John Hood: Lawmakers Aren’t Deadlocked on Regulation
RALEIGH — Fiscal negotiations between the North Carolina House and Senate appear to have stalled out for now, with the two chambers too far apart on the timing and magnitude of future tax cuts to strike a budget deal before the July 1 start of the 2025-26 fiscal year.
But that doesn’t mean nothing of consequence is happening on Raleigh’s Jones Street. For more than a decade, state lawmakers have used both fiscal and regulatory policy to make North Carolina a more attractive place to live, work, invest, and do business. Over the past couple of weeks, the General Assembly has continued this important work by advancing several critical reforms.
On June 19, the legislature gave final approval to Senate Bill 266, the Power Bill Reduction Act. It eliminates the requirement that North Carolina households and businesses meet an interim carbon-reductions goal by 2030, even as it retains the target of achieving net-zero emissions by 2050.
The 2030 target wasn’t going to be met, at least not without drastic measures that would have sent energy prices skyrocketing. “Our residents shouldn’t be saddled with higher power bills to satisfy arbitrary targets,” said Senate leader Phil Berger (R-Rockingham). “Senate Bill 266 ensures that North Carolina will have reliable energy at competitive prices to serve our citizens and businesses.”
The legislation also changes the way electrical utilities operating in the state (primarily Duke Energy) finance new power plants, which will at least modestly reduce their construction costs.
On the same day, the General Assembly sent House Bill 401, North Carolina’s version of a REINS Act, to Gov. Josh Stein. I hope he either signs it or allows it to become law without his signature.
REINS stands for “Regulations from the Executive in Need of Scrutiny.” The bill requires that any proposed rule with an economic cost of $20 million or more over five years must receive direct approval from the General Assembly. At the administrative level, rules costing more than $10 million would require unanimous approval by the rulemaking agency and those exceeding $1 million would require a two-thirds supermajority. Only rules mandated by the federal government would be exempt.
The measure will substantially decrease the chances of North Carolina imposing a regulation for which compliance costs exceed the potential health or safety benefits. It also strengthens the constitutional separation of powers, as Jon Sanders — director of the John Locke Foundation’s Center for Food, Power, and Life — explained in a recent piece.
“Agencies can create law-like rules only with deferred lawmaking authority from the legislature,” he wrote. “This delegated power is supposed to be limited to accomplishing an objective in legislation. Unfortunately, thanks to the vast difference between passing laws and creating rules, agencies can easily exceed their authority.”
With regard to the labor market, the Senate Rules Committee approved House Bill 763, the Neighbor State License Recognition Act. As the title suggests, the legislation would make it easier for individuals already licensed in Georgia, South Carolina, Tennessee, Virginia, or West Virginia to relocate and work in the Tar Heel State.
“If you’re an occupational license holder in one of these five states, and you establish residency in North Carolina, instead of going through the hurdles to get that occupational license, this would grant you an automatic license,” said Sen. Tim Moffitt (R-Henderson).
Occupational licensing is an area where North Carolina still has much room for improvement. We currently license more occupations than do all but 10 other states in the country. These regulations raise consumer prices as much as 16% and reduce employment by a net of about 42,500 jobs, according to a recent John Locke Foundation study. Reciprocity will make our labor markets freer and more dynamic.
Although our state’s gross domestic product grew by an inflation-adjusted 17% over the past five years — faster than all but seven other states in the country — we can’t afford to rest on our laurels. Regulatory reform will help take North Carolina to the next level.
John Hood is a John Locke Foundation board member. His books Mountain Folk, Forest Folk, and Water Folk combine epic fantasy with American history (FolkloreCycle.com).
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