee Act has been thoroughly discredited by our own studies and defies sound economics. This budget adds another $10 million in new giveaways (Section 12.8).
State Employees received miniscule pay raises for the last 5 years while other employees received normal raises. This year’s 5.5% pay raise is much better but doesn’t make up for 4 years of attrition. Once again state employees are being unfairly discriminated against – compared to other employees who will receive an 8% raise this year.
There are over $497 million of recurring expenses paid for by nonrecurring revenues in the budget. You don’t buy groceries with an inheritance from your great aunt. This treatment of nonrecurring revenue is a recipe for future structural deficits. I calculate: $1,045,000,000 in 2007-2008 $1,163,000,000 in 2008-2009
Fiscal staff has estimated that the unfunded liability for retired state employees’ health insurance premiums is about $13.5 billion. To amortize this over 30 years would cost about $1.5 billion per year. This budget takes no steps to resolve this structural problem.
The budget continues part of the same “temporary” tax rate increases that I voted against in 2003 and 2005 – higher sales tax and income tax rates. Since these higher rates are set to expire in 2007 the budget is fundamentally flawed because it funds recurring expenses with nonrecurring revenue. And higher sales taxes are not deductible against your federal income taxes so they cost you 20% in higher federal income taxes.
Priorities not met. Pork still there. The House budget included full funding for Early Intervention Services. These services are for disabled children from birth to 3 years old. But the conference report shortchanges these children by $7.3 million. That was not from a shortage of funds – not with a 9.7% increase in spending. The conferees even have $10 million in new pork projects in Section 12.8.
There is no real cap on the gas tax. First, the budget leaves in place the additional tax that was added January 1, 2006. Next, the “cap” expires June 30, 2007. The only effect of the provision is to prevent announcement of an increase next October – right before the elections.

Of course, all budgets have some good items and some bad. But in deciding how to vote on the final package it is the basic structure that must be considered.

Disappointments

HB 2213 Eminent Domain amends the constitution so land cannot be taken for economic development. Eighty- seven other Representatives joined me on this bill. Last summer the U.S. Supreme Court decided (in Kelo v. New London, Connecticut) that local government could condemn private property and transfer it to someone else for economic development. The hue and cry around the county spread like wildfire. This bill reverses Kelo permanently for North Carolina. It also requires prompt payment of just compensation and requires trial by jury in all condemnation actions as a matter of constitutional right (as do 49 other states), rather than by statutory grace.

The Assembly failed to address the State Marriage Amendment (HB 55) which was signed by a majority of House members. Leadership of the House and Senate refused to allow us to vote on the question: Whether North Carolina will allow polygamy and same-sex marriage or deny recognition to out-of-state marriages?

The writer represents Southern Wake County in the North Carolina House of Representatives

Reform of the House Needed

April 5th, 2006 by Skip

Representatives Capps, Dollar and Stam
Call for Immediate Reforms in the House

Every day it becomes more evident that there will be a change in the Speakership by opening day of the General Assembly. Yet, more important than changing the Representative who holds the gavel is changing how the House operates.

North Carolina desperately needs to transform our state government into a modern 21st Century democracy. It’s time to leave behind the secrecy, the log rolling and the perception that trading campaign cash for legislative favors is required or helpful.

There are issues the House can address on opening day – fundamental reforms that will create a climate of open and honest government, restore integrity to the legislative process, and renew the public’s confidence in our governing institutions and leaders.

Place a limit of three terms on any future Speaker of the House.
Each party caucus to determine its own membership on all committees, (standing, select and conference) proportional to its representation in the House.
No Legislation in the main budget beyond that necessary to carry out the appropriations and revenue items.
No provisions in the conference report which were not previously in the House or Senate version of the budget or which are necessary to effectuate a true compromise of provisions in dispute.
No voting by floaters (ex-officio members) on any committee.
No closed-door sessions of the budget conference committee. Public announcement of meetings of the committee or its subcommittees.
Independent redistricting commission.
Rules revised to restore the Regular Order employing standard parliamentary principles to the operation of business in the House.

All of these reforms can be subverted by a speaker or rules chair who won’t enforce the rules. More than anything we need presiding officers who will commit to actually apply the rules adopted by the House in a fair and transparent manner. We will be requesting any new incoming Speaker of the House publicly address these issues, and pledge to implement and uphold the reforms we need to restore open government to the citizens of our State.

The writer represents Southern Wake County in the North Carolina House of Representatives.

2005 Legislative Session Report

December 5th, 2005 by Skip

This year’s legislative session lasted from January until the beginning of September. Thousands of bills were filed and hundreds were passed. Here are the highlights.

The Budget

I voted against the state budget, (HB 662) which will spend $ 17.18 billion this year of state funds for the following ten reasons:

It continues the same “temporary” tax rate increases that I voted against in 2003 – higher sales tax and income tax rates – about $507 million on a fiscal year basis. Since these higher rates are set to expire in 2007 the budget is fundamentally flawed because it funds recurring expenses with this huge sum of nonrecurring revenue; unless the big spenders plan to make these “thrice-temporary” tax increases permanent by a fourth extension. Sales taxes are not deductible against your income taxes so they cost you 20% in higher income taxes.
It continues to spend and accrue hundreds of millions of dollars in ineffectual and discriminatory corporate giveaways, like the Bill Lee Act, JDIG, the ONE North Carolina Fund and the Cigarette Export Tax Credit. The Bill Lee Act has been thoroughly discredited by our own studies and all of those giveaways defy sound economics.
State Employees received miniscule pay raises for the last 4 years. This year’s $850,or 2.0%, pay raise is inadequate to make up for 4 years of attrition. Once again state employees are being unfairly discriminated against compared to other employees.
The budget fails to include full funding of Early Intervention Services for developmentally disabled children (short by $6 million). My amendment to fund this shortfall was supported by a majority of the House and would not have raised taxes. The money would have come from accumulated surpluses (over $300 million) of the Golden LEAF foundation. House leaders refused to let my amendment come to a vote.
There are over $ 125 million of recurring expenses paid for by nonrecurring revenues in the budget, in addition to $ 507 million in the first item, for a total of over $ 632 million in nonrecurring revenue paying for recurring expenses. The problem is $ 100 million worse if ABC bonuses are recognized as a recurring obligation, which they are, for a total structural deficit of $ 732 million.
Fiscal staff has estimated that the unfunded liability for retired state employees health insurance premiums is about $12 billion. To amortize this over 30 years would cost about $1.5 billion per year. This budget takes no steps to resolve this structural problem.
This Budget includes $1.259 billion dollars in new spending (2005-2006 over 2004-2005) – a 7.9%increase in spending. After the budget passed, additional spending in other bills raised this to an 8% increase.
Many (if not most) of the “cuts” are not really reductions in spending, but are just taking reversions as “cuts” that historically would have reverted anyway! But the increases in budget authority are for real spending increases.
PORK. This budget includes $75 million in over 200 items of pure pork. For example, there is $400,000 for a Teacup Museum near Sparta, NC. Pork is pervasive throughout all departments. Those who vote for this budget cannot claim that there was not enough money to meet the needs of the children, the elderly and the handicapped. The money was there but it was wasted.
There are hundreds of pages in the budget of “special provisions” that never went through committee, were not germane to the bill, but were protected from amendments.

