North Carolina’s political welfare systems are still going strong even though they clearly are illegal.  The State Board of Elections will be playing a critical role in implementing these illegal schemes in the upcoming elections despite recent developments that should force them to place a moratorium on political welfare. 

North Carolina has public financing (i.e. taxpayer financing) of campaigns for appellate court races and some Council of State races.  Candidates who participate in these programs get massive lump sum payments courtesy of taxpayers.

These systems are unethical.  Taxpayers are forced to support candidates and speech that they oppose.  Politicians are receiving the hard-earned dollars of citizens for their own personal political careers.

If this type of political welfare system wasn’t bad enough, it also is illegal.  There’s something called matching funds that is central to these welfare systems.  A candidate that decides against taking taxpayer dollars (unsubsidized candidate) is punished if he spends beyond a threshold amount of money.

For example, if the candidate spends $10,000 beyond the threshold, the opposing candidate that is taking taxpayer dollars (subsidized candidate) receives $10,000 in matching funds.

An unsubsidized candidate isn’t going to want to spend beyond a certain amount of money and exercise free speech rights because that would help the opposing candidate. 

The United States Supreme Court, about a month ago, took the unusual step of blocking Arizona from issuing matching funds in its upcoming elections.  This Court order is in place until the Court decides not to hear the case challenging the Arizona law or the Court issues an opinion.  

While Arizonans are having their First Amendment rights protected through this Court order, North Carolinians will continue to have their rights violated unless the State Board of Elections decides not to issue these illegal matching funds.

Technically, the Court’s actions apply to Arizona only.  However, the Court was sending a clear signal that matching funds, regardless of the state, pose serious First Amendment problems.  This also was just a long line of developments that make it clear that matching funds are unconstitutional.

In 2008, the United States Supreme Court in Davis v. FEC held that it was unconstitutional to punish a self-financed candidate for spending beyond a threshold amount of money.  The penalty was fundraising advantages for the opponent.

This advantage violated the First Amendment because a candidate isn’t going to want to engage in free speech knowing that it will benefit his opponent.

For the same reasons, North Carolina’s taxpayer financing systems also would be unconstitutional.  A candidate is punished for spending beyond a threshold amount of money.

Any objective analysis of this case would lead to the conclusion that North Carolina’s taxpayer financing systems are illegal in light of Davis.  Two federal district courts recently held matching funds to be unconstitutional.

In a shocking decision, a three-judge panel of the Ninth Circuit, however, decided that matching funds in Arizona were constitutional.  That’s when the United States Supreme Court stepped in.  They blocked the Arizona matching funds and will almost certainly take up the Arizona case.

Then, just this week, the Second Circuit Court of Appeals held that matching funds were unconstitutional.  The Court based its decision on Davis. 

I have asked the State Board of Elections to decline to issue matching funds in the upcoming elections.  They responded with a weak attempt to defend violating the First Amendment, which I countered. 

Consider all of the reasons why it would be inappropriate to issue matching funds.  The Supreme Court just decided to block matching funds in Arizona, the Davis case makes it clear that matching funds are illegal, and court after court are striking them down (except of course the Ninth Circuit, which got “slapped” by the Supreme Court).

Even leading taxpayer-financing proponent Harvard law Professor Larry Lessig, while in Raleigh, admitted that the Supreme Court would strike down matching funds.

To put it more simply, if a federal court was asked today to issue an injunction blocking matching funds in North Carolina, there’s no question it would do so.  The State Board of Elections though is ignoring all of this.  It has no credibility to enforce any law if it’s going to disburse illegal matching funds in the upcoming election. 

Of course, to expect ethical behavior in North Carolina government is a pipedream.  After all, the legislature was actually trying to expand taxpayer financing this past session even in light of its illegal nature.  Fortunately, the grassroots successfully fought that effort.  Now we’ll see if the State Board of Elections thinks Arizonans have greater First Amendment rights than North Carolinians.

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Daren Bakst is the Director of Legal and Regulatory Studies for the John Locke Foundation.

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The NC legislature is considering a bill (HB 748) tonight that could force many people communicating through the Internet and mentioning a political candidate to file reports with the state.

