As Chris Fitzsimon reported in this morning’s “Monday numbers,” analyst Allan Freyer of the N.C. Justice Center has released a new and damning report today on North Carolina’s business incentives programs. This is from the release that accompanied the report (“Picking Losers: Why the Majority of NC’s Incentives Programs End in Failure”):

“If North Carolina continues to use incentives to pick winners and losers in economic development, the state needs to do a much better job of picking winners. More than half of all firms receiving incentive awards from the state’s Job Development Investment Grant (JDIG) program since its inception in 2002 have failed to live up to their promises of job creation, investment, or wages. These failed projects have forced the Department of Commerce to cancel those grants and even occasionally take back funds already given to these underperforming firms, according to an analysis of program reports.

Given the troubling number of failed projects, now is not the time to accept recent proposals to expand JDIG and create a new “catalyst fund” for closing new incentive deals. All told, the state has cancelled 60 percent of JDIG projects after recipient firms failed to honor their promises, with even higher rates of failed projects in the rural and most economically distressed areas of state. The disparity in performance between projects in urban and rural counties is even more striking in light of the signifi cantly lower incentive investments made in those rural areas—rural counties are seeing more project failure despite having fewer and smaller investments.

To address these problems, legislators should resist adding to the state’s incentive programs and instead focus on strengthening the performance standards that hold recipient fi rms accountable for the promises they make. Without these critical accountability measures, each one of these unsuccessful projects would have continued to receive millions in public subsidies, despite failing to create promised jobs and investment. Additionally, policy makers should improve the evaluation process for prospective JDIG projects. Currently, the cost-benefit analysis every project must undergo is clearly letting too many bad projects slip through the cracks. Future incentive grants should go to firms in targeted industries that are poised for robust growth rather than those that are in decline, and grants should be designed to bring infrastructure development and job training resources to the rural counties that most need assistance. Lastly, there is no need to create a new “closing” fund because there is already a similarly designed incentive program that governors have traditionally used to help close projects—namely, the OneNC program.”

Click here to read the entire report.


Richard LindenmuthRemember when racing legend Richard Petty ran for North Carolina Secretary of State back in 1996? There were a lot of reasons that Petty got thrashed by Elaine Marshall, but one of the most important was Petty’s stated intention to keep running his NASCAR team while serving. It seems almost comical now, but that was actually King Richard’s absurdly tone-deaf plan.

You’d think that little incident might have taught wannabe North Carolina public officials a lesson, but apparently some folks missed the memo. Take Dick Lindenmuth (pictured above), the Raleigh businessman recently hired by State Commerce Secretary Sharon Decker to run the state’s new, soon-to-be privatized corporate recruiting efforts.

According to Mr. Lindenmuth, he intends to retain his position as a managing partner of Verto Partners even as he serves in his new full-time, publicly-funded job. This is, in a word, ridiculous.

This morning, Raleigh’s News & Observer put it this way:

“That is not acceptable. This is a new, complex job, and despite Lindenmuth’s assurances that he’ll be on top of it and not involved in the day-to-day operations of his company, there must not be any chance for a distraction or a conflict. Taxpayers need to have those who work for them accountable only to them.”

As the editorial notes, there are lots of other reasons to be very concerned about the mad rush to privatize corporate recruiting, but this one, quite fixable problem can and should be addressed ASAP.


12-3In case you missed it, the McCrory administration took yet another step in recent days to assure that the always opaque and ripe-for-corruption business of bestowing economic “incentives” (i.e. giveaways to corporations) becomes just a little bit more opaque and even more vulnerable to corrupt practices.

As many folks are already aware, McCrory and his Commerce Department Secretary, Sharon Decker, have been moving to privatize the Department’s business recruiting/incentives work for some time. The plan — not yet fully fleshed out because the General Assembly has yet to formally  sign off on the deal — is to fire a bunch of Commerce Department employees and then recreate and re-establish their functions in a publicly-funded, private nonprofit.  To make matters worse, the whole thing appears to be thoroughly infused with partisan politics as one of McCrory’s top fundraisers has been designated to serve on the board of the new nonprofit (the fundraiser, John Lassiter, finally resigned last week from his position on the renew North Carolina Foundation — a group that exists to generate pro-McCrory propaganda — after months of drum-banging Chris Fitzsimon).

The latest outrage, however, involves the hiring of the new nonprofit’s first executive director. Read More


Fast food workersRaleigh’s News & Observer published an outstanding think piece by Kevin Rogers of Action NC today udner the headline “The high cost of fast-food’s low wages.” Rogers’ headline was simpler: “McWelfare.” 

As you can see below, either one works.

I recently met Willietta Dukes, a mother of two and fast-food employee in Durham, North Carolina. Willietta makes $7.85 at Burger King, despite 16 years of experience in the fast-food industry. In August, tired of struggling to get by, she walked off her job, just a month after losing her home because she could no longer afford rent payments. Despite working hard for as many hours as she gets from Burger King, Willietta is forced to rely on food stamps just to make ends meet.

Willietta is not alone. Research released this week finds that more than half – 52% – of fast-food workers nationwide are paid so little that the public needs to provide assistance to make sure workers can afford basic, everyday needs. In other words, fast-food employees are twice as likely as other workers to be forced to rely on programs like the Supplemental Nutritional Assistance Program (food stamps) or Medicaid. Read More


Sharon DeckerFor years, one area of common ground between conservatives and progressives in North Carolina has been their shared skepticism for business incentives. As analysts and advocates from both camps have shown dozens of times, state and local governments in North Carolina are pouring millions upon millions of dollars down a rat hole on corporate giveaways each year — sometimes just to lure businesses from one county to another.

Over time, the end result is an enormous drain on public resources that breeds cynicism, corruption and special favors and disadvantages homegrown, taxpaying businesses. To make matters worse, virtually every politician who campaigns for public office pledges to reform incentives and then, once in office, finds it impossible to do anything about the problem.

The latest case-in-point is Gov. McCrory who seems bent upon not just using corporate incentives, but dramatically expanding them. If you doubt this, check out reporter Andy Curliss’ article in Raleigh’s News & Observer about the administration’s utterly daft new proposal (given voice by Commerce Secretary Sharon Decker – pictured above) to tax fracking as a way of creating a giant slush fund to attract/bribe corporations: Read More