Disappointments

The Assembly failed to address the State Marriage Amendment (HB 55). This bill was signed by a majority of House members. Leadership of the House and Senate refused to allow us to vote on the question: Whether North Carolina will allow polygamy and same-sex marriage or deny recognition to out-of-state marriages along these lines? The issue will inevitably come to our courts as people move here from Massachusetts, New York, California, Connecticut and Vermont.

The Assembly failed to address any bills designed to protect unborn children and their mothers. For details email me at paulstam@bellsouth.net

On the last day of the Assembly the lottery (SL2005-344) passed. I debated it extensively on the floor and with my colleagues. In each house a one-vote margin prevailed. Please email me for my list of arguments against a lottery.

Successes

This year I spent much time pointing out the flaws in the proposed death penalty moratorium (HB529). There was never an actual floor debate because the proponents lacked the votes. I debated in committee and on television and in publication. Email me for a detailed list of my arguments.

I was principle sponsor of:

HB 393 Holly Springs Eminent Domain. At the unanimous request of its Town Board the procedure by which Holly Springs condemns land for water, sewer, public streets and roads was affected. Chapter SL 2005-57

HB 510 Enforcement of Power of Attorney. This bill encourages third parties to accept the authority granted under powers of attorney. It provides certain ways to prove that power-of-attorneys are valid and clearly defines them so that people will feel more at ease dealing with the attorney. Chapter SL 2005-178

HB 532 Adjust Adoption Procedure This bill expedites adoptions where the birth father is not really involved. Chapter SL 2005-166

H1054 Swift Creek Management Plan/Standing to Enforce clarifies the procedure for a person adversely affected by a violation of the Swift Creek Management Plan. Chapter SL 2005-7

I was one of four sponsors of:

H1541 Homeowner Association Amendments, SL2005-422, changes the law in dozens of ways-many clarifying and improving procedural protections for homeowners:

Capping late fees on assessments,
Capping attorneys’ fees in uncontested actions,
Reducing the maximum fine that may be imposed from $150 to $100
Providing owners notice before attorneys’ fees and court costs may be assessed and allowing the owner 15 days from the date of the mailing to pay without the attorneys’ fees and court costs,
Prohibiting payments to any officer or member of an association’s board unless the payments are made for services and expenses on behalf of the association and given prior approval by the board,
Requiring executive boards to provide homeowners an opportunity to attend and speak at meetings,
Requiring associations to maintain detailed records and to provide access to owners,
Limiting restrictions on the display of the U.S. flag, the North Carolina flag, and political signs unless the covenants clearly sets out these restrictions.

H1432 Register of Deeds-Certifications. Passed the House but became law as part of a companion Senate bill.

Pending Work

HB 931 Tax Fairness in Education. This bill will allow parents to receive a $2,500 tax credit for relieving the taxpayers of the cost of educating their children. If you would like to see a detailed fiscal note demonstrating that this will not reduce the amount of money available per student in the public schools please contact my office and we will send it to you. This bill will give parents a way to find the best education for their children.

H1439 A study of the Exclusionary Rule/Good Faith Exception in criminal cases passed Judiciary III and has been assigned to the Legislative Research Commission.

One bill, which I debated, at length in committee and on the floor was the Actual Innocence Inquiry Commission (HB 1323). Chief Justice Lake asked me to round up Republican votes. The bill passed (80-23) and will be eligible for passage in the Short Session.

Miscellaneous

Towards the end of session conference committees are formed to help the House and Senate agree on the text of bills that are being held up due to disagreements. Generally the conferees are those who have been most active in shaping the bill. I was assigned to several conference committees including: HB 217- Driving From/Leaving the Scene of an Accident, SB 428- No Lasers Pointed at Planes, SB 590- Consumer Credit Counseling/Debt Management, SB 612- Amend Lobbying Laws, SB 1126- Implement CRFL/Amend Fisheries Law

When a senate bill appears on the House floor a House member is appointed to manage the bill. Two of the senate bills I managed were:

S1029 – Clarify/Enhance Domestic Violence (SL2005-423)
S461- Unitrust Amendments (SL2005-244)

I offered major amendments to:

S856 – Access to Public Trial Press Records (SL2005-332)
S612 – Amend Lobbying Laws (SL2005-456)
S 1048 – Identify Theft (SF2005-414)

Thank you for the opportunity to serve you during the 2005 Session of the North Carolina General Assembly. If you need further information on any of these bills, please ask.

The writer represents Southern Wake County in the North Carolina House of Representatives.

8 Little Rules The House Had to Break to Pass a Lottery

November 9th, 2005 by Skip

Constitutional Requirement that third reading be on a different day – Article II, Section 23
Constitutional Requirement that on third reading the “yeas” and “nays” be entered on the journal. Article II, Section 23.
Refusal to recognize members under Rule 24(a), who want to call for yeas and noes to be entered on the journal as provided in the Constitution Article II, Section 19.
House Rules require third reading on a different day – Rule 41(b) unless 2/3 agree to vote twice on the same day.
Inclusion in conference report of material not in either house or senate version – Rule 44(b) (e.g. the school construction proceeds distribution formula which is grossly prejudicial to Wake County and 40 other counties)
Refusal to recognize points of order, Rule 21(c)
Rule 26.1 and 26.A Select Committee to reflect the partisan membership of the House (63-57). This Lottery Select Committee was 12-4 Democrat and 15-1 pro lottery.
Closing debate without a vote of the House – Rule 19(a) provides that “only” certain members may call for end of debate and it requires a majority vote of the House to implement.

Constitution Article II, Section 19: Record votes – Upon motion made in either house and seconded by one fifth of the members present, the yeas and nays upon any question shall be taken and entered upon the journal.

Constitution Article II, Section 23: Revenue Bills – No law shall be enacted to raise money on the credit of the State, or to pledge the faith of the State directly or indirectly for the payment of any debt, or to impose any tax upon the people of the State, or to allow the counties, cities, or towns to do so, unless the bill for the purpose shall have been read three several times in each house of the General Assembly and passed three several readings, which readings shall have been on three different days, and shall have been agreed to by each house respectively, and unless the yeas and nays on the second and third readings of the bill shall have been entered on the journal. (Because the lottery states that its purpose is to “generate funds” and subjects prizes to the income tax, and because its proponents think this will be about $400 million/year, Supreme Court precedent is that it is subject to this section.)

Rule 19(a): Previous Question (a) The previous question may be called only by: (1) The Chair of the Committee on Rules, Calendar, and Operations of the House; (2) The member submitting the report on the bill or other matter under consideration; (3) The member introducing the bill or other matter under consideration; (4) The member in charge of the measure, who shall be designated by the chair of the standing committee or permanent subcommittee reporting the same to the House at the time the bill or other matter under consideration is reported to the House or taken up for consideration; (b) The previous question shall be as follows: “Call for the previous question having been made, is the call sustained?” When the call for the previous question has been decided in the affirmative by a majority vote of the House, the question is on the passage of the bill, resolution, or other matter under consideration.