This means a blog that does regular political analysis could be forced to send in reports to the state.

Almost any web site that just mentions a political candidate in any context could be forced to file reports.

The law specifically exempts print and broadcast media from this reporting requirement, but picks on the "new media."

As I wrote on the Locker Room (also see this post):

If you communicate using one of the following methods and you mention a political candidate then you may need to report under some circumstances (if the NC legislature passes HB 748):

• • Blogs
  • Web magazines
  • Email newsletters
  • Podcasts
  • YouTube videos
  • Any web site mentioning a political candidate
  • E-Books
  • Facebook
  • Twitter

Basically, if you use the Internet and you reach a wide audience, you better be careful or you could get into legal trouble.  You don't want to face government penalties for improper Tweeting.

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The following is based on my more in-depth report released today.

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Twenty states have joined together to challenge whether the recently enacted federal health care bill is constitutional. Last week, North Carolina Attorney General Roy Cooper announced that North Carolina won’t join those states in their lawsuit.

Mr. Cooper explained that his decision was based on the law and his belief that the federal bill was constitutional.  However, his decision appears to be nothing more than a political move.

Specifically, he doesn’t address the most important legal question.  This is convenient because the question is difficult for defenders of the law to answer.

In the health care bill, individuals are required to purchase health insurance or suffer a financial penalty.  This provision is the most legally problematic provision of the bill.  

Congress doesn’t have unlimited power.  Congress derives its power under Article I, Section 8 of the United States Constitution.  The power under this section that most likely would give Congress the authority to create this individual mandate is the Commerce Clause.

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What if you wake up one day and find out you can no longer vote for your city council members?  Further, the city council members could still make the same major decisions that affect your lives, such as how much in taxes you should pay and what zoning laws you must follow.

This would seem like a far-fetched scenario, yet in North Carolina we have 4.1 million fellow citizens that live in unincorporated areas that are at risk of facing a comparable situation.

They could wake up and find that a city that they never decided to live in is going to force them to live in the city.  This means a government they never consented to be governed by is going to devastate their lives.  It means they’ll face higher taxes, laws and regulations that could fundamentally alter their way of life, and excessive water and sewer infrastructure costs.

This outdated and embarrassing practice of government abuse is called forced annexation.  North Carolina is one of only a handful of states considered a forced annexation state, and its law is arguably the most extreme in the country.

Last year, the state House passed an annexation “reform” bill, HB 524, that some legislators are tying to pass off as a first step towards reforming North Carolina’s 51 year-old annexation law.  However, the bill is a merely a first step towards making annexation abuse even worse.

It’s important to identify what constitutes meaningful reform.  The most important reform is to provide annexed property owners a voice so that they can have some say in whether they are going to be forcibly annexed.

This voice could be a vote of the affected property owners.  Another way to provide a voice, albeit less desirable, is to have county approval of city-initiated annexations.  The county commissioners can at least provide a representative voice for the property owners.

Annexation victims often correctly point out that the municipalities annexing them aren’t providing them a single service that they need.  Municipalities will duplicate existing services or contract with the county for one extra police officer for an area that has excellent police protection.

In 2006, the North Carolina Supreme Court in a case called Nolan v. Village of Marvin held that municipalities must provide property owners services that give them a significant or meaningful benefit.  There’s nothing significant or meaningful about duplicating existing services.  As a result, the law should clarify that municipalities may only annex an area if the municipality can provide a necessary service.

While a voice for property owners and necessary services are the core reforms, another major reform should also be addressed.  Even though annexed property owners don’t want or need water and sewer, they are forced to pay for the water and sewer infrastructure.  This is just adding insult to injury.  Not only are property owners forcibly annexed, but they also have to pay for their “noose.”

HB 524 doesn’t address any of these issues.  There’s a lot of smoke and mirrors to give the impression that it’s doing something, but it’s all a sham.  The biggest sham is the so-called vote provision.

In a little over a year, annexation victims would have to secure signatures from 15 percent of the total number of registered voters in the municipality and the annexed area.  Based on just registered voters in municipalities alone, in Raleigh this would mean securing 38,057 signatures—an impossible task.

