Matt Hirschy of Equality NC speaks about the one-year anniversary of House Bill 2. Jim Morrill jmorrill@charlotteobserver.com
Matt Hirschy of Equality NC speaks about the one-year anniversary of House Bill 2. Jim Morrill jmorrill@charlotteobserver.com

Politics & Government

A year later, HB2 has cost North Carolina millions. How much worse will it get?

By Jim Morrill, Katherine Peralta and Steve Harrison

jmorrill@charlotteobserver.com

March 18, 2017 12:22 PM

UPDATED March 23, 2017 07:19 PM

House Bill 2 has cost North Carolina a year of lost NCAA and ACC championships, an NBA All-Star Game, jobs and economic development. Now the state can brace for more.

As North Carolina marks the first anniversary of House Bill 2 next week, an ongoing political stalemate is making a prolonged economic backlash – and future anniversaries – likely.

The law, widely criticized as anti-LGBT, has cost North Carolinians jobs, money, performances and events, including this month’s NCAA basketball tournament.

“The longer it stays on our books, the more difficulty we will have repairing the damage,” Democratic Gov. Roy Cooper said last week. “It’s hard to quantify the damage.”

Never miss a local story.

Sign up today for a free 30 day free trial of unlimited digital access.

It’s also hard to predict what the ultimate cost will be – so far, it’s estimated that the controversial bill has cost the state more than half a billion dollars, and thousands of jobs.

An NAACP boycott over the Confederate flag in South Carolina lasted more than 15 years, causing the loss of NCAA tournament games and other events. An NFL boycott over Arizona’s decision not to recognize the Martin Luther King Jr. holiday cost that state a Super Bowl.

Lawmakers tried to repeal HB2 in December but Democrats and many Republicans turned back a proposal from GOP Senate leader Phil Berger. Democrats said the proposal reneged on a deal for outright repeal.

Other attempts have since failed. Last week lawmakers faced a reported deadline from the NCAA, which is choosing championship venues through 2022. Charlotte, Raleigh and Greensboro are among the cities bidding for over 130 NCAA events.

The NCAA declined to confirm any deadline. But in a statement, it said, “Our constitution and values commit us to respecting the dignity of every person.…(O)ur principles have not changed.”

Some fear that without a deadline, any sense of urgency will fade.

“This place operates on deadlines,” said House Minority Leader Darren Jackson of Raleigh. “Without that deadline, we’re just afraid it will fall through the cracks and people will move on to the next issue.”

Michael Bitzer, a Catawba College political scientist, said he finds it unlikely that any side will be willing to compromise on such a “hyper-polarized” issue.

“If something isn’t resolved probably by the courts fairly soon, this could be North Carolina’s new environment,” Bitzer said.

It also could continue to exacerbate tensions between urban and rural North Carolina, with implications for other policies.

Metro areas, typically more socially progressive, have lost the most business over HB2. Animosity toward Charlotte, in particular, was evident during the December special session that resulted in the failed attempt to repeal the law. Republican Sen. Buck Newton of Wilson said he had “no faith in the city of Charlotte,” calling its City Council “the lunatic left.”

And the economic backlash is likely to continue.

The NBA moved its All-Star Game from Charlotte. The ACC, like the NCAA, has moved events including the football championship once scheduled for Charlotte’s Bank of America Stadium – though conference officials have said they don’t plan to move its headquarters from Greensboro. Cooper said economic development experts have told him that “a number” of Fortune 500 companies have taken the state off their lists.

Through research and interviews with economists, Politifact estimates that HB2 has cost North Carolina between $450 million and $630 million. But in perspective, that accounts for 0.1 percent of the state’s annual gross domestic product, notes Michael Walden, an N.C. State economist.

“So we know that it’s hundreds of millions of dollars and thousands of jobs, but it could be worse than that because what we’re not getting is what we don’t know,” Cooper said. “I’ll just have to spend that extra 15 to 20 minutes that I have to spend in most of my recruiting sessions answering questions from companies about House Bill 2 and why it’s still on the books.”

In the 2017 legislative session, lawmakers in 15 states have introduced some version of a “bathroom bill” that requires people to use the restroom and locker room in public facilities that corresponds with the gender on their birth certificate, according to the National Conference of State Legislatures.

Last week Virginia Gov. Terry McAuliffe cited HB2 in a tweet designed to lure companies to his state.

“To NC companies and families tired of anti-LGBT attacks like #HB2 - Virginia welcomes you, no matter whom you love,” he tweeted.

HB2: A timeline for North Carolina’s controversial law

North Carolina’s legislature recently passed a law that prevents transgender people from using government-run bathrooms corresponding to the gender with which they identify. The law — House Bill 2 (HB2) — has incited a state-wide civil liberties battle. Here is the timeline of the so-called "bathroom bill."