Rule 21(c): Voice, Votes; Stating Questions (c) No statement, explanation, debate, motion, parliamentary inquiry, or point of order shall be allowed once the voice vote has begun. Any point of order or parliamentary inquiry may be raised, however, after the completion of the vote.

Rule 24 (a): Roll Call Vote (a) Before a question is put, any member may call for the ayes and noes. If the call is sustained by one-fifth of the members present, the question shall be decided by the ayes and noes upon a roll call vote.

Rule 26(c): Standing Committees and Permanent Subcommittees generally (b) The Speaker shall appoint the members of all standing committees having no permanent subcommittees at the beginning of the first regular session in a manner to reflect the partisan membership of the House.

Rule 26.1: Mentions of Standing Committee Includes Select Committee. – Any reference in these rules to standing committees shall extend to select committees unless the context requires otherwise.

Rule 41(b): Reading of Bills (c) No bill shall be read more than once on the same day without the concurrence of two-thirds of the members present and voting; provided, no bill governed by Article II, Section 23 of the North Carolina Constitution or described in Rule 20(a)(2) herein shall be read twice on one day under any circumstance.

Rule 44(b): Conference Standing Committees (b) Only such matters as are in difference between the two houses shall be considered by the conferees, and the conference report shall deal only with such matters.

The writer represents Southern Wake County in the North Carolina House of Representatives.

Spend Incentive Money More Wisely

October 17th, 2005 by Skip

Hickory, NC

To the North Carolina Leauge of Municipalities

It is politically correct in some circles to argue that the granting of tax and other targeted incentives to attract new business will create net benefits to the communities where the facility is located. However there are many studies that demonstrate this premise is false. Writing in the Southern Economic Journal in 2004, economists from the University of Tennessee found that tax incentives limit revenue gains and that concessions such as site acquisition and infrastructure development require expenditure of public funds. The foregone tax revenue, combined with the higher public expenditures, means that state and local governments must either provide fewer public services or impose higher taxes on existing industry and residents to maintain balanced budgets.

The authors of the Tennessee study also found that the new company can crowd out other economic activity by shifting sales from existing firms, lead to congestion of schools and highways, and raise labor costs. These perverse consequences punish the firms who had already located or expanded through higher taxes and restricted services.

Since 1996 North Carolina has jumped to the forefront in offering these giveaways by spending over $350 million every year through the Bill Lee Act, Job Development Incentive Grants (JDIG) and the One North Carolina Fund (Governor’s discretionary fund to “close the deal”). In addition, local communities have been active in making property tax concessions through the back door by using “economic development grants”.

Some notable examples of State incentives include $161 million given to Nucor for its Hertford County facility, $115 million granted to Dupont for its Bladen County operations, and the whopping $267 million offered and accepted by Dell to locate in Forsyth County. The Nucor incentives amounted to $411,765 per job; those at Dupont cost $440,000 per position and the low wage ($28,000/year) jobs at Dell will cost the state $205,000 per job. No one knows for sure whether these companies would have located in North Carolina in the absence of the incentives but in the case of Dell, media reports indicate that we were only bidding against ourselves. In many other cases we know for a fact that the incentives did not actually induce the company to locate here. In fact, one of the triggers for the 1996 change in North Carolina’s philosophy, the loss of a Motorola manufacturing plant to Virginia, turned out to be a non-event due to the company’s change in plans.

I offer the following suggestion: Instead of wasting that $350 million on giveaways the state’s public policy should treat all taxpayers and companies uniformly. Invest in key state services that assist all companies including as highways and water and sewer facilities by an additional $50 million per year. Improve worker training at community Colleges and high schools by the same amount. Raise state employee pay an extra an $50 million annually to ensure better services by retaining trained professionals.

The Medicaid program injects a large amount of cash each year into every community and the overall public health is improved. Most importantly, the Federal government would match an additional state expenditure of $100 million by giving North Carolina $200 million. Purely as an economic development tool that beats the return on any tax incentive. Finally, give $100 million/year of this back to the taxpayers so we don’t continue to have the highest income tax rate in the Southeast.

We spend way too much money chasing foreign companies, to the detriment of the businesses and taxpayers who are already here. It’s time we used public money for the benefit of all North Carolinians.

In The Wealth of Nations Adam Smith said a “statesman who should attempt to direct private people in what manner they ought to employ their capitals, would not only load himself with a most unnecessary attention, but assume an authority which could safely be trusted, not only to no single person, but to no council or senate whatever, and which would nowhere be so dangerous in the hands of a man who had folly and presumption enough to fancy himself fit to exercise it.” As a state representative I call on my colleagues to abandon the “folly and presumption” of trying to pick the winners (and thereby creating losers) in the business world. Let’s get back to creating a climate where all businesses can thrive.

I hope you will read the attached article which includes the economic case against incentives, facts and figures on their cost, and the recent report on the costs of the Bill Lee Act.

View Attachment

The writer represents Southern Wake County in the North Carolina House of Representatives.
Stam for House/Blue Ribbon Transer Tax-Point of View

Why I Oppose the State Lottery

October 5th, 2005 by Skip

To the Editor of the Raleigh News & Observer

Dear Editor:

You recently ran a story to the effect that the North Carolina lottery will bring the bucks back home to North Carolina instead of being siphoned off into the swamps of South Carolina. This is far from the truth.

There are two basic economic reasons: administrative expenses and income taxes. The lottery has administrative expenses that will go out of state to GTech and other vendors. But, more importantly, one must consider this question after the imposition of income taxes.

A lottery is almost unique. Most economic activity has a rough equivalence between income and expenses with the difference being profit. But under our tax laws, lottery losers are not able to deduct their losses against income taxes. But the winners are, by definition, in the highest income brackets and taxed at the highest rates with only a trivial amount of losses to deduct against their winnings. The effect is that a North Carolina lottery actually loses about $210 million more to Uncle Sam than we are now losing by playing the South Carolina and Virginia lotteries. This more than offsets any loss to Virginia and South Carolina from the convoys to the state line. We see the cars. But we should also be able to visualize money flowing out of state when taxpayers put a $.37 stamp on their IRS returns with a bigger check (or a request for smaller refund) inside.

Conversely the taxpayers of other states are subsidizing us by our not having a lottery. Since most states have a lottery we are currently the winners of this game.
The chart below demonstrates the amount of money that North Carolina’s economy and North Carolina gamblers will cumulatively lose by this new lottery. Since this net loss is disproportionally from the poor (and near poor) we can now estimate the amount of money that will be transferred from the poor, which I will describe as approximately the 4th and 5th quintile of income, to the rest of us. It is at least several hundreds of millions of dollars. My best estimate is $500 million. A lottery is a real disaster for the 40% of the people in lower income groups. Please note that the assumptions used in calculating this chart are from lottery proponents and uses the figure of $1,800,000,000 that they say will be wagered in year 3 of the lottery in North Carolina.

