(Corrects name in fifth paragraph of story originally published July 1.)
July 15 (Bloomberg) -- It started in April with 17 arrests at the North Carolina statehouse. By last week, more than 600 people had passed through Raleigh’s jail and the crowd on the grassy mall outside the capital numbered in the thousands.
Armed with signs, bongo drums and puppets, the protesters blasted tax breaks for the rich and the end of a credit for the poor. They chanted against education budget cuts, the refusal to expand Medicaid, the end of a program that kept special-interest money out of judicial races, proposed voting restrictions and a new law that cuts jobless benefits. More than 70,000 North Carolinians lose those checks today, when the protests resume.
The weekly outpourings of anger, called Moral Mondays, were prompted by the first Republican-led North Carolina government since Reconstruction. Its leaders are pushing dramatic change in a state whose economy has been dominated by technology, higher education and banking, and one that is narrowly divided between parties, choosing President Barack Obama in 2008 and Republican Mitt Romney last year.
“We’ve always had this balance,” said Erica Eisdorfer, 57, a Durham bookseller at last week’s demonstration. “The progressive were balanced by the business conservatives. North Carolina is balanced and these people are running roughshod over it.”
Entering their 10th week, the protests recall demonstrations over public-employee rights in Wisconsin, Ohio and Michigan in 2011, and during a Texas Senate filibuster last week, spurring a commotion that blocked a vote on an anti-abortion bill pushed by Republicans.
North Carolina Republicans, who won the governor’s office and cemented a veto-proof legislative majority in Raleigh last year, are doing everything they can to hurt the poor, help the rich and destroy the coalition of black, white and Hispanics that made the state competitive for Democrats, protesters say.
Raleigh was the last state capital in the U.S. South to switch to all-Republican control, after incumbent Democratic Governor Beverly Perdue didn’t run for re-election. It joined 36 states where one party holds power in both the legislature and the executive branch after former Charlotte Mayor Pat McCrory won the governor’s race. He’s the first Republican in a century to take office with a legislature led by his party.
McCrory ran on a platform of change, specifically to the tax code and education system.
The business community was eager to see it, said Lew Ebert, president of the North Carolina Chamber of Commerce.
“We had one of the highest unemployment rates in the country,” he said. “We owed the federal government $2.5 billion for unemployment benefits we’d borrowed. We were paying benefits that were much higher than what’s common in the South. Our business taxes were much higher than what’s common in the South.”
The state also had a reputation of being a cut above the rest of the region because of its tradition of public investment, particularly in education. Home to Duke University in Durham and the University of North Carolina at Chapel Hill, the state topped Site Selection magazine’s list of best business climates in nine of the past 11 years, in part because of the quality of its workforce.
Once a low-wage, mill-and-agriculture state, North Carolina’s economy now rests on higher education, technology and banking, including Charlotte-based Bank of America Corp., the second-biggest U.S. bank. The Research Triangle region, including Raleigh, Durham and Chapel Hill, has the sixth-highest number of doctoral-degree holders in the U.S.
The Reverend William Barber, president of the North Carolina chapter of the National Association for the Advancement of Colored People, said his members and their allies had hopes that they could work with McCrory. The former mayor had been known as a moderate during his tenure in Charlotte.
The optimism continued even after McCrory tapped Variety Wholesalers Inc. Chairman Art Pope, a top campaign donor and limited-government advocate, as budget director. Pope spent years building a network of policy institutes advocating free markets and less government.
Barber said his hopes were dashed within weeks, when the new administration killed efforts to expand Medicaid, the joint state-federal health-care program for the poor, and worked with lawmakers to cut unemployment benefits.
The changes also raised business contributions to the jobless-insurance system to repay federal aid, supplied when North Carolina’s funds ran out during the 18-month recession that ended in June 2009. The cuts made the state ineligible for extended U.S. support, which is why checks end today for 70,000.
The legislature is also weighing dueling tax proposals that both would cut corporate and income levies and reduce revenue, at least in the short term.
North Carolina’s fiscal management has made it one of eight states that have AAA grades from the three major credit-rating companies. Its pension system was more than fully funded in 2012, according a report this month by the Center for State & Local Government Excellence in Washington. The median nationwide was 72 percent in 2011, according to Bloomberg Rankings.
The state’s leadership is tinkering with the some of the underpinnings of North Carolina’s success. However proponents, including the chamber’s Ebert, say the proposed tax cuts ultimately will boost revenue by encouraging business growth.
A slew of election bills introduced in April, all still pending, spurred the weekly protests. One measure would remove a tax credit for parents whose college-student children vote where they go to school instead of where their parents live. The provision would reduce the vote in college towns such as Chapel Hill, a Democratic stronghold.
The bills also add voter-identification requirements; end Sunday voting, which has increased turnout among black churchgoers; shorten the window for early voting and end same-day registration. The registration provision had been won only five years ago, by the same organizations -- the NAACP, labor, women’s and Hispanic groups and clergy -- that are behind the demonstrations.
College students protested first, showing up at the legislature with duct tape over their mouths. Then, on April 29, the NAACP brought 17 protesters to the statehouse, all of whom were arrested after they refused to disperse. That kicked off what organizers call Moral Mondays, with demonstrations every week since except on Memorial Day.
Police estimated last week’s crowd at 3,000, of whom more than 120 were arrested.
“Stop making my state look stupid,” said one handwritten sign. “Even my dog is pissed,” said another.
The arrests have taken place on the first floor of the Statehouse after rallies on the grassy mall next door. Typically, volunteers file in surrounded by cheering supporters, then sing until they’re told to stop.
“To get arrested, you stay when they say go, sing a few songs and they put the handcuffs on you and walk you away,” said Roy Schonberg, 60, a Durham technology consultant arrested last month.
Those arrested have included preachers, a woman in a wheelchair, another more than 90 years old and the Charlotte Observer newspaper’s religion reporter, who was interviewing a protesting clergy member.
The charges are typically second-degree trespassing and disobeying building rules. Most of the defendants are released on personal recognizance.
Chris Kromm, editor of the pro-labor publication Southern Exposure, was among 150 arrested last month, and said he was back home by about 1:30 a.m.
“I was sitting in a cell next to a doctor, a farmer, a guy who works in a genetics lab and an Army guy from Fort Bragg,” he said.
The governor has had little to say about the protests.
“Unlawful demonstrations should be unacceptable,” McCrory said in response to an e-mailed query last week. “But lawful demonstrations we welcome. That is the great part of our democracy.”
Critics call the protesters outliers who don’t represent voter sentiment in North Carolina.
“It looks like my fellow baby boomers want to revisit the ’60s,” said James Tynen, a spokesman for the free-market Civitas Institute, one of the research organizations created by Pope, now McCrory’s budget director. “They represent a fairly narrow cross-section of the state.”
Civitas created a mocking game using mug shots of the arrested, publishing it on its website. It listed many of their occupations, the salaries of public employees, and a chart showing that most were from the immediate area.
Barber, the NAACP president, said the Civitas gallery only brought out more protesters: “People are realizing. This is where the fight is happening now, in statehouses. It’s the statehouses that are taking away our rights.”
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