Can Pat McCrory accomplish what he promised in the campaign?

Some pledges – especially those on unemployment and tax cuts – will prove difficult to fulfill

jfrank@newsobserver.comNovember 10, 2012 

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Governor-elect Pat McCrory speaks during his first press conference at the Albemarle Building in Raleigh, N.C. Thursday Nov. 8, 2012. McCrory traveled to Raleigh on Thursday to set up his transition office, meet with Perdue and hold his first press conference.

CHUCK LIDDY — cliddy@newsobserver.com

  • The McCrory agenda Pat McCrory made a number of promises on the campaign trail. He is expected to lay out a more formal agenda in the coming months. But a broad review of the comments he made in dozens of appearances during the campaign revealed five main areas in which he is pledging action. Here’s a look at some of his top goals and analysis of their feasibility:   Goal: “My goal is to be beating our neighboring states” in terms of unemployment. Third statewide televised debate, Oct. 24 Background: McCrory said he expects to see North Carolina’s unemployment rate fall lower than its neighbors’ rates at the end of his term and beat South Carolina after his first year in office. North Carolina’s jobless rate in September was 9.6 percent, the fifth highest in the nation. The rates for border states: South Carolina, 9.1; Georgia, 9.0; Tennessee, 8.3; and Virginia, 5.9 percent. Analysis: Using current figures, North Carolina’s rate would need to drop 3.8 percentage points to best them all – assuming all the states’ workforces remain static, which is not likely. But take September’s numbers: To post a better rate than Virginia, the lowest among neighboring states, North Carolina would need to put more than 173,000 additional people in jobs, experts said. Moving ahead of South Carolina, whose rate is closer, may prove more doable. But the problem, analysts said, is that McCrory is at the mercy of national and global forces. Unless the governor-elect proposes a massive government spending plan on infrastructure projects, federal policy changes are more likely to move the needle than state actions, experts said. Can he do it? This is likely McCrory’s most difficult challenge, and economic analysts suggest it may be too optimistic. Goal: “If I have an opportunity to reduce a tax, the first tax I will reduce is the income tax.” UNC-TV’s “North Carolina Now” program, April 9 Background: McCrory is focusing on the personal income tax because he believes the state’s current rates – between 6 percent and 7.75 percent – are limiting job growth. Analysis: The governor-elect is not the first to propose an income tax cut. State lawmakers have studied the issue for decades and made little progress. McCrory will have a Republican legislative majority to help him, but it could still prove difficult, given the intense lobbying expected on the issue. Personal income tax revenue is more than 50 percent of the state budget, so Republicans would need to increase other taxes to make it balance. Can he do it? It will require extraordinary political muscle, but McCrory appears willing to fight. Expect some cut in the income tax rate. Goal: “I want to ... implement a 25-year plan for infrastructure to show our business community and our citizens exactly how we plan to invest their hard-earned tax dollars.” First statewide televised debate, Oct. 3 Background: As Charlotte mayor, McCrory made transportation a priority and pledged to do the same as governor with a concrete plan for future spending on the state’s roads, bridges, ports and other infrastructure. Analysis: Earlier this year, North Carolina transportation officials embarked on the same course. The state Board of Transportation updated its long-range outlook with a 2040 Statewide Transportation plan looking 28 years into the future to anticipate priorities and needs. Can he do it? McCrory may want to expand or tweak the existing plan, but what he promised was already done by the current administration. Goal: “We’re going to form a coalition (with Virginia and South Carolina) and share that revenue” from offshore oil and gas drilling. WRAL-TV “On the Record” interview, Sept. 22 Background: Republican state lawmakers approved a bill instructing the governor to enter a three-state, revenue-sharing compact in 2011. Gov. Bev Perdue vetoed the bill on constitutional separation of powers issues. The royalty revenue would come from the federal government’s leases allowing energy companies to drill. Analysis: McCrory will find support for this plan in the legislature, given that it passed such a measure last year. The Obama administration also could be open to drilling off the Atlantic coast with some precautions. The tougher part is negotiating the revenue-sharing deal. But the Republican governors of Virginia and South Carolina helped elect McCrory, so he should find working with them easy. Can he do it? With support from the legislature and likely the federal government, offshore drilling appears entirely achievable. Goal: Would you hold regularly scheduled news conferences? “Absolutely.” WRAL-TV “On the Record” interview, Sept. 22 Background: Under the theme of transparency, McCrory pledged to hold regular news conferences to communicate with the public. Analysis: McCrory didn’t define what he meant by regular press conferences, but as mayor he said he was frequently accessible to the media. Former Gov. Jim Hunt held weekly question-and-answer sessions with reporters in his first two terms and less frequently in his third and fourth terms. His successor, former Gov. Mike Easley, was much less accessible. Perdue did not have regular news conferences, but was usually available after public appearances. Can he do it? McCrory will need to prioritize this goal, but other governors made the time and used public support to effectively push an agenda. Compiled by staff writers John Frank, Teresa Leonard, Austin Baird, Bruce Siceloff and John Murawski.
  • More information Five McCrory goals: •  By the end of his term, reduce North Carolina’s unemployment rate below that of surrounding states •  Reduce the individual income tax •  Implement a 25-year plan for transportation improvements •  Form a coalition with Virginia and South Carolina to share revenue from offshore oil and gas drilling •  Conduct regularly scheduled news conferences

