U.S. Bureau of Economic Analysis

Claims Dept: NRSC's 'Gold Medals'

ryanteaguebeckwith — Mon, 08 Sep 2008 17:57:02 -0400

The National Republican Senatorial Committee has a new ad attacking Democratic candidate Kay Hagan's record as a state senator.

What it says: The ad shows images of Kay Hagan with graphics similar to the Olympics. Narrator: "What if they gave gold medals for financial irresponsibility?" Announcer: "The gold medal goes to Kay Hagan." Narrator: "Budget writer Kay Hagan helped double state debt. The gold for government waste?" Sports announcer: "Kay Hagan." Narrator: "Hagan's budgets pushed North Carolina to the highest taxes in the Southeast. And the gold for twisting the truth?" Sports announcer: "Kay Hagan." Narrator: "The press said Hagan’s TV ad was 'overstated, inaccurate.'" Sports announcer: "Kay Hagan." Narrator: "The National Republican Senatorial Committee is responsible for the content of this ad." The ad says "Highest Taxes in Southeast 2006."

The background: The ad raises three issues: high taxes, state debt and a previous Hagan ad.

TAXES: Every year, the Tax Foundation, a Washington-based think tank, analyzes the combined state and local tax burden in all 50 states.

According to its overall ranking, North Carolina had the 17th highest burden in 2006.

The think tank does not break out the rankings by region, but the John Locke Foundation, a conservative think tank in Raleigh, has compared those numbers to other states in the region.

The Locke Foundation defines the Southeast as Florida, Georgia, North Carolina, South Carolina, Tennessee and Virginia.

The U.S. Bureau of Economic Analysis, the only federal agency to define the Southeast, includes those states as well as Alabama, Arkansas, Kentucky, Louisiana, Mississippi and West Virginia.

If those states were included, North Carolina would have been second highest in 2006, after Arkansas.

DEBT: The state constitution requires the legislature to balance the budget, so North Carolina's debt does not come from annual budget deficits.

Instead, the debt comes from bonds issued by the state to pave highways, build jails and college buildings and pay for other projects. The bonds are backed by the state's expected tax revenue.

From 2002 to 2007, Hagan was a co-chairwoman of the Senate Appropriations committee.

During those five years, the state's overall debt went from $3.5 billion to $6.9 billion — nearly doubling.

However, the increased debt has not hurt North Carolina's credit rating. The three agencies that rate government bonds — Moody's, Fitch and Standard & Poor's — each give it a top-tier ranking.

North Carolina is one of only seven states to have top rankings from all three.

HAGAN'S ADS: In an ad run in August, Hagan's campaign claimed that she "reach(ed) across party lines to ban driver's licenses for illegal immigrants."

A previous Claims Department by the N&O found that claim overstated the supporting role she played in that bill and the Senate Democrats' previous opposition to stronger proposals from Republicans.

The ad's "account of Hagan's role on the driver's license bill is overstated and inaccurate," the article noted.

Is it accurate? Yes and no. The claims about state debt and Hagan's previous ad are true. But the definition of the Southeast used by the John Locke Foundation is bizarre. Though the ad correctly cites the foundation's research, the claim is misleading.

— Ryan Teague Beckwith

A working definition of the Southeast

ryanteaguebeckwith — Wed, 03 Sep 2008 19:37:00 -0400

We've arrived at something of a definition of the "Southeast."

Lew Powell argued the term was a Yankee invention, which John Shelton Reed backed up. The Census Bureau was no help, giving us "East South Central" and "South Atlantic" regions that might be useful if they didn't stupidly include Delaware and Maryland.

College football pushed for the inclusion of Louisiana and Arkansas, as did the U.S. Bureau of Economic Analysis. Neither liked oddball West Virginia but Kentucky didn't fit anywhere else either and it was generally accepted.

Even Wikipedia found 15 different lists.

One reader suggested "The Confederate states minus Texas" which agrees with most of the other lists, but does not include either Kentucky or West Virginia.

Dome sees basically two definitions:

Lesser Southeast: The former Confederate states east of the Mississippi: Alabama, Florida, Georgia, Mississippi, North Carolina, South Carolina, Tennessee and Virginia. Add Kentucky because aside from the Cincinnati suburbs it wouldn't fit in the North.

Greater Southeast: All those states plus the three borderline cases of West Virginia, Arkansas and Louisiana.

Here's the rub. The states that have high tax burdens along with North Carolina are West Virginia, Louisiana, Arkansas and Kentucky.

So the "highest taxes in the Southeast" claim is going to depend entirely on whether you accept the broader or narrower definition of the region.

State tax burdens in the Southeast

ryanteaguebeckwith — Wed, 03 Sep 2008 12:37:24 -0400

North Carolina has a higher tax burden than most Southeastern states.

But it has not been ranked the highest among the dozen states considered to be part of the Southeast by the Tax Foundation, a Washington-based nonprofit.

Using as its guide the states considered Southeastern by the U.S. Bureau of Economic Analysis, the foundation has ranked North Carolina between the fourth and second Southeast states in terms of tax burden since 1977.

A recent ad targeting Democratic Senate candidate Kay Hagan cited research by the Tax Foundation, among others, to back its claim that budgets she helped write "pushed North Carolina to the highest taxes in the Southeast."

In 2002, the year before Hagan became a co-chair of the Senate appropriations committee, the Tax Foundation ranked North Carolina the third highest state in the Southeast, below Kentucky and Arkansas.

Over the following five years, North Carolina remained in the top three, but it was never in the top spot.

In 2008, it dropped to fourth, below Arkansas, Georgia and Virginia.

Still, it was close. The differences between the rankings were often based on a tenth of a percent and the states were only a few slots apart in the overall rankings.

Document(s):
SE-Tax-Burdens.xls

The definition of Southeast

ryanteaguebeckwith — Wed, 03 Sep 2008 12:02:57 -0400

How do you define the Southeast?

We here at Dome headquarters have been poring over some tax data this morning as part of a fact-check, and we came across this interesting epistemological problem.

The general consensus of our group of reporters was that it includes the following states:

Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, Mississippi, North Carolina, South Carolina, Tennessee and Virginia.

We did not include West Virginia, but the U.S. Bureau of Economic Analysis does in its regional breakdowns. That means a number of other groups, such as the Tax Foundation, also use it.

The U.S. Census Bureau does not define the Southeast.