	Assumed Rates	Now	With NC Lottery	Increase
Total Amt. spent by NC Gamblers		$300,000,000	$1,800,000,000
Administration Expenses	16%	$48,000,000	$288,000,000
Amt. Leaving NC Based on G-Tech Rate of	1%	$48,000,000	$18,000,000
Prize to NC Residents if Payout	50%	$150,000,000	$900,000,000
Federal Taxes Paid on Prizes	28%	$42,000,000	$252,000,000
State Taxes Paid Other States	5%	$7,500,000	$0
NC Income Taxes	7%	$0	$63,000,000
NC Sales Tax Not Included	3%	$5,985,000	$36,450,000
Prizes less Taxes ignoring Losses		$106,485,000	$621,450,000
Losses to NC Gamblers- amt. wagered		$300,000,000	$1,800,000,000
Net Loss to NC Residents who Gamble		$193,515,000	$1,178,550,000	$985,035,000
Loss to NC		$199,500,000	$270,000,000	$70,500,000

Of course there are many substantive reasons why a lottery is really bad public policy.

A lottery exploits the poor and gullible. Those with incomes under $20,000 per year play and pay much more than others. It is the most regressive tax possible on those who are not good at arithmetic.

Massive amounts of false and deceptive advertising are necessary to sustain a lottery. The lottery commission will breathlessly advertise a million dollar prize. After a winner is declared the Commission will pay it at $50,000 a year for 20 years. If I pulled that stunt as an attorney I would be reprimanded or disbarred since the present worth of such a prize is between $300,000 – 400,000 depending on interest rates.

The lottery bill is not about freedom. Gambling remains illegal under the lottery law which creates a state run business which the law declares to be criminal if you did it.

Easy access to gambling through a state lottery means that citizens will gamble a lot more. Studies consistently show that 5 percent of the adult population (and 10-15 percent of teenagers) will become compulsive gamblers. In one study, 86 percent of compulsive gamblers had committed a felony to obtain money to gamble. I estimate that North Carolina will have between 150,000 to 200,000 compulsive gamblers within 10 years. Bankruptcies, crime and poverty will follow. Taxpayers will be asked to clean up the mess.

A lottery hurts retail businesses. Lost sales mean fewer businesses and fewer jobs. Every dollar that goes to a lottery is money that cannot be spent somewhere else – or invested.

A lottery creates a climate which is conducive to organized crime. Once our poorer neighbors start gambling via the lottery they will soon discover that the Mafia offers better odds, unsecured credit, and no pesky reports to the IRS for the occasional winner. The effective rate of return on bets with organized crime is negative 6%. But with the lottery the effective rate of return is negative 65%. Where do you think our gamblers will turn when they have run through their bank accounts?

Putting the state in the gambling business sends the wrong message to children. Parents should raise their children to study hard, work hard, and learn to manage money. States with lotteries are saying to children “Don’t worry about work and savings. Gamble, hit the jackpot, and you’ll be rich!” Is this the message you want the state to send to your children?

One of the cruelest of lottery hoaxes is that it will pay for “education” for the “chirrun”. A lottery that produces what its proponents predict will only pay 4¢ on the dollar of the education budget. It will be the work of an afternoon for budget writers to reduce the state appropriation to match this by simply understating one time the cost of living. The Governor has already started this magical supplanting of education money by stating that much of his preschool and class size reduction monies now in the budget will be paid for by lottery money. Just one more scam on the trusting people of North Carolina.

Sincerely yours,

Representative Paul Stam

The writer represents Southern Wake County in the North Carolina House of Representatives.

Targeted Business Incentives are Not Good Public Policy

June 6th, 2005 by Skip

Summary

Targeted state incentives do not provide a net economic gain. They merely redistribute jobs and investment from one business to another and from one region to another. Price adjustments in free markets lead to maximum efficiency in the use of resources. Targeted incentives destroy the efficiency of the free market by favoring inefficient businesses over efficient ones. A number of perverse market consequences result:

One, the subsidy distorts the rate of return that businesses use to judge the profitability of investment alternatives.

Two, the subsidy is designed to create “more jobs”; however, the subsidy will act to squeeze more socially beneficial investments out of the market if incentives are continued into periods of relatively full employment.

Three, political favoritism is an inherent byproduct of targeted incentives.

Fourth, these incentives are very expensive. The same funds, if used for worker training or to match federal Medicaid dollars would give a much greater payoff.

Argument for Economics

The new policy of providing cash or other direct targeted incentives to individual companies represents a distinct break from North Carolina’s economic development policy before the mid-1990’s.

This practice relies upon the unreasonable assumption that governments can best judge which businesses will contribute the most value to an economy, because the government is taking money away from some firms, workers and consumers – through taxation – and giving it to others. This “opportunity cost,” is rarely factored into the equation. It’s focus is merely on the jobs or economic opportunities that appear to be created, not whether there is a net expansion of jobs or economic opportunities once the clear opportunity cost of the policy is subtracted.

Cash and other targeted state incentives have not provided a net economic gain in any jurisdiction. Instead, academic studies examining the subject have found that such incentives bear no statistically significant relationship to measures of state economic performance or well-being.

These incentives merely redistribute jobs and growth from one area to another, or from one firm to another, or even from one individual to another.

Adam Smith, The Wealth of Nations, made the link between profits and the public good. Smith described a society that relied upon competitive market transactions between sovereign individuals to achieve greater prosperity for the entire nation rather than a society that relied upon government-directed economic policy.

Smith contended that every individual would endeavor to employ capital in support of domestic industry for practical reasons.

A “statesman who should attempt to direct private people in what manner they ought to employ their capitals, would not only load himself with a most unnecessary attention, but assume an authority which could safely be trusted, not only to no single person, but to no council or senate whatever, and which would nowhere be so dangerous in the hands of a man who had folly and presumption enough to fancy himself fit to exercise it.” Id at 423.

Marginal equivalences, achieved through price adjustments in freely competitive markets, eventually lead to both maximum efficiency in the use of resources, and maximum welfare of the participants, given an existing distribution of income.

The key economic piece of information that all consumers and firms regard in making their decisions is price. It is the price of goods and services, freely determined in the market exchanges between consumers and profit maximizing firms that allows the adjustments of marginal rates of transformation of resources into finished products, and then the consumption of products into consumer satisfaction.

In the absence of government intervention in market exchanges, or monopoly power in production, participants in the free market price system seek and find maximum welfare for all.

Targeted business incentives act as a price subsidy to a specific firm selected by the government over any other firm that may also make an investment. When government intervenes in the market the ratio of net return to capital is not the same for all savers and investors.

Some firms benefit from the government intervention, while other firms do not. Some consumers benefit from the government intervention, while others do not. The government determines who will win and who will lose as a result of the use of the incentives.

Once the process of government incentive price subsidies begins, a number of perverse market adjustments and consequences result, none of which has a market-based resolution that would restore price as the key information variable. The process of private investment decision-making becomes more and more politicized and arbitrary. This is true even if the government officials who decide are paragons of virtue.

First, the price subsidy distorts the rate of return throughout the capital markets that all firms use to judge the profitability of investment alternatives. The government incentive acts to drop the real rate of return of the recipient firm, compared to the prevailing market rate of return for non-recipients, thus making socially inefficient investments possible and more likely to recur.

