@NCCapitol

McCrory calls for tax, education reform

Posted January 2, 2013 4:01 a.m. EST
Updated January 2, 2013 4:50 p.m. EST

— Gov.-elect Pat McCrory warned North Carolina business leaders Wednesday that he will be stepping on their toes in the coming months as he pushes for reform in the state tax code.

Speaking to the annual economic forecast meeting of the North Carolina Chamber at the North Carolina Bankers Association, McCrory also said he plans to work toward a more efficient education system in the state, expand North Carolina's energy industry and build a long-term vision for highways, ports and other infrastructure.

"We have to recognize and admit that we have some problems," he said, citing the state unemployment rate and competitive imbalance. "Our brand of economic prosperity has been diminished."

Updating that brand will require restructuring the state's tax system, especially lowering the corporate and personal income tax rates, so that North Carolina can attract businesses and trained workers, McCrory said.

"Our tax system is no longer competitive with the rest of the United States and especially with our neighboring states," he said. "(Tax reform) is not going to be an easy battle or an easy solution."

Predicting swarms of lobbyists who will try to make exceptions for various industries during the reform effort, he asked business leaders to look at the state's long-term interest and not at their own tax pain.

"It's going to step on everyone's toes a little bit," he said. "I don't want to step on people's toes to cause pain. I want to step on people's toes to get them to stand up and recognize that we've got a problem and we've got to fix it."

Business leaders agree the tax system needs reform, but there's no real consensus on the best way to do it.

"We've all known that for while," said Gary Salamido, vice president for government affairs at the N.C. Chamber. "I think it's proof that (McCrory has) been out in the community. He's been listening to folks. ... We think he's heard what our members have been telling him."

McCrory said he wants North Carolina to join with Virginia, South Carolina and Georgia to negotiate with the federal government on offshore natural gas and oil drilling. He also wants to put inland gas exploration on the fastest track possible to generate revenue and jobs for the state, as well as energy for the U.S.

"The downside right now is we've started very, very late, and now the gas price has gone very low," he said. "It's going to be a tough, competitive market to begin that process."

The public education system in the state needs to work seamlessly from pre-kindergarten through higher education to best use existing funds to educate and train students for the jobs that will be in demand in the future, McCrory said.

Likewise, the state needs a seamless infrastructure system, from highways to rail to airports to seaports. He said his new secretary of transportation will focus on building a 25-year plan that will help the state's economy and mobility.

"We're going to lead, but we're also going to listen, we're going to learn and we're going to communicate," he said. "In the end, we have to lead together."

McCrory will be sworn into office on Saturday, and he said his first priority is repaying the $2.8 billion that North Carolina owes the federal government for unemployment benefits paid to laid-off workers during the height of the recession.

"You will be impacted – everyone will be impacted – but I'm convinced that, if we deal with it now, the cost won't be greater years down the road," he said. "You pay off the debt, and then you look at new policies so we don't get caught in this position again."

His other immediate concerns involve handling the provisions of the Affordable Care Act that will kick in over the next 12 to 18 months, such as building a system where people can shop for health coverage, deciding whether to expand the state's Medicaid program and working with businesses that are considering dropping their employee health plans.

"I don't think the people of North Carolina or the people of our country really understand the implications of the major changes that are going to be occurring with regard to health care," he said.