During visits to Charlotte earlier this year, Gov. Roy Cooper urged state business leaders to support his budget and pressure Republican lawmakers to focus on greater public investments. He opposed cutting the corporate income tax because less revenue means less money to boost pay for teachers, professors and state workers, to repair more schools, and to provide more health care and other services.
Spurning the governor, the General Assembly passed a tax cut that will trim the corporate tax to 2.5% over the next two years. With the economy humming and tax revenues exceeding forecasts, Senate Pro Tempore Phil Berger and House Speaker Tim Moore passed a budget that boosts average teacher pay by nearly 10% over the next two years, increases by 95,000 the number of low-income North Carolinians who will pay no tax and set aside $363 million for the state’s emergency fund. (It now tops $1.8 billion, a record.)
So what happened to Cooper’s plea for business-community support? Pretty much crickets, so I asked his staff for business leaders who back the governor’s vision that the Berger-Moore budget is the most “fiscally irresponsible” in state history.
Cooper’s office gave me two names. One was Peter Pappas, a hugely successful Charlotte developer. Pappas says Cooper’s strategy struck him as more visionary than the legislature’s. An example, he says, is the film industry, where Cooper favors more incentives than legislative leaders. “That industry is absolutely booming in Georgia because of their programs,” he says.
Pappas is a very cautious fellow. He wouldn’t directly answer when asked if he opposed the corporate tax cut.
The other person proffered by Cooper’s staff isn’t cautious at all. Kevin Trapani, CEO of The Redwoods Group insurance company based in Morrisville, says many business leaders quietly support Cooper, particularly in Triangle and Charlotte tech and financial services industries.
By focusing on corporate tax cuts and socially conservative issues like bathroom bills, state lawmakers are harming North Carolina’s reputation as a progressive place to live and work, Trapani says. They should share Cooper’s vision for broader investments to distinguish North Carolina.
Unfortunately, Trapani says, the North Carolina Chamber, which represents many big state business, “has an outsized voice that doesn’t reflect the views of a large proportion of the business community. They are very powerful at the General Assembly, but they don’t represent the future of business in this state.” The Chamber pushed for the corporate tax cut.
The chamber, he adds, remains heavily influenced by pork producers and other traditional industries that no longer lead the state’s growth. He predicts the group’s influence will wane over the next few years.
Wait a second: What about those surveys showing North Carolina ranks high in growth and attractiveness compared with 49 other states?
“Those reports largely reflect rearview mirror thinking,” Trapani says, and are based on decades of actions by political and business leaders. In other words, neither Republicans or Democrats should take all the credit for the state’ success.
The N.C. Chamber takes a dim view of Trapani’s criticism. “Everything we do, our legislative agenda included, is future-focused,” according to a statement issued in response to our questions. “We remain laser focused on advocating for policies on behalf of all of our members that make North Carolina the best possible state for job creation.”
The statement adds, “While competitive tax cuts have been a part of growing North Carolina’s economy, to suggest that could be our only priority is a misguided endeavor as tax reform is far from being the only policy that has throttled our state forward. Comprehensive action to improve education, innovation and the state’s business climate have all contributed to that growth.”
My conclusion: Berger and Moore showed masterful political skills in advancing their agenda through the budget, benefiting from a robust economy that makes possible pay hikes and a huge rainy-day fund deposit. The N.C. Chamber has taken a more hard-edged, politically conservative turn under President Lew Ebert’s leadership over the last decade, but it knows it has to broaden its coalition. Here’s a signal: The group held its first “Workplace Diversity and Inclusion” conference in June.