Second, in the absence of a market-derived, commonly observed rate of return, the socially optimal rate of investment does not equal the time preferences of consumers for present versus future rates of consumption. It becomes more rational for non-recipient firms, who are not initially blessed by government largesse, to begin searching for incentive handouts and focusing their attention on obtaining easy government revenues, not on obtaining more difficult market derived profits. The rate of invesment does not equal the time preferences of consumers for present versus future rates of consumption. It becomes more rational for non-recipient firms, who are not initially blessed by government largesse, to begin searching for incentive handouts and focusing their attention on obtaining easy government revenues, not on obtaining market derived profits. The rate of investment declines for profitable enterprises that would be undertaken, thus adversely affecting consumption in the future.

Government handouts serve not only to produce socially inefficient investments that would not otherwise be undertaken in the competitive market, but also serve to distort the rate of investment required to produce optimal levels of welfare in the future. This process eventually leaves the government as the dominant force in determining both the socially optimal rate of investment for the future and the type and location of investments that will occur.

Third, the government subsidy is designed, according to its proponents to create “more jobs.”

The “more jobs” provided by incentives produces a stream of income that may or may not have been present in the economy prior to the incentive. If “more jobs” is created when “more jobs” is not required because of relatively full employment, then the government incentive serves to squeeze other more socially beneficial investments and capital out of the market. Since “incentive” programs have a long gestational period, they invariably carry over into periods of relatively full employment.

The government not only determines who wins and loses, but its action with the incentive has a secondary effect of squeezing other investment alternatives out of the market. It is not, then, rational for non-recipient firms to either commit capital to investments in jobs that would compete with the government subsidized investments, or to invest for future time periods.

Fourth, while dropping the real rate of return for the recipient firms, the government lowers the risk of failure for the firm compared to the higher risk levels faced by non-recipient firms. The subsidized firm has a lower level of commitment to the success or failure of the investment. The incentive acts as an insurance policy for the recipient firm. If and when things go bad, or if and when some other state offers a better incentive, the firm has less at risk in abandoning the project.

This type of government intervention becomes self-perpetuating. If it took a government subsidy to recruit the firm to the location, and that subsidy helps promote a lack of commitment to the investment, then it seems likely that it will take more incentives to keep the firm from leaving. Unless the government continually meets the competitive bids of other states, the firm, basing its decisions on the political process, and not the market rate of return or market rate of risk, will continually extract greater incentives from the government agent in order to stay. By this time it has a covey of lobbyists in state who will become adept at finding subsidies.

Fifth, over time, the price subsidy to the recipient firm distorts the adjustment relationship between returns to capital and returns to labor that are expected to occur in a competitive market. In perfect competitive equilibrium the marginal equivalency of profits to consumer satisfaction is reached after a series of price-based exchanges. By providing the incentive, the government allows higher nominal returns to be achieved by the firm, vis-a-vis non-recipient firms than is consistent with the payment of prevailing wages in the labor market, although the return appears lower when the government’s subsidy is counted as part of the recipient firm’s investment. POLITICAL FAVORITISM IS AN INHERENT BYPRODUCT OF THE SYSTEM OF GOVERNMENT RECRUITMENT INCENTIVES

When government selects the recipients of incentives it overrides consumer sovereignty of free choice in the market place. The government substitutes its own judgement in place of the collective, autonomous, free decisions of the market on what type of goods and services should be produced. Any such judgment by the government is inherently arbitrary and capricious.

The government has no way of determining the social advantages of its decision. But its decision creates winners and losers, many of whom cannot be identified in advance. The power to decide who gets the incentive is perfectly symmetrical to a power to deny an incentive, or to provide a disincentive to a private firm considering location in North Carolina.

The incentive process w/ill ultimately result in graft and bribery in the selection process as all arbitrary decision making does.

The writer represents Southern Wake County in the North Carolina House of Representatives.
Source: Representative Paul Stam submitted a version of this article as a brief in Maready v. City of Winston-Salem for the John Locke Foundation.

2004 Legislative Session Report

August 4th, 2004 by Skip

This is a report of what the Assembly accomplished during its “Short Session” of May 10 – July 18, 2004. The main purpose of the Short Session is to “adjust” the Budget. I voted against the “adjusted” State Budget, (HB 1414- will spend $15.9 billion this year of state funds), for the following ten reasons:

It continues the same “temporary” tax increase that we voted against in 2003 – higher sales and income tax rates – about $445 million on a fiscal year basis. Since these higher rates are set to expire in 2005 the budget is fundamentally flawed because it funds recurring expenses with this huge sum of nonrecurring revenue, unless one plans to make these “twice-temporary” tax increases permanent by a third extension.
Adds $9 million for More at Four when the Governor couldn’t even spend all of last year’s increases.
It continues to spend and accrue hundreds of millions of dollars in ineffectual and discriminatory corporate giveaways, like the Bill Lee Act and the Cigarette Export Tax Credit, which have been thoroughly discredited by our own studies.
State Employees received miniscule pay raises for the last 3 years. This year’s $1000,or 2.5%, pay raise is inadequate to make up for 3 years of attrition.
Small corporations were promised a small tax cut (exempting the first $20,000 from corporate income tax). It did not happen.
Over $580 million of recurring expenses paid for by nonrecurring revenues in the budget, in addition to $445 million in the first item, for a total of over $1,024,700,000 in nonrecurring revenue paying for recurring expenses. The problem is $108,000,000 worse if ABC bonuses are recognized as a recurring obligation. This is like paying for groceries and the rent with your home equity loan.
Fiscal staff has estimated that the unfunded liability for retired state employees health insurance premiums is about $12 billion. To amortize this over 30 years would cost about $1.5 billion per year. This budget takes no real steps to resolve this structural problem. It sets up a trust fund to receive the funds but none are there.
This Adjusted Budget includes $1.183 billion dollars in new spending. 2004-2005 over 2003-2004 – a 8% increase, after adjustment to correct the FY for HB 1352, $64 million passed and spent in 2004-2005 but retroactively budgeted for 2003-2004.
Many (if not most) of the “cuts” are not really reductions in spending, but really are just taking reversions as “cuts” that historically would have reverted anyway! But the increases in budget authority are almost all for real spending increases.
Finally, members of the House were given less than an hour to read and study over 320 pages of budget documents before voting the last night of Session. I can’t read that fast.

Disappointments

The Assembly failed to address the State Marriage Amendment. This bill was signed by a majority of House members and a discharge Petition was signed by a majority of Senators. Leadership of the House and Senate refused to allow us to vote on the question: Whether North Carolina will allow polygamy and same-sex marriage or deny recognition to out-of-state marriages along these lines. The issue will inevitably come to our courts as people move here from Massachusetts.

The Assembly also failed to address any bills designed to protect unborn children and their mothers. I was the principle co-sponsor of HB 998- Woman’s Right to Know Act. A majority of House members signed as co-sponsors but the leadership decided that the status quo was its preferred public policy.

Positive Notes

Additional measures were taken to remedy and punish Domestic Violence. I was pleased to serve as Co-chair of the Criminal Subcommittee for House Bill 1354 and I include extracts from that Bill that relate to criminal law. There were other provisions regarding civil procedure, prevention and treatment. The House Select Committee on Domestic Violence will continue to meet through January. Please send my any suggestion that you have on the criminal law side. I was also pleased with the passage of the School Calendar Bill. Without any loss of instructional days we will redeem the summer from a creeping calendar.

