Publisher's note: The author of this post is Becki Gray, who is vice president for outreach for the Carolina Journal, John Hood Publisher.
The 2016 N.C. legislative session was short, but full of significant action: limiting the growth of government, cutting taxes, paying down debt, building savings, raising teacher pay by almost 5 percent, protecting property rights, and continuing the momentum toward economic growth that began in 2011.
What's ahead? More of the same, I hope. As we look toward a new legislature convening in 2017, there are opportunities to continue on the same path of reform that has led to a vibrant, revitalized North Carolina with one of the strongest economies in the country.
A longtime debate continues between economic development and economic growth. Progressives tout economic development, a system in which government decides which businesses get resources at the expense of the vast majority of taxpayers, picking winners and losers through subsidies, tax breaks, and carve-outs for a select business or industry.
On the other hand, economic growth, favored by free-market advocates, is based on policies that maximize growth for all businesses: low and fair taxes and reasonable regulations, providing a well-skilled work force, consistent and fair treatment, and a fertile environment for entrepreneurs and investors.
For those committed to the long term, growth policies result in a strong economy. We've seen this in North Carolina with 300,000 net new jobs created since 2013 and unemployment down in all 100 counties. Gross domestic product, job creation, and per-capita income growth all beat national and regional averages. We have the ninth-strongest economy in the country.
But the battle against economic development incentives is never-ending. This session we saw the introduction of a new markets tax credit. Expect to see this idea revived again, along with proposals to reinstate solar tax credits, expand film credits, and revive a research-and-development grant program.
Expect to hear noise about small-town main-street revitalization and historic preservation, regional community and low-income community development strategic planning, land-use credits and grants, and training on "economic development" programs.
Those incentives redirect hundreds of millions of dollars that could be better spent on tax reduction, training well-skilled workers, infrastructure investments, or returning tax dollars to those who earned them.
Economic growth depends on innovation and investments of entrepreneurs. How do you get capital into the economy? If you are an economic developer, you push things like a new market tax credit or taxpayer-funded cash giveaways. If you are committed to economic growth, you look at repealing North Carolina's capital gains tax. Complete repeal would pump $500 million back into the state's economy to be re-invested by proven job creators, North Carolina's small-business community.
The right investments can fuel economic growth as long as those investments are broad and benefit everyone. Hundreds of millions of dollars have been invested in roads, bridges, and highways determined by formulas based on safety, congestion, and economic need. Economic developers look to investments in bike lanes, transit, and light-rail trains that come with huge short-term and long-term costs to the benefit of a very few.
As we look forward, we should focus on further economic growth, fueled by entrepreneurs, job creators and people investing money and resources in a market-driven economy. We still have a lot of work to do, but it is unquestionable that North Carolina is moving forward, stronger than ever, even stronger tomorrow.