Who will emerge as leaders
By Asheville Citizen-Times
Feb. 1, 2003 11:06 p.m.

As N.C. faces a budget crisis, "The challenges we confront right now, today, in North Carolina have never been more complex nor more interconnected.

"In the past North Carolina has developed innovative policy initiatives to confront its challenges head-on. Today, as then, the big ideas must come from good people who are able to see trends that are not yet visible to others.''

- (North Carolina 20/20, 2001)

North Carolina Progress Board (created by the General Assembly in 1995)

By Casey Hurley GUEST ANALYST

Who are the people with the "big ideas" that might lead us out of financial crisis? Both Republicans and Democrats alike express concern over how the last two budgets were balanced - by cutting programs, withholding money from retirement funds and taking money from the highway trust fund.

North Carolina's tax revenue isn't supporting the state's spending programs. Estimates of next year's shortfall are $1.5 billion to $1.8 billion, if the half-cent sales tax hike is dropped as scheduled in July.

On the other hand, Gov. Mike Easley said recently that, "North Carolina is one of just a handful of states that has no mid-year budget shortfall. The state is now on a path of sound budgeting. But we must continue to change our budget model to stay balanced."

The governor did not say how "to change our budget model."

When the question, "Who has ideas about how to get North Carolina out of the current budget crisis?" was posed to our regional state legislators before the General Assembly convened Wednesday, House members said it was too early to tell.

Their uncertainty presaged a bitter fight over who will hold the powerful House speaker's position. Days before the session began, Rep. Michael Decker, a conservative Forsyth County Republican, switched parties with the result that the House is now split evenly with 60 Republicans and 60 Democrats.

Even after the controversial Republican nominee for the job, Rep. Leo Daughtry, R-Johnston, withdrew, making way for a nominee more acceptable to many Republicans, Rep. George Holmes, R-Forsyth, neither Holmes nor the Democratic nominee, Rep. Jim Black, R-Mecklenburg, could get the necessary 61 votes to be elected on opening day. After five votes the House recessed.

When it reconvened Thursday morning, one additional vote was taken, with the same result as the five taken on Wednesday: All 60 Democrats voted for Black, and Republicans split with 55 votes for Holmes and 5 votes for Richard Morgan, R-Moore. The House adjourned Thursday to discuss options for power sharing over the weekend. Among those voting for Morgan was Rep. Wilma Sherrill, R-Buncombe.

"I made a commitment to Richard Morgan because I believe in my heart that he is the best man to lead this House," Sherrill told a Citizen-Times reporter Wednesday.

"The speaker has all the authority," Sherrill said before the session began. "He appoints committees. He names the leadership team to deal with the crisis, and he sets the tone. Each candidate for speaker would pull together a different set of people."

Democrat Sen. Marc Basnight of Manteo was re-elected president pro tempore of the Senate. Basnight has legislative seniority, and a 28-22 Democratic senate majority.

"Marc Basnight has the power to get what he wants," freshman Sen. Tom Apodaca, R-Henderson, said before the session began.

Veteran legislators said the leaders of the House and Senate wield enormous power over the legislative process, and over those who will assume leadership positions.

Paul O'Connor, who writes a column on state government, described the power legislative leaders have over their colleagues this way: "As these legislators decide for whom they will vote in the speaker's race, they are undoubtedly weighing how their votes will affect their own careers. ... A speaker will reward his or her supporters with good committee and office assignments."

Do those elected to these powerful positions have ideas for getting us out of the budget crisis?

Rep. Sherrill was disappointed when, "At our caucus, one of the candidates for House speaker was asked, `What is your vision? What will you do about the budget crisis?' He had no ideas about what to do. He had no plan. He had no vision."

The structure and rules of the North Carolina state legislature place leadership squarely in the hands of the governor, and the leaders of the Senate and House.

In interviews before the session began, regional lawmakers didn't speak about changing this structure or these rules.

Instead, they hoped legislative procedures would lead to reasonable compromises.

"With our current budget crisis, we have an opportunity to make some big changes," said Rep. Trudi Walend, R-Brevard. "These will be extensively debated with amendments that will lead to compromise. The moderates, conservatives and liberals will debate, which means it usually comes to the middle."