And there were many technical bills passed, such as the exciting repeal of Article 6 of the Uniform Commercial Code.

Thank you for the opportunity to serve you during the 2003-2004 Session of the North Carolina General Assembly.

The writer represents Southern Wake County in the North Carolina House of Representatives.

Latin Legal Maxims

January 1st, 2004 by Skip

Latin Legal Maxims
By: Paul Stam, Representative of the 37th District

Objective: Match the Latin maxim with its English translation and give yourself a reward.

____ 1. Quasi agnum committere lupo, ad devorandum.
____ 2. Lex non exacte definit, sed arbitrio boni viri permittit.
____ 3. Omnibus qui reipublicae praesunt etiam atque etiam mando, ut omnibus aequos se praebeant judices, perinde ac in judiciali libro scriptum habetur; nec quicquam formident quin jus commune audacter libereque dicant.
____ 4. Juris praecepta sunt haec honeste vivere, alterum non laedere, suum cuique tribuere.
____ 5. Sanctio justa, jubens honesta, et prohibens contraria.
____ 6. Tam immensus aliarum super alias acervatarum legum cumulus.
____ 7. Nulli vendemus, nulli negabimus aut differemus, rectum vel justitiam.

A. A just decree, commanding what is right and forbidding the contrary.
B. I again and again command all who are set over the state, that they show themselves just judges to all, as is written in the judicial book, and that no fear deter them from declaring the common law boldly and freely.
C. To no one will we sell, to no one deny or delay, right or justice.
D. Like committing a lamb to a wolf to be devoured.
E. So immense a heap of laws piled one above another.
F. The precepts of the law are these: to live honestly, to injure no one, and to give every man his due.
G. The law does not exactly define, but leaves to the discretion of a good man.

Source: Blackstone’s Commentaries on the Law of England
Stam/Nulli Vendemus

The writer represents Southern Wake County in the North Carolina House of Representatives.

2003 Legislative Session Report

December 4th, 2003 by Skip

Hundreds of issues are considered and thousands of votes cast during each session of the Assembly. You have read about some of these issues in the press. Here are a few others which may not have received as much attention or upon which a different perspective may be helpful.

I did not vote for the Budget. With revenues running 7% ahead of the previous year I felt it was unnecessary to once again raise the sales and income tax rate. I also discovered that there are hundreds of millions of dollars in pork still in the state budget. Under these circumstances I could not vote for a tax increase. Spending levels will increase by about $1.5 billion over the next biennium and taxes by about $920 million (over revenue levels under preexisting law).B There are many good provisions in the budget.B But these could have been retained without the massive tax and spending increases. (HB397) 41 other House Republicans and 22 Senate Republicans also voted against the budget.
Revise Exclusionary Rule (HB 564) passed the Judiciary Committee on a vote of 7-6. This is an effort to separate murderers and rapists from their loopholes. I explored all options to see if it could become law this year. It gained the support of the Conference of District Attorneys and victims advocacy groups. An attempt on the Floor to amend another bill with this change in law was ruled out of order three times.B This struggle is not over.
As Co-Chair of the House Committee on Election Law and Campaign Finance Reform I am a primary co-sponsor of dozens of election law changes, Help American Vote Act (HB 842). One controversial change is the new requirement that voters sign the pollbook.
With Rep. Linda Johnson I am a primary co-sponsor of this year’s “Woman’s Right to Know Act” (HB 998), requiring some minimal but truthful information about abortion. Although the bill has a majority of the House as co-sponsors (and many more pledged to vote for it) it never received a hearing. A CNN/Gallup Poll indicates that this bill is favored by 75-85% of the voters. In the May 2004 Short Session we will attempt yet again to get a vote on it. For a report on the current legal status of unborn children in North Carolina please ask by email.
All of us want to see road improvements made promptly. But the Assembly funded additional improvements with a $700 million raid on the Highway Trust Fund. The raid violates the language on the 1996 bond ballot voted by the people. The money for light rail ($70 million) is just the opening shot of a colossal billion dollar waste of money that could otherwise be spent on real road improvements. I cast a protest vote against HB48.
Two technical bills that I introduced became law – HB 393 Modify County Tax Certification Authority; HB 394 Clarify Legal Filing Deadlines. Ask your lawyer.
Rep. Don Munford and I filed a bill to repeal the gift tax in 2006 (HB 1277). This tax collects very little money but can seriously undermine proper estate planning. We will pursue it in May.
Two local bills are now law – HB 517 – Holly Springs Town Charter Revision and SB 181 – Apex Quick Take/Historical Register. I worked on these bills with Sen. Richard Stevens. It was a privilege to work with the governing bodies and staff of these two towns.
Dix Hospital – Senators and Representatives for Wake County worked together to try to save a psychiatric hospital for Wake County. But we failed. Our task now is to make sure that there are adequate psychiatric facilities available. I have been appointed to the Joint Legislative Oversight Committee on Mental Health, Developmental Disabilities, and Substance Abuse Services.
HB 150 – Establish State Tuition Grants would allow 250 North Carolina residents who are full-time students at accredited 4-year private colleges (like Southeastern College at Wake Forest) to receive the same tuition assistance from the State ($1,800/year) as others (like Duke and Meredith). I was the primary co-sponsor with Bill Owens, a Democrat from Pasquotank. After a bruising 3-day battle it passed 66-47. The Senate vote was easier, 38-2.
HB 11 repeals six unconstitutional statutes and was amended into another bill (SCS for HB 281), which will likely become law in the fall redistricting session.B I was able to get eight other technical amendments into the Senate version of the bill on the subject of adoption but not the House version. I am working with DHHS and others to get these provisions into the final conference report in the Fall.
With Rep. Mary MacLawhorn, I co-managed the Disaster Price Gouging Bill (SB 963).B It passed the House 116-1.B The Senate concurred with the House changes. It makes excessive pricing during a disaster an unfair trade practice but does not arbitrarily set any price.
Display American Flag (SB 722).B We drafted a Committee Substitute, which received a favorable report from Judiciary II Committee, providing for additional freedom to display the American flag on private property. This will have to wait for the May 2004 short session.
We spent quite a bit of time on a Manufactured Housing Bill (HB 1006). The effect will be to dramatically lower interest rates by treating these properties as real estate for loan purposes instead of personal property. The bill also provides some additional consumer protection.
I spent much time arguing (mostly unsuccessfully) with my colleagues against targeted tax (and expenditure) incentives. These include the Bill Lee Act, Job Creation Tax Credit, Golden Leaf Foundation, Tax Increment Financing (SB765), and the Travel and Tourism Investment Act (HB1316) (Not passed) The economic case against these incentives is summarized in an article on my website, HYPERLINK “http://www.paulstam.info” www.paulstam.info. They cost the state several hundreds of millions of dollars each year. Economists believe that these incentives harm the economy.
Moratorium on the Death Penalty. We have counted the votes in opposition to this proposal and have provided written and electronic information to members to send to their constituents. If you would like a sample of the information that I have provided, please ask for it by email.
SB996 ABC-Sexually Explicit Performances passed on the last weekend of the session. It restores the ability of the ABC Commission to regulate live sexual performances where alcohol is served. Although the Bill passed unanimously, it was a struggle to pry it out of Committee.
SB6 Ban Video Poker (except at Cherokee) passed the Senate but has seen no action in the House. This addictive scam is opposed by all 100 sheriffs. I am working with the Senate sponsor and the large House majority that wants a vote in May 2004.
I’m all for free markets, but interest rates of 400-450% APR are a little higher than the poor can afford. When an amendment failed which would have limited interest rates to 150% APR several conservative Republicans decided to expend time and political capital to defeat the Payday Lending Bill. It passed the House but failed to pass the Senate when the news broke that the FDIC and the Comptroller of the Currency are cracking down on these lenders who affiliate with national banks.
As a member of the Appropriations Subcommittee on Health and Human Services it was my duty to consider the budget for the second largest department in State government. I am sure you read of drastic cutbacks in services. Those of you familiar with government accounting realize that even with the “cuts,” spending by that department will be greater this year than last.Legislative work did not stop when the Long Session ended in July. I have been appointed to several Study Committees (including a House appointment to the Legislative Research Commission). The two most active are:
The Joint Select Committee on Economic Growth and Development has been hearing from people all over the state concerning dire economic conditions in many of our towns. I have been working with Fiscal Research Division for a proposal to repeal tax incentives and to use the money saved to

