NC Budget and Tax Center

Governor’s budget wipes out funding for economic development programs in distressed, minority communities

Like all budgets, Governor Pat McCrory’s proposed spending plan for FY2013-2015 is based on a set of ideas about how the world works—what spurs economic growth, what creates jobs, and the most effective ways of using state government to achieve these goals.  Unfortunately, his proposal for economic development represents quite a few bad ideas, including the sharp reduction in spending for economic development nonprofits that receive state funding through the Commerce-State Aid portion of the budget.  These nonprofits provide vital economic development resources for historically disadvantaged and persistently distressed communities and minority populations. 

At the same time, he proposes boosting spending on industrial recruitment and other traditional economic development activities that will likely bypass the communities benefitting from the work of these nonprofits, if any meaningful job creation or economic growth is generated at all. 

As seen in the following chart, McCrory’s budget for FY2013-14 proposes a more than 55% cut to the overall spending on nonprofits that are geared specifically to providing important economic development support for economically distressed regions and populations within North Carolina.  Even more troubling, some of the most important nonprofits were zeroed-out altogether—funding for the N.C. Community Development Association, the N.C. Community Development Initiative, and the N.C. Indian Economic Development Initiative has been eliminated altogether.

 Minority Econ Dev Chart

Created as a way of addressing past discrimination and persistent poverty, these organizations provide technical assistance, capacity building, and much needed financial assistance for local community development groups working in economically distressed neighborhoods and Native American reservations. In turn, these local groups use the resources provided by these nonprofits to perform a range of economic development activities vital to these forgotten communities, including providing job training services, assisting with affordable housing development, and helping start small businesses in communities that have been left behind in the global economy. They also provide access to capital for many small businesses at a time when commercial banks have refused lend.

Both the governor and leaders in the General Assembly place a lot of stake in the argument that the poor should take responsibility for lifting themselves out of poverty. These economic development nonprofits provide the very tools that help poor families and poor communities achieve this goal, so it makes little sense to eliminate them.

In taking away these tools from historically disadvantaged communities—while simultaneously boosting funding for traditional industrial recruitment activities—Governor McCrory is apparently making the bet that the economic growth he hopes to create through his approach will somehow trickle down to these communities.  This is a bad bet, given the historical and current failure of statewide economic growth to lift these communities out of persistent poverty.  As a result, eliminating these programs will only cause these communities to fall further behind.


  1. Tom Lassiter

    April 11, 2013 at 9:52 am

    Couple this with cuts to the N.C. Rural Economic Development Center and grabbing future tobacco money from the Golden Leaf Foundation … it’s apparent Charlotte’s mayor has no understanding of, or appreciation for, the lives led and challenges faced by millions of North Carolinians.

  2. Michael Harris

    April 11, 2013 at 12:07 pm

    i don’t understand why there is no intelligence in running nc right all the state representatives advice is all ways the same cut this cut that look some of the non profit organizations are a waiste but you must pick the ones that are producing results in asheville you have so many women working in these organization it’s crazy half of them are stealing the money the other half are making more problems to keep there jobs and everybody cannot work for the goverment or the hospital or schools building these brewerys is dumb because the dui rate is going to be high and the only ones that are going suffer is the people because the transportation should be more effective longer to save lives asheville goverment is going to make prison a viable entity to arrest people and beg for more federal money to build a prison but won’t help education at all i don’t know how he won but asheville is going to have property taxes go up wages are down and that’s what needs to be worked on the wage the way it is is making this state lose so much money it’s sad and as far as blacks go and the poor govenor mcrory is hoping that people leave asheville so that the only people that are left are white old retired disability people and that is no money that just sustainable income at a terrible pay rate mcrory you are crazy you need to be disability and get out of goverment the choices you are making will crusify you next election because he is going to swing all resonsibility to pay for his current management ofd this state i s going to show he is no economist and he don’t know what he is doing at all to generate jobe

  3. Gene Hoglan

    April 11, 2013 at 12:13 pm

    Yep, more smokestack chasing and luring McJobs to the suburbs. Who didn’t see this coming?

  4. Frances Jenkins

    April 11, 2013 at 5:18 pm

    Wait one minute! More people were added to the poverty roll over the last twelve years than ever before.More people on food stamps, more free housing and more medicaid, so something is not working.These program acted as the left arm of the Democrat Party as well campaign fund. They did not work. Why should continue them????

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