In a smaller community like Goldsboro, 3,304 signatures would be needed—a very unlikely task.  These numbers don’t take into account the extra signatures needed to make-up for rejected signatures.  

In addition, there’s not much incentive for municipal residents to sign the petition especially when the municipalities (and its allies) will be doing extensive “education” in favor of the annexation.

Here’s the kicker though.  If by some miracle the signatures are gathered and there’s a vote, the municipal residents vote along with the affected property owners.  Since generally there are so many more municipal voters than voters in annexed areas, the only individuals with a voice are the municipal residents.  In other words, instead of the city council deciding that an area will be forcibly annexed, the city residents will decide that an area will be forcibly annexed.   

HB 524 actually hurts annexation reform.  It’s possible that the North Carolina Supreme Court would stop the municipalities from being able to annex areas by providing unnecessary services.

To preempt the Court from taking that action, HB 524 makes it clear that cities can duplicate services and it’s fine to provide unnecessary services.  One of the core reforms was to require municipalities to provide necessary services.  HB 524 does the exact opposite by ignoring annexation reformers and making sure cities can provide absolutely nothing in return for forcing people into their boundaries.

HB 524 proponents often point to the requirement in the bill that municipalities must provide water and sewer within three years, as if this is some meaningful reform.  They fail to mention that under existing law, annexed property owners can request water and sewer and municipalities then are required to provide these services within two years.

They also fail to mention that under existing law, a city may indefinitely postpone providing sewer lines only if it isn’t economically feasible to run the lines due to the topography of the area.  Under HB 524, if a municipality decides that providing sewer lines isn’t fiscally feasible for any reason (not just topography), they can indefinitely postpone providing the lines thereby making the three-year requirement virtually meaningless.

Since the House has passed its annexation bill, the ball is in the Senate’s court.  The Senate should ignore HB 524 and develop real annexation reform.  North Carolina citizens deserve a lot better than the state’s abusive annexation law.

Daren Bakst, an attorney, is the Director of Legal and Regulatory Studies for the John Locke Foundation.

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Are you opposed to forced annexation?  Do you believe it's about time that North Carolina stop the oppressive practice of forcing people to live in cities against their will?

Then you should attend the inaugural StopNCAnnexation Annexation Reform Conference.

When: March 6, 2010 (special FreedomWorks and John Locke Foundation reception on March 5, 2010)
Where: Raleigh, NC

Learn More and Register: Click here

Time and Space are Limited!  Register Soon!

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If you like red tape and unelected government bureaucrats making major policy decisions without any real oversight, then North Carolina is the state for you.

Compared to most states and even the federal government, North Carolina is far behind when it comes to developing a regulatory process that protects against government agencies doing whatever they want.

When the state decided to allow illegal immigrants to attend community colleges, it was the State Board of Community Colleges that made this decisions not legislators who are accountable to the voters.

The legislature simply passes off major decisions to these largely invisibly boards, in part to avoid the political repercussions of tough decisions.  This isn’t a problem unique to North Carolina, but there are protections that can be built into the regulatory process to ensure that government bureaucrats are making decisions that truly represent the will of the legislature.

The regulatory burden is overwhelming in North Carolina.  In a 2005 John Locke Foundation survey of more than 600 North Carolina business leaders, regulatory burden was ranked as the second most important factor reducing the state's economic competitiveness (the tax burden was ranked No.1).  If we develop sensible regulatory reform, we can greatly improve our economic competitiveness.

In my recent report, “Regulating the Regulators,” I identify multiple reforms that the legislature should adopt to bring North Carolina into the “20th Century” when it comes to creating protections against agency abuses in the regulatory process.

Here a just a few reforms.  First, a government agency should clearly have the power to issue regulations (referred to as statutory authority).  Bureaucrats, who are in the regulation business, are going to try and regulate even if it’s unclear whether the legislature gave them the power to develop regulations on a specific issue.  The legislature should develop protections so that statutory authority clearly exists.

Second, the legislature also needs to require cost-benefit analysis.  For nearly 40 years, the federal government has required agencies to use some form of cost-benefit analysis when developing regulations.