Like all political candidates, Pat McCrory made many promises in his campaign. Now comes the hard part.

A review of dozens of speeches and interviews from McCrory’s successful campaign revealed three top policy initiatives: revamp the tax code, step up energy exploration and foster job creation.

His other priorities included improvements to the education system, long-term transportation planning, a customer-service mindset and more transparency in state government.

A number of the Republican’s proposals are under way in the current administration, but experts suggest other pledges will prove difficult to fulfill.

One of them is McCrory’s idea to cut corporate and personal income tax rates. The N.C. General Assembly has commissioned numerous studies in the past decade and made little progress.

“The irony is there is a broad consensus” to reform the system, said Alexandra Sirota, a policy analyst at the liberal N.C. Justice Center. “But in practice it is very difficult to maneuver through all the different interests.”

At the same time, much of McCrory’s agenda remains undefined.

In the campaign, he offered few details and no road map for his platform. And last week, in his first days as governor-elect, he sidestepped frequent questions about his policy positions.

“Right now, I’m not going to discuss specific policy issues,” McCrory told reporters in Raleigh.

McCrory appointed a transition team last week that will begin to assemble his agenda and tackle the chief issues, including economic development, taxes and transportation.

“This team will be hiring people to look at certain policy issues and make the transition as easy as possible and work with members of the legislature,” he said.

State lawmakers and the public will expect the governor-elect to chart a more detailed course in the days ahead, political observers said. But his vagueness so far is a political calculation.

“He took the approach of aspirations instead of specifics,” said John Dinan, a political science expert at Wake Forest University. “The more you take pretty clear positions on contentious issues, the more you raise the possibility of upsetting people.”

McCrory will get help on a few campaign pledges from the current administration. The state transportation board adopted a new plan earlier this year for roads and bridges that looks 25 years in to the future, as the McCrory campaign wanted. Likewise, his goal to emphasize technical and vocational education is a current focus for the state’s community colleges.

Cutting taxes?

But the tax plan is a bigger hurdle. McCrory wants to make the state’s tax rates competitive with its neighbors. North Carolina’s 6.9 percent corporate tax rate is the fifth highest in the Southeast and the personal income tax – ranging from 6 to 7.75 percent – is the highest.

At their current levels, McCrory believes they hurt the state’s ability to recruit companies and unduly burden existing businesses, although Democrats point to business rankings with North Carolina at the top.

Both liberal and conservative economic analysts agree that the current system is over-reliant on personal income taxes and too vulnerable to economic swings.

The biggest obstacle is finding revenue to offset any cuts in the tax rates, particularly the personal income tax, which generates about $10 billion in revenue. That’s half the state budget.

Options include eliminating some of the many existing tax exemptions and broadening the base to add a levy on services or items not currently subject to a tax. But the tax breaks are all protected by special interests that helped elect him.

“It’s going to take some political will and courage to tune out all those special-interest groups,” said Brian Balfour, a fiscal policy analyst at the conservative Civitas Institute.

Different type of job

As Charlotte’s mayor for 14 years, McCrory made a number of controversial proposals. His biggest policy initiatives included a referendum to pay for a mass transit system with a sales tax hike and a plan to build a downtown basketball arena once rejected by a non-binding public referendum.

Speaking to reporters last week, the governor-elect said he would bring “a mayor’s attitude to the executive branch.”

But even with Charlotte’s size, the job as mayor is much different than governor, which speaks to the learning curve he faces in his first full-time public-sector position. McCrory worked as an executive at Duke Energy but never led a major enterprise, particularly one that makes daily decisions affecting people’s lives.

The mayoral position is a part-time job, and the mayor only voted on city council matters in case of a tie, though McCrory did have veto power. Charlotte’s city manager served as the chief executive.

“Technically, the mayor is a legislative position,” said Eric Heberlig, a political science professor at UNC-Charlotte. “Where being governor is really an executive position.”

But McCrory’s strongest skill, Heberlig added, is his ability to convince others to support his vision.

“He’s used to dealing with the media,” he said, “so he’s certainly capable of communicating his agenda and selling the public on it.”

Frank: 919-829-4698

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