lower the corporate income tax rate to 6% (as a first step – our rate is currently the highest in the Southeast);
lower the highest marginal income tax rate to 7-1/2% (since so many small businesses are organized as LLCs and partnerships which pay this rate and not the corporate rate – we are the highest rate in the Southeast);
provide increased funding for community college workplace training.

The academic studies which I have seen indicate that these are the items that matter (in addition to location which cannot be changed) and that incentives are at the bottom of the list of what works.

I Co-Chair the Criminal Sub-Committee of the House Select Committee on Domestic Violence. Our work includes revising all of the assault laws in North Carolina to more properly base punishment on harm to the victim. We really must take more seriously the problem of people beating each other up and trying to kill each other at home.
The second “extraordinary” session concluded on December 10th. I joined the defense in the House against the Governor’s Incentive Package. The total cost (over 10 years) is $214 million – mostly for RJR to “save” 800 jobs after it laid off 2,500 employees last year. If you want more information on tax incentives I can email it to you.

It has been a privilege to serve the citizens of the 37th House District in this session of the General Assembly. If you have questions on these or other bills please contact me and I will try to find answers for you.

The writer represents Southern Wake County in the North Carolina House of Representatives.

Cloning

March 3rd, 1998 by Skip

Opening Statement to the Twin City Republican Club on the Science and Ethics of Cloning
By: Paul Stam, Representative of the 37th District

It would be presumptuous indeed if I attempted to lay out the case against cloning of individual human beings in the time allotted. Instead let me raise 11 sets of questions that may help us think this thing through and through.

If only one parent becomes necessary for reproduction, what social structure will eventually be required to see that two adults are normally responsible for the support of a child? If the second parent is only “on the hook” as a matter of contract and not as a matter of a shared life, what is to keep that parent sacrificing in the lean years?
Should the law impose on the cloner secondary duties of child support and visitation. Why is there any less duty of support for the cloner than on a “father” who is liable for 18 years of support for contributing nothing more to a child’s life than sperm. At least the cloner specifically intended a child.
Should the amount of child support for which the cloner is liable be based on the mother’s standard of living or on the cloner’s standard of living.
We would all be rather put off if some eccentric rich guy decided to make 100 clones of Sadaam or Khadafi. But these men really do control great wealth and have little common sense. If the law allows cloning of individual human beings for some humanitarian purpose does anyone think that the law could then prevent Ross Perot from plaguing the 21st century with another 100 yapping Perots if his vanity demanded that he needed leadership for his political party.
Surrogate motherhood, in vitro fertilization and artificial insemination already separate reproduction from sex but genetic biodiversity is not adversely impacted because the male contribution to the DNA is still present. With cloning will biologic homogenity provide avenues for epidemic diseases similar to what the Irish potato did to Ireland in the last century.
People die prematurely. There are divorces, accidents, murders. One of the wonderful things about the normal process of courtship, marriage, sex and children is that a child has not only two parents but two families – multiple grandparents, in-laws, cousins, as well as brothers and sisters. This support structure can often step in when one or both parents fail. But if a child is intentionally created with only half of that support structure to whom will the child turn when the only other half fails?
Can a cloned human being be held in slavery? I hope not. If not, can a child be cloned for the purpose of a tissue match for the parent? Assuming that use of the child for that purpose entails some risk or pain who will give informed consent? If it is the parent have we not in effect sanctioned slavery, that is, using another human being as a means – not empowering that human being as an end in herself.
If there is no need for men in family formation what social consequences can we predict from an increase in the number of families without a resident father?
I have heard that the fertility rate was dropping in America, but really, is the population now dropping so quickly that the usual, virtually free, method of producing children needs to be supplemented by hyper-expensive methods? Couldn’t this be handled much more cheaply by simply encouraging adoption. Is the problem lack of children or vanity?
Is the vanity of a person who simply won’t mix his genes with another – if not in bed at least in the test tube – an important interest that needs to be humored by society? Or would character development be enhanced if those wishing to create children were required to develop social skills creating children in the context of a family?

Let me close with a musing from John Donne. Please imagine the cloner absorbing these thoughts from her patient.

“Muse not that by thy mind my body’s led For by thy mind my mind’s distempered So thy cares live long, for I, bearing part, It eats not only thine, but my swollen heart And when it gives us intermission.”
We take new hearts for it to feed upon.

Question 11. What has happened to romance?

I look forward to some answers to these questions.

The writer represents Southern Wake County in the North Carolina House of Representatives.

Is Public Education The Only Way That Children Can Learn?

March 12th, 1997 by Skip

Published in Neighbors

In Governor Hunt’s fourth inaugural address he used “publiceducation” so often that observers wondered if this was a new six-syllable word that he had invented. Is there something intrinsically wrong with private education?

What is this debate about? It is a tax fairness issue and an education quality issue. In North Carolina government at all levels spends $4,500 (now $7,500) per child for public education. The parent of a school age child who chooses private education pays twice – once in tuition and again in taxes. The concept, known as school choice, vouchers or tax credits, seeks to reduce the unfairness of the tax code on that parent by allowing a small portion of that parent’s taxes to be redirected so that the parent can pay a small portion of the tuition.

A poll commissioned by the John Locke Foundation found that seven out of 10 North Carolina voters believe that parents should be able to use state education funds to select any public or private school for their child to attend, provided that this would not increase the cost to taxpayers. Of course it would not increase the cost. If a fourth-grader is being education at public expense for $4,500 (now $7,500) and is withdrawn from the public school system at a cost to the state of $1,000, the state and county have made a profit of $3,500 (now $6,500) on this transfer.

Under a fiscal simulation of the $1,000 per year tax credit prepared in 1996 by the Fiscal Research Division of the General Assembly, if even 10 percent of public school students were diverted to private schools this tax credit would have saved the state $88 million and would have saved local school boards $434 million that year – a combined savings of one-half billion dollars.

