Fact Check: Was Bishop Right In Saying 'No Economic Effect' From HB2?

May 21, 2019

In an interview with WFAE's Morning Edition last week, Mecklenburg State Sen. Dan Bishop was asked about an Associated Press analysis from 2017 that projected North Carolina would lose $3.7 billion in business over the next 12 years because of House Bill 2.

Bishop co-sponsored that 2016 law, which was since been repealed. HB2 — the so-called "bathroom bill" — required people in government buildings to use the bathroom that matches the sex on their birth certificate.

In response, Bishop pushed back against the $3.7 billion estimate, and instead cited a report by a non-partisan state economist, who said there was no impact because of the law.

"The nonpartisan staff at the General Assembly, the economists, say no economic effect could be detected, but that's something that the media doesn't care to pick up," Bishop said during the interview. "The media fascination with this is endless, but voters have long since tired of the endless controversy that has been mostly media manufactured."

What was he citing? And is that true?

Earlier this year, Bishop asked Barry Boardman in the state's Fiscal Research Division to study the impact of HB2 on the state's economy. 

The report was not widely disseminated. Boardman's research is done for the legislature and is not a public record. Bishop said former Wake County legislator Phil Stam asked him to request that the Fiscal Research Division do the analysis. Bishop then sent the memo to Stam, and Bishop said he believed Stam shared it with some reporters.

[Read the report here]

The first part of the three-page memo looked at NC's Gross State Product since 2000. A chart shows a study rise, then a decline during the Great Recession.  

During the roughly 12 months when HB2 was law, the state's GSP continued to rise on the same trajectory as it did before and after the law was passed.

Boardman wrote: "The available data for the time period when HB2 was in effect do not reveal any discernable positive or negative economic trend in North Carolina's Gross State Product. These results are not surprising given that the legislation was only in effect for twelve months, which is too short a timeframe to observe and validate any economic variances with proven analytical methods and the available data."

The memo has similar charts for employment and visitor spending statewide. There is no drop from HB2, nor is there a slowing of growth.

But what about the canceled events and companies that didn't relocate to North Carolina because of the law?

The biggest cancelation was PayPal's decision not to open a 400-job operation center near Charlotte. The AP report said that was the biggest single loss, costing the state $2.7 billion over that 12-year period.

In the WFAE interview, Bishop questioned whether that impact was as significant. PayPal did not relocate the 400-job center in another state. Instead the company told WFAE this week it spread those jobs among existing facilities throughout the nation. 

"The decision to not open the facility was due to HB2," the company said.

The other two large job losses were from CoStar deciding not to bring roughly 700 jobs to Charlotte, and  Deutsche Bank not expanding by 250 jobs in the Triangle.

The AP analysis also counted some event cancellations like NBA All-Star Game, as well as NCAA championship events. Those events have returned since HB2 was repealed.

The AP analysis said losing PayPal was an annual loss of about $200 million. But  that estimate is not certain.

The Charlotte Chamber that year said the PayPal loss would cost Charlotte more than $285 million in economic impact. PayPal's payroll was expected to be around $20 million a year, and it appears an economic multiplier was used to expand that $20 million payroll into an economic impact of between $200 and $285 million a year.

Some economists at the time said the multiplier used appeared to be too large, and that PayPay's actual economic impact would have been much smaller.

But what about the state's image?

The Charlotte Regional Visitors Authority told the Charlotte Observer last year it budgeted more money than in the past — $3 million over the last two years — to market the city post-HB2. Laura White of the CRVA said the increase was due to HB2; the protests following the Keith Lamont Scott shooting; and to promote the city in nearby markets like Nashville.

The CRVA has said that six states — including New York and California — have banned official state travel to North Carolina.

The Fiscal Research Division memo goes to great lengths to mention how difficult it is to see how small events can impact large trends in a state as large as North Carolina. It also throws a little cold water on the Republican's tax reform efforts, which Bishop and other Republicans have touted as improving the state's business climate.

"These changes have impacted every taxpayer and business in the state, and yet, examining the current data does not allow us to know the the extent those changes have had on the economy," Broadman wrote. "That is not to say the tax changes had no impact, it is to say that there are many important national and international influences on a state's economy making it difficult to dissect the role played by any one policy change."