  |
|
The Voice of Business,
Industry & the Professions Since 1942
North Carolina's largest
business group proudly serves as the state chamber of commerce
|
|
|
|
|
|
Cover Story
February 2005
Four More
For Mike
As he begins a second term, the governor aims
to cement a legacy for progress during tough times
|
 |
Workers
were
erecting a viewing stand for the Jan. 15 swearing-in ceremony marking the
start of Mike Easley’s second term as governor when we arrived at the
state Capitol for the interview that follows. “I hope it’s a platform
they’re building and not a gallows,” he quipped.
At 54, Easley is a bit grayer but not noticeably more wrinkled than when
he moved from the Attorney General’s office to the Governor’s Mansion four
years ago. He’s been a very different sort of governor than North Carolina
has been used to. Unlike Jim Hunt, his extremely outgoing and workaholic
predecessor, Easley has insisted on maintaining pretty much a 9-to-5
workday and private weekends with his family at their Southport beach
home. But when hurricanes struck or budget disasters loomed — as they did
so often in his first term — nobody worked harder or was better at
comforting his fellow citizens on television and in person-to-person
contact. For many people, the lasting image of Easley will be of him in a
flannel shirt, touching down in a helicopter to survey hurricane damage.
As his second term begins, we wanted to learn what his priorities will be
over the coming four years, particularly on those issues impacting the
business community. He spoke for about 45 minutes with Editor Steve
Tuttle. A condensed version of that tape-recorded conversation follows.
How will your second term be different than your first?
I won’t have to spend so much energy on the budget. I think the
legislature is going to have to get used to the idea that there will be
cuts every year if you want to have expansions in other areas. That’s
something governors are having to come to grips with all over the country.
But the budget won’t sap so much energy as in the past. I think they will
be able to see that down at the General Assembly, that what I asked them
to do last time worked. They worked with me, gave me a lot of latitude and
the benefit of the doubt, coming in new with a lot of seasoned
legislators. So I expect there will be a better working relationship, more
credibility this time.
 What
specific initiatives will you be pushing in your second term?
First and foremost, we’re going to have to keep instilling fiscal
discipline. That doesn’t sound like an initiative but it is. That will be
a constant drumbeat. Second, we’re going to have to raise the level of
knowledge of the workforce. We have done that the past four years and
we’ve got to keep doing it. We’re now in the top five states of our
graduating seniors going on to college. We have to be able to sell our
state to the business community around the world as the top in innovation,
creativity, knowledge, talent and skills. Those are the items that matter
the most as we go forward. The other part of my rather simple strategy —
which is keeping skill levels high and costs down for business — is to
reduce the corporate tax as much as we can. I had a bill last year to
remove the corporate income tax completely on the first $20,000 in income,
which would help over half of our corporations, maybe up to 90 percent of
them. I want to lower that corporate tax. We’re competing on cost right
now with China, Malaysia, Singapore, all of these foreign countries and
due to foreign trade policies North Carolina was dealt the most stunning
blow of any state. And we’re been able to weather that storm, keeping our
unemployment level below the rest of the nation by keeping skills high and
costs low.
Does that mean the budget you will submit to the General Assembly will be
based on elimination of the temporary half-cent state sales tax, the top
marginal personal income tax and your proposal to reduce corporate income
taxes?
Until we get the January numbers in it would not be responsible for me to
talk about what I am or not going to submit to the General Assembly. I
won’t know until some time in mid February just where we are, what
projections we have, how much money we have to work with on corporate tax
cuts and the like. We’ve already done some with the tax credits for
research and development, we’ve done some with middle class tax cuts. My
top priority right now is to get the highest rate personal income tax
down. And the reason is you tend to penalize your best minds by putting a
higher tax on them and give them an incentive for them to leave the state.
We need incentives to bring in more talent, not run it away. People don’t
mind and will accept a short term increase but if they think it’s going to
continue to be high, then they start making plans in that direction. We’ve
seen a number of situations where some high-tech startup hit it big and
the next thing you know they’re heading to Florida, which doesn’t have
personal income taxes.
You’ve strongly supported creating new jobs through economic development
initiatives like those used by the state to attract Merck and Dell. There
are spreading concerns about the federal court case from Ohio that
challenges such tax incentives as unconstitutional. There is talk about a
similar lawsuit here in North Carolina. In your view, what are the
constitutional underpinnings of North Carolina’s incentives program?
That’s a legal question and since I am the one that argued the Maready
case before the Supreme Court (in 1996 when he was attorney general) I can
answer that. The constitutional underpinnings are that tax dollars must be
for a public purpose. If not, it’s an emolument and unconstitutional. The
court up until that point had taken the position that it wasn’t
government’s business to get involved with commerce. But the argument I
made then and will continue to make now even more so is that with NAFTA,
WTO, the lack of use of the special China safeguards (to protect
textiles), it has become the role of government to export North Carolina
jobs. Why then is it not the role of government to replace those jobs?
So your view is that everything the state is doing today in economic
incentives is completely consistent with the Supreme Court’s ruling in
Maready?
Yes.
You’ve strengthened the state’s ability to attract new industry through
expanded tax credits and other incentives. In your second term, will you
be doing anything similar to help existing businesses grow?
The R&D tax credit will particularly help some. But don’t forget when you
talk about incentives and businesses that have grown here you look at RF
Micro Devices, which has grown dramatically, and we have used some
incentives there. Look at Cree, a home-grown industry; again, we used some
incentives just to level the playing field to keep them in North Carolina.