Parents should not have to pay twice for private education. Gov. Hunt should learn a new vocabulary word – “education”.

The writer represents Southern Wake County in the North Carolina House of Representatives.

More Freedom, Less Government

November 1st, 1996 by Skip

More Freedom Less Government
By: Paul Stam, Representative of the 37th District

How big do you want your government to be? Conservatives generally advocate less government. Yesterday’s liberals (who have curiously changed their name to the meaningless ‘moderates’) invariably act to create more government.

What is the issue here? Government has only two ultimate tools to use when its teaching function is ignored. It can put you in jail. And it can seize your property. It is in light of these coercive remedies that the debate over the size and scope of government should be understood.

There are three types of government activity in this debate. The first is core government justice. Only anarchists seriously dispute that government should operate the courts, the police system and the prisons. It should enforce laws to prevent fraud and provide to all of us a comprehensive, just and understandable legal framework. At the national level this includes provision for the national defense – including military and diplomatic measures – and disaster relief. On this set of core government the debate is over the proper level of government to provide the service. Conservatives generally want to decentralize to the lowest appropriate level – usually local or state government. And liberals try to concentrate power up the food chain – preferably with the U.N. – and if not feasible then with Uncle Sam. Bill Clinton’s phantom 100,000 police officers are a classic example. Policing is a proper function of government. But only liberals could imagine that there is some advantage in having local police paid for by the federal government (which is currently 5 trillion dollars in debt) in order to relieve the tax burden on local governments which run a net surplus.

The second type of government activity involves projects that only the government can do efficiently and that most of us recognize as beneficial to the community. While neighborhood groups will debate whether a highway should take this or that route they do not disagree that construction and maintenance of roads, water supply, and sewer lines are a proper function of government. The debate between conservatives and liberals focuses on efficiency and allocating the costs between users and the community. Conservatives support allocating costs to users where feasible. Liberals tend to charge the community. Conservatives have economic principles of supply and demand on their side.

It is the third category of government activity that a huge philosophical conflict develops. Historically liberals have wished for government the power to implement any “good idea”. If the performing arts are a “good thing” then liberals want the government to perform art. If everyone needs health care liberals want government to provide it. Education is indispensable so liberals demand a government education monopoly.

Since we all must breathe liberals may soon propose the NBA – the National Breathing Authority – and will tax the air and tell us how much of it we may consume. It’s not that liberals are bad people. They are just fizzy thinkers.

In the great debates over the scope of government there is often a real difference that reveals what voters really think, not only about government, but about themselves. Those who have grown up dependent, pampered and coddled are comfortable with a government as a benevolent nanny. It is all they have known. They are called liberals. Conservatives see the potential for abuse in most extensions of government power and try to hold the line at core government services.

Legislative debates often are on the very margin. In the summer of 1996 the State House and Senate debated whether there would be a 10.689 billion dollar budget as requested by Governor Hunt or a 10.315 billion dollar budget adopted by the House. They compromised at 10.446 billion dollars for this year, a 6.7% increase in spending over the previous year. That is an argument at the margin. But is not a real conservative/liberal struggle.

When you see entire nanny programs eliminated instead of reduced by a trivial amount there or there then you will know what conservative thought has become ascendant. More freedom, less government.

The writer represents Southern Wake County in the North Carolina House of Representatives.

Three Strikes and You’re Out of Here

August 22nd, 1996 by Skip

Three Strikes and You’re Out
By: Paul Stam, Representative of the 37th District

Three strikes and you’re out. As California led the way North Carolina followed. Sounds like a good wholesome American rule. It goes with apple pie, the 4th of July and the All Star Game. We all know the rule but how will it really fit in our criminal law. The idea is that with the third violent act the career criminal will be put away for life. How does it work?

First, the crimes of violence in question may not be what you think. While they include such crimes as murder and armed robbery, they also include a consensual sexual act with the mother’s boyfriend, an assault with a gun with intent to kill which completely misses, and an 18 year old wimp delivering marijuana to a 15 year old thug.

Let’s see how this works out in practice.

Your fifteen year old is walking home from school one day when accosted by Josephine, the local sixteen year old bully. She demands his lunch money while brandishing a knife. Your son, being the circumspect boy that he is, gives her his money. But being somewhat brash he says, “We’ll get you. Don’t you know about “three strikes and you’re out of here”.

Josephine Bully immediately calls her lawyer on her cellphone. She explains the situation carefully. Her lawyer says “Josephine, last year weren’t you convicted of having sex with your boyfriend’s teenage son. And this year weren’t you convicted of encouraging your little sister in an act of prostitution. Those are two strikes. Josephine, you are going to jail for life, my friend, for robbing that boy of his lunch money.”

Josephine Bully turns back to your son, Hey you wouldn’t tell on me, would you?” He says, “Yes I would”. She says, ” Sorry, I have to kill you. If I let you live I am going to prison for life for taking your lunch money. But if I kill you, there are no witnesses. And even if they catch me I won’t do any more time for murder than for robbery.”

I don’t think we should use baseball analogies to structure criminal law. While “three strikes and you’re out” sounds good, it may actually cause more serious crimes like murder.

The writer represents Southern Wake County in the North Carolina House of Representatives.

Pro Bono Work for a Homeless Woman

January 20th, 1992 by Skip

January 20, 1992
To: Mr. Victor Boone

Dear Victor:

This is a conclusion to our efforts involving AAS.

AAS was referred to us, having been evicted (by disconnection of electricity) from her home along with her 9 year old daughter. We first obtained the help of a local church in housing for a night.

Later investigation revealed she had been paying rent regularly but was provided no operating toilet, no water, no usable heat and suffered innumerable other housing code violations. Actual damages were $2,511 which was all the rent she had ever paid.

Suit was brought for breach of the Covenant of Quiet Enjoyment, Residential Rental Agreements Act and Unfair Trade Practice. A default judgment was obtained for $7,533.00.

Defendant claimed to have no assets. A local surveyor, Smith & Smith Surveyors of Apex, donated its time in locating a one-third interest in 1.2 acres of “lost” property and 2.7 acres titled in the name of Defendant’s former wife, who had long gone up north. We prevailed on the former wife to reconvey the property to the Defendant.

After 13 Sheriff’s sales the property brought enough to:

Reimburse Legal Services its $500;
Reimburse Holleman & Stam $2,300 of court costs advanced by it;
Pay the client $6,500. There were two other judgment creditors who received another $6,500.

Difficulties included:

Finding property to sell and getting adequate bids;
Defendant went into bankruptcy during the course of the sales and then died – necessitating substitution of numerous parties;
A special proceeding was required to determine distribution of the execution proceeds.

Recommendations:

The Sheriff of Wake County insists on advertising execution sales in the News & Observer. This is an economically wrong approach when the land is located in the county. It greatly inflates costs and reduces recovery. Can you do anything with him? $3,600 of the sales price went for advertising the two sales.
Volunteers Lawyers Program could thank A. Earl Smith at Smith and Smith Surveyors, P.O. Box 809, Apex, NC 27502, for donating his services.

It was a pleasure to work on this.

With best regards, I am

Sincerely yours,

Representative Paul Stam

The writer represents Southern Wake County in the North Carolina House of Representatives.