When the costs of regulation exceed the benefits, the regulations should be rejected.  Agencies should be required to identify alternatives to achieve their regulatory objective and select the option (including no regulation) that involves the least cost to society.  Further, as President Jimmy Carter required, agencies should select the least burdensome regulations among the acceptable alternatives.

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North Carolina could soon prohibit dog owners from bringing their canine friends to restaurants.  This would even include outdoor dining areas.

The state’s Commission for Public Health has proposed a rule, which as written, would create this ban.  The agency, however, has explained that their goal isn’t to ban dogs in outdoor areas, but unfortunately, this is exactly what their rule would do.

This dog debate is a repeat of the smoking ban debate.  The only difference is instead of smokers we have dog owners.  The state shouldn’t prohibit dog owners from bringing their dogs to indoor or outdoor dining areas.

This issue isn’t about the rights of dog owners (or dogs), just like the smoking ban wasn’t about the right of smokers.  This is a property rights issue.  

Restaurant owners should have the right to decide for themselves whether they want to allow dogs in their restaurants.  The fact that property is open to the public doesn’t change the fact that a restaurant is someone’s private property.

Smoking ban proponents argued that health “rights” were in conflict with property rights—I imagine this same fallacious argument will be made to defend a dog ban.  Just like with smoking, customers are fully capable of deciding for themselves whether they want to dine at a restaurant where dogs are welcomed

Dog ban proponents actually want to create a new right.  They want a right to go to any restaurant they want without ever having to deal with dogs.  They want their personal preferences, enforced through the power of government, to take precedent over property rights and the preferences of others.

Smoking ban proponents argued that a smoking ban was no different than having a health inspector regulate the conditions of a restaurant.  As with a smoking ban, a dog ban isn’t the same thing as a health inspector who is investigating the unknown health and safety conditions of a restaurant.  Customers can see for themselves whether dogs are allowed at restaurants.  Unlike with hidden risks, customers can make informed and voluntary choices about whether to be around dogs.

There likely are numerous individuals that supported the smoking ban but who oppose a dog ban.  However, one can’t have it both ways.  Ironically, I wrote the following during the smoking ban debate, “Smoking ban proponents may cheer on passage of HB 2 [the smoking ban bill], but under the legislative precedent they wish to set, they could soon find that some of their own actions subject to prohibition.”

That is exactly what is happening with a dog ban.  Those that oppose a dog ban but wanted a smoking ban are now having the same disrespect for property rights and personal choice used against them when it comes to bringing dogs to restaurants.  To be fair, there probably are smoking ban opponents that want a dog ban.  This also would be inconsistent.  

We’re getting into a situation where the populace identifies things it doesn’t like and then urges the government to ban it, regardless of rights or individual responsibility.  Yesterday, we were talking about a smoking ban.  Today, we’re talking about a dog ban.  Tomorrow we may be discussing a sugar ban.

A dog ban also reflects a belief that restaurants won’t act in their own best interests.  If a restaurant’s patrons don’t want to be around dogs, then the restaurant will prohibit dogs from entering the establishment.  It doesn’t require the government to force them to ban dogs.

The Commission for Public Health needs to change their rule to expressly allow restaurants to decide if dogs will be allowed in their indoor or outdoor dining areas.  I’d think that dogs would really appreciate it.  I know that anyone who respects property rights and freedom will appreciate it.

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Daren Bakst, an attorney, is the Director of Legal and Regulatory Studies at the John Locke Foundation.

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Here are a couple of things I have just written on the recent Supreme Court case on whether corporations and unions can engage in political speech.

There's been a lot of absurd reaction to the case--so hopefully the following will provide some common sense on the issues (at least for those who believe in the First Amendment).  

1) Op-Ed in Fayetteville Observer

On Jan. 21, the U.S. Supreme Court issued an opinion in Citizens United v. FEC that's a major victory for anyone who believes in the First Amendment. The court held that it was unconstitutional for the government to prohibit corporations and unions from expressing their support or opposition to political candidates or to prohibit them from airing campaign ads within 30 days of a primary or 60 days of a general election.

The law was so extreme that the government could have banned books, movies and other communications that contained political messages. The penalty for committing this "horrible" act of engaging in speech included possible jail time. The very notion that speech could be met with criminal sanctions should scare all Americans.

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