I think the other thing we need to do is to continue with HSAs, the Health
Savings Account we put in place. There are some more tax credits I would
like to see that would reward investment in knowledge and talent. At the
same time we should be finding ways to keep costs low. The best rule to
remember is that you’re not going to attract new industry in if the
industry you have isn’t happy. So the best thing I can do is to take care
of the businesses that we already have, and I try to make my decisions
based on that.
NCCBI has strongly supported your efforts to improve state government
efficiency. What efficiency initiatives will you be pushing in the General
Assembly, and which ones will you be implementing through your powers as
governor?
The most important thing to remember is efficiency has to be a constant.
It can’t be an initiative you start each legislative session. Either your
cabinet secretaries are about efficiency or they are not. We have to find
a new efficiency every day. I would like to see some form of reward, such
as for every three dollars you can save we will let you reinvest two
within your agency. I think you would see lot more services for the
dollars. But I don’t think the legislative will ever give up that much
control. Our biggest efficiencies have been investments in new technology.
We now don’t get into too many long-term computer contracts. I saw that we
were getting locked into contracts and we were locked into obsolete
equipment, especially at Health and Human Services. We know now not to do
that.
Will you pursue some efficiency reforms to the state employees’ health
plan, which is becoming a drain on the state budget?
What you’re going to see is, if we don’t make some changes in Medicaid and
the state employees health plan you will see that budget begin to eat away
your education budget, eat into things that provide a good business
climate, eat into your infrastructure dollars. We started last year and
will continue to work on the Healthy North Carolina plan. Actually, the
premium for somebody who is healthy is about $700 a year and if you have a
chronic disease it’s $8,000. The state workforce is aging and the
workforce is not nearly as healthy as it could be. And a lot of these are
lifestyle choices. A lot are not. But I’m looking at potentially a sliding
scale on co-pays as it relates to lifestyle choices. For instance, if I
choose to smoke it should cost me more and not be subsidized by those who
don’t. If I choose to get overweight and stay there, much more likely to
get diabetes, I shouldn’t ask everybody else to pay for it. Another thing
to look at is, is there buying power with a combination of local
government and state employee health plans and Medicaid? And if so, we
should take advantage of it. Secondly, how much can we save local
governments if we were able to combine the state and local governments’
health plans? We’re looking at a possibility of a combination of those
programs. Those and a lot of other options have to be put on the table
because we cannot allow health care costs to grow as much as they are and
then lose the revenue for education and other things.
How has serving as governor changed you and your family?
The family is pretty much the same. It takes a lot of discipline (as
governor) to maintain a good family environment. The demand is not only on
me but also on Mary, who has been very active as First Lady. A lot of
times we meet each other like ships passing in the night. One thing we
have tried to do during my whole time in politics, and which I have
continued to do here, is we try to do things together. Like, we eat dinner
together every night, if I’m not on the road and she’s not, even if it’s
10 o’clock. And that’s where I let her talk about the things she wants to
and I vent about the things on my mind. When I take the oath this time
you’ll see (son) Michael standing up there with us. And that was a real
question; they didn’t want us to do that the first time. He worked with
the campaign this summer. We set aside and put on the schedule time we’re
going to duck hunt, time when we’re going to go fishing, whether it’s out
in some pond or trolling for blues off Southport. You have to schedule
everything you want to do. If not, somebody will snatch up that date and
have you give a speech to some group on the other end of the state. I
think it’s been a positive experience for us.
Later on, if Michael told you he wanted to go into politics, what would
your reaction be?
I’d say, that ain’t what you said last week. No, I would encourage him and
everybody to consider it. The mistake people make is to assume that only
politicians are in public service. The greatest public service is creating
a job. Lots of people can take jobs but only a few can create them. Those
who are looking at politics as a way to serve people could very well go
into business and create jobs.
What do you hope your legacy will be? How do you want Mike Easley
remembered 20 years from now?
You know I just don’t think much about that. The thing I want to have
accomplished by the time I leave office is I want to have elevated the
level of knowledge of the state. I want to have transitioned this economy
because I believe what we do over the next four years will be the
determining factor to where North Carolina will be 30 or 40 years down the
road. I said in my State of the State in 2001 that this legislature will
be remembered for either stepping up or hunkering down. And they stepped
up. And as a result of that you have seen the tremendous gains we’ve made
in test scores and in our business climate. We have to continue to work
every day. That’s what I most want to accomplish because I think that
helps the most people across the state.
Can you capture that goal in just one word or a phrase?
Building that “One North Carolina,” and achieving progress despite tough
times. I remind the Cabinet at every meeting that we are supposed to
balance the budget, that we are expected to fix floods and disasters like
that. We don’t get credit for that. The measure for success is, did you
make progress in spite of all that?
In private you’re known as a great kidder and joke teller. Tell us
something funny that’s happened to you recently.
When I had that shoulder surgery just before the campaign I went for a
while with my arm in a sling. And I was trying to get dressed at the
Mansion one morning and had trouble tieing my tie, because of the sling.
So I called down to the troopers for someone to come help me. We had one
trooper who was also a part-time mortician. And I asked him to tie my tie,
and he said, “OK, but you’ve got to lie down, sir. I can’t do it unless
you’re laying down.” So I laid down on the couch like a corpse and he did
a good job tieing my tie for me.
Governor, thanks for giving us your time.
|
|
|
|
|
|