Ali Rizvi, Nicole L. Cvetnic and Sohail Al-Jamea / McClatchy

The flag boycott

The statewide economic impact of HB2 is difficult to measure. It’s not known how many companies crossed North Carolina off their lists for expansion before making their interest public, experts say.

In Charlotte alone, direct spending only for event-related cancellations over HB2 totals $83.9 million, estimates the Charlotte Regional Visitors Authority. That figure takes into account canceled events like the ACC Championship football game, the NBA All-Star Game and annual conventions.

It does not, however, take into account other cancellations. Less than two weeks after HB2 was signed, Lionsgate pulled production for a new Hulu show that was supposed to be filmed in Charlotte. The next day, PayPal scrapped plans for a new operations center in Charlotte, costing the city at least 400 new jobs. In October, a real estate research firm called CoStar also decided against a 730-job expansion here because of HB2.

If the state wants to see how a prolonged HB2 boycott might play out, it doesn’t have to look far.

South Carolina, facing national pressure, moved the Confederate battle flag from the statehouse dome to the Capitol grounds in 2000. But the NAACP called a boycott. The NCAA refused to hold championships in the state. The United Auto Workers and other groups honored it as well.

But as the years went by, the boycott wasn’t discussed much, said Frank Knapp, president of the S.C. Small Business Chamber of Commerce.

“It was lamented, and especially in some of the venues that could host large gatherings, they knew they were losing business,” he said. “But outside of the entities that were directly impacted, I don’t think there was much of a public discussion. In general, it was, ‘That’s the way it is, and you keep on going.’ 

S.C. business leaders say corporations weren’t deterred by the controversy.

BMW’s decision to build a plant near Spartanburg was made before the flag boycott. But Knapp noted that Boeing still opened a plant near Charleston in 2011 for the 787 Dreamliner.

“I never heard anyone say we’re not going to move there because of the boycott,” he said. “That’s typically not the way large businesses operate.”

It took the 2015 Charleston church massacre of black parishioners to bring the Confederate flag down. Once that happened the boycott ended. If not for that, business leaders say, the flag would likely still be flying today.

Knapp, of the S.C. Small Business Chamber of Commerce, said North Carolina might be affected more, should this become a multi-year boycott. He said others could follow PayPal’s decision not to expand in Charlotte.

“It may be different for those tech companies,” he said. “We weren’t attracting tech companies. We were attracting manufacturing. It’s a different culture.”

Arizona endured a multi-year boycott over its refusal to honor Martin Luther King Jr. with a holiday.

In 1986, then Gov. Bruce Babbitt declared a King holiday. But the next governor, Republican Evan Mecham, rescinded that decision. A 1990 referendum on the holiday failed despite the NFL’s threats to move the 1993 Super Bowl.

Voters did approve the holiday in 1992, but not before the Super Bowl was moved to Pasadena, Calif. Arizona finally hosted a Super Bowl in 1996.

Looking for votes

Republican Rep. Chuck McGrady of Hendersonville is the chief sponsor of the most recent compromise bill. Despite some bipartisan support, it has yet to go anywhere.

“I indicated I’ll move the bill when I have the votes,” McGrady said last week. “I don’t have the votes right now.”

In a newsletter to constituents, McGrady suggested Democrats are waiting until after the 2018 election.

Except for one provision, Cooper said he can go along with McGrady’s bill. The provision would allow voters, in a referendum, to roll back any local anti-discrimination law. In his response to the governor’s “State of the State” address this month, Berger said Cooper “slammed the door on a bipartisan compromise.”

Cooper said, “We just have to keep talking and keep negotiating.”

“I think North Carolina has such a positive reputation as a beacon in the South,” he said, “that if we could get this repealed now, it would take just a little polishing of our image to get back in the swing.”

Cooper calls out House GOP leadership on HB2 compromise

Democratic Gov. Roy Cooper reacted strongly on Wednesday to a question suggesting that he is working behind the scenes to slow down a proposed compromise that could allow the state to repeal HB2. Cooper said Democrats can think for themselves and that "two or three at most support House Bill 186 in its current form." Cooper said the bill cannot gather enough votes to pass as long as it contains a provision requiring local ordinances that expand anti-discrimination protections to be put before voters in a referendum. If House leaders are serious, Cooper said, they'll remove that provision.

Clifton Dowell NCInsider.com

Rep. John Bradford talks about HB2 compromise efforts

The second-term Republican from Cornelius is in the middle of the latest efforts to reach a compromise that would get rid of HB2, the law that has gained national attention as the “bathroom bill.”

jmorrill@charlotteobserver.com