Commentary

Christensen: McCrory sees turnaround, but is one needed?

rchristensen@newsobserver.comJanuary 12, 2013 

— Pat McCrory was inaugurated Saturday as North Carolina’s chief executive, billing himself as a governmental version of a corporate turnaround specialist.

North Carolina has been called everything from “the Dixie Dynamo” to “one of America’s leading edge states.”

But McCrory has said repeatedly in recent months that North Carolina’s “brand” has become tarnished. McCrory, a 56-year-old former utility industry executive, said North Carolina needs a new business plan – one that includes a cut in certain taxes, reduced regulations and better customer service.

“Government must work with business as partners – not against them as adversaries – to identify and eliminate burdensome taxes, rules and regulations that stifle economic growth,” McCrory told about 2,500 people Saturday in front of the Capitol.

The McCrory administration has a Dan Moore déjà vu feel. The conservative Democratic governor, who led the state from 1965 to 1969, also had a business background, as legal counsel to Champion Paper in Canton. Moore also had a number of businessmen in his Cabinet, although not as many as McCrory.

McCrory’s Cabinet is dominated by business executives. His budget director runs a large retail chain. His environmental enforcer runs an environmental clean-up firm, his administration secretary is an oil distributor, his revenue secretary is a former tobacco industry executive, and his commerce secretary is a former utility executive.

Past Democratic administrations have been pro-business. But it is clear that business feels a special kinship with the McCrory administration.

During the past campaign, one of McCrory’s refrains was to call for a Carolina comeback, although he did not use that language in his inaugural address.

A state of some disrepair

That North Carolina has slipped in recent years seems beyond dispute.

The state had the country’s fifth-highest unemployment rate in November, per capita income has slipped from 29th to 37th in the past 11 years, and the poverty rate has climbed from 12.2 percent to 17.4 percent since 1990.

There is little consensus as to why. Republican lawmakers point to the failed policies of past Democratic leaders in Raleigh. Democrats blame the Great Recession and trade policies under a Republican president. Economists cite historic declines in such traditional industries in textiles, furniture and tobacco, and the state’s heavy reliance on manufacturing – which is sensitive to economic downturns.

McCrory and his Republican legislative allies want to address some issues that have not received sufficient attention in recent years, said John Hood, president of the John Locke Foundation, a conservative think-tank in Raleigh.

The state, Hood said, has traditionally been good at looking at the factors that affect long-term growth – such as investing in education and in infrastructure. McCrory on Saturday praised the state’s university and transportation system.

But what was ignored, in Hood’s view, are the more immediate needs: how make the state’s regulatory system, legal system and tax climate more conducive to economic growth. That is what McCrory and the GOP legislature hope to accomplish.

Hood said the two goals are not mutually exclusive – you can adjust the tax and regulatory environment to make it more friendly to economic growth without damaging education and infrastructure.

“They (Republicans) don’t think they are sacrificing the long-term benefits of an educated work force and a well-maintained infrastructure just because they want to work on regulatory and tax issues right now,” Hood said. “The left and Democrats see them inherently at odds.”

It’s not all bad

While North Carolina may be struggling in many respects – which is why the state residents voted for change in November – there are still many things going well in the state. This is not some struggling Rust Belt State that is losing population.

McCrory is governor of the 10th-largest state and one of the fastest growing in the country. It is a magnet for people from all over the country – scientists who work in the Research Triangle Park, bankers in Charlotte, college students at dozens of campuses, Latinos looking for work.

The state’s growth stunned demographers. In 1997, they predicted that North Carolina would have 9.3 million people by 2025. Instead, the state already has 9.7 million.

North Carolina is only one of eight state governments with a AAA bond rating. The University of North Carolina system and the state community college system are among the most admired in the country. North Carolina just reported its highest high school graduation rate. Numerous surveys have shown North Carolina as one of the most attractive states for business.

“Charlotte has become one of the banking centers of America,” said Ferrel Guillory, director of the Program on Public Life at the University of North Carolina at Chapel Hill. “Raleigh-Durham is spoken of in the same breath as Silicon Valley and Route 128 in Boston. There is a lot about this state that remains on the up escalator, that is still creating a new economy, new jobs.”

Different views of N.C.

In many ways, there are two starkly competing narratives being told about what is happening in North Carolina.

Last week, Senate leader Phil Berger, a Republican, said the state was losing jobs, losing businesses and failing to educate its citizens.

“Our leaders had lost their way,” Berger told the Senate. “And our state lost its place as the leader of the South and the envy of the nation.”

Contrast that with the authoritative Almanac of American Politics, edited by conservative commentator Michael Barone: “In the first decade of the 21st century, North Carolina emerged as one of America’s leading-edge states, with a booming demography and vibrant culture that are in many ways typical of the way the nation was going – or wanted to go.”

So which is it? Has North Carolina lost its place or is North Carolina leading the way? Or is the state, like Guillory suggests, like a Hudson Belk department store with up and down escalators?

McCrory’s good fortune

All the political stars are aligned for McCrory, who has a Republican legislative majority that is in general philosophical agreement with him and that wants him to see him succeed.

His timing is also good. McCrory is taking office as North Carolina is coming out of a recession, while his two Democratic predecessors, Bev Perdue and Mike Easley, took office as recessions were gaining momentum.

The job picture has been steadily improving, with unemployment dropping in North Carolina from a high of 11.4 percent in January 2010 to 9.1 percent in November.

All of which suggests that the Carolina comeback has already begun.

Christensen: 919-829-4532 or rchristensen@newsobserver.com

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