"Some Democrats and some Republicans need to get together to say, `We are of like minds. Let's get together and do something about this situation,'" Sherrill said. Almost one-third of the General Assembly (52) will be freshmen this spring. Several legislators see this as an opportunity for new ideas. Sen. Joe Sam Queen, D-Haywood, is optimistic because he heard good questions from his colleagues when they were briefed on government operations by the NC Institute of Government. He also hopes the legislature can address the crisis in a bipartisan manner. So, with a large contingent of new legislators and with a budget crisis looming, are we likely to see any big changes in the budget model? The N.C. Progress Board's North Carolina 20/20 report says, "We must give our strongest support and commitment to leaders who will look beyond today's headlines, dig out the underlying trends, and then reset our course." What are the "big ideas" being proposed? Many Republicans want the state to use a zero-based budgeting approach. ZBB is based on the principle that each annual budget is built with only the most essential expenditures taken for granted from year to year. (Some would say "no expenditures" are taken for granted, thus the "zero" idea; but, in practice, this extreme approach quickly becomes ridiculous.) A ZBB approach requires departments and agencies to justify all but their most essential budget requests. This approach is based on the assumption that state agencies and departments are spending inefficiently. This is probably an accurate assumption, for no organization is always efficient. With zero-based budgeting, spending judgments are shifted from those in the departments to those in a budget "enforcement" position. Actual cost savings would be directly related to perceived unnecessary spending, minus the additional costs associated with the ZBB approach. Democrats have taken a different approach to reducing the cost of state government. When Gov. Easley realized he inherited a budget with overestimated revenues, he immediately asked state agency directors and department heads to solicit savings ideas from state employees. More than 800 ideas were submitted. Most of these involved small savings, but some were more extensive, saving thousands of dollars. Gov. Easley then directed the agencies and departments to implement all the cost-saving suggestions that did not require legislative action. Some of those cost saving measures have already helped the state balance its last two budgets. A list of the ideas and projected savings is available from the governor's office. A Taxpayer Protection Act is being suggested by Republicans. This proposal involves the passage of a law preventing the adoption of a budget that exceeds the previous year's budget, adjusted for inflation. This idea coincides with the "no new taxes" pledges made by some Republicans in the last election. The reason for this proposal was explained by Sen. Robert Carpenter, R-Macon: "The budget has increased 113 percent in the last 10 years, from $6.9 billion to over $14 billion." He points out that, "Even with the increase in population, spending increased out of proportion to inflation, especially pork barrel spending." Again, Democrats have other ideas for balancing the budget. "You just don't have that many choices. You have to cut, or raise revenues," said Rep. Martin Nesbitt, D-Buncombe. Rep. Phil Haire, D-Jackson, said the budget situation is so serious that the legislature is going to have to find additional revenues. He believes raising the cigarette tax, closing tax loopholes and adjusting the sunset clause on the recent sales tax increase should be considered. Sen. Carpenter suggested other approaches to cutting state spending.

"Combine departments," he said. "This is like bank mergers. You get an economy of scale. We could probably cut a third of the people. The Department of Public Instruction needs to be streamlined, too, so the money gets to the counties and the classrooms. "

In this case, Democrats agree. Gov. Easley has already moved to reorganize the Department of Transportation. And several of the ideas that emerged from the Efficiency Commission he established shortly after taking office involve consolidating departments and updating the state computer system so efforts can be coordinated across departments.

Gov. Easley has also created two commissions to study what can be done to improve the state's economic future. The first is The Commission to Promote Government Efficiency and Savings on State Spending. The second is the Commission to Modernize State Finances.

The recommendations of these panels didn't appear to be on the minds of regional lawmakers before the session began.

But it's clear from reading those recommendations that the Progress Board is right - the problems facing North Carolina "have never been more complex nor more interconnected." For example, North Carolina has the ninth highest "vehicle miles traveled (VMT) per capita." This level of reliance on automobiles lessens our air quality, which increases health costs and reduces disposable income. Building more roads will increase VMT.

The Progress Board suggests: "To assure a solid competitive position with other states for quality economic growth, North Carolina will have to find new ways to improve the efficiency of its transportation system. A large, access-drive highway system that promotes inefficiency and congestion - and is difficult to maintain - is not the answer."

So, who are the people who will lead us out of our budget crisis? Veteran legislators are waiting for leadership from those they elected or will elect to head their legislative bodies. No thought is given to whether or not placing so much power in the hands of a few is part of the solution or part of the problem.

Freshman legislators are optimistic, some might say naive. They are hopeful that the General Assembly can work in a bipartisan fashion, and some may have new ideas that will improve state government efficiency and effectiveness.

It may also be naive to expect to discover some "big ideas" for developing a better budget model. But perhaps we should not be disappointed. Our political institutions are structured for stability. Their systems of checks and balances cause them to resist big changes.

Perhaps we should not expect revolutionary ideas to emerge in government. The structure is against it. Although we may complain about the inability of government to adapt in difficult times, there's much to be said for having a government designed for stability. Furthermore, in a two- party system, in which deviating from the party line is political suicide, our elections select followers, not leaders. It has been enlightening to be reminded of this, once again.

Casey Hurley is a professor of educational administration at Western Carolina University. He has lived and worked in this region for 13 years. He received his masters and doctorate in educational administration from the University of Wisconsin at Madison. He writes occasional about leadership and regional issues for the Citizen-Times editorial pages.