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John Skvarla

John Skvarla

Sharon Decker

Sharon Decker

North Carolina Governor Pat McCrory announced a major change in his cabinet today. Commerce Secretary Sharon Decker is out and Secretary of Environment and Natural Resources John Skvarla will take her place. No word yet on who will head DENR after Skvarla.

Though it’s hardly unprecedented for a Governor to, in effect, transfer secretaries from one agency to another, in a normal/sane world this particular switch would raise eyebrows. After all, it’s one thing to be the state’s top environmental protection chief and it’s quite another to be it’s top business schmoozer.

Or at least it ought to be.

Unfortunately, under the present regime in Raleigh, such an idea is perfectly logical and consistent. That’s one of the main reasons that today’s announcement produced a unanimous yawn from state political observers: No one ever had any illusion that Skvarla was doing anything other than serving the state’s big business community at DENR. By all appearances, the new gig will simply allow him to do essentially the same thing he’s been doing  — just with a different title.

 

NC Budget and Tax Center

Sharon DeckerThe unfortunate quest to privatize the state’s business recruitment and job creation efforts took a big step forward yesterday, when the Senate agreed to a House proposal creating a new nonprofit partnership to oversee much of the state’s economic development efforts.

This misguided proposal is a bad deal for North Carolina taxpayers, businesses, and workers—schemes for privatizing economic development have repeatedly proven to be ineffective at job creation, wasteful of taxpayer dollars, and prone to financial mismanagement, conflicts of interest and pay-to-play incentive granting, and the inability to raise private funds in many of the states where they’ve been tried.

The only good news is that the General Assembly finally ended up supporting the House-passed measure, which includes somewhat better taxpayer protections than the original Senate measure.

Perhaps most importantly, the House bill did not include a new incentive program for the film industry, an extra policy tacked onto the Senate version two weeks ago. Given ongoing controversy over the effectiveness of film incentives, the Commerce privatization bill was just not the appropriate place for creating an entirely new incentive program.

A second important improvement over the original Senate measure involves the inclusion of new ethics rules. While the Senate suggested allowing the new nonprofit to develop and implement its own code of ethics—potentially creating legal loopholes for problematic ethical behavior—the final House bill requires that all board members, officers, and staff members remain subject to the existing state ethics act, just like all other state appointees and employees. This will protect taxpayers from the kinds of ethics scandals that have plagued other states’ privatization efforts, as in Wisconsin, Florida, and Texas.

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Lindenmuth

Lindenmuth

If there’s one news story about North Carolina state government that you don’t want to miss this morning it’s NC Policy Watch reporter Sarah Ovaska’s new investigative report on the McCrory administration’s “jobs czar,” Richard Lindenmuth. As Ovaska reports, the man charged with overseeing the privatization of the state’s business recruiting efforts (something that former Republican governor Jim Martin calleda “dumb and dangerous idea”) has some controversies and questions in his own background in private industry. This is from the report:

“N.C. Policy Watch investigation into Lindenmuth’s background uncovered federal court records showing that controversy has marred his career in recent years. He placed his Raleigh consulting company, Boulder International, into bankruptcy in 2010 and had his fiduciary abilities called into question by a federal bankruptcy judge in a separate incident.

U.S. Bankruptcy Judge Barbara Houser, the chief bankruptcy judge for the Northern District of Texas, found that Lindenmuth improperly overcharged expenses by nearly $117,000 while consulting for a home décor company undergoing bankruptcy, a situation she found ‘very, very troubling’ and potentially criminal.

‘[T]his appears to violate the criminal violations of the Bankruptcy Code, and I mean this is not right,’ Houser said, according to a hearing transcript.

Court records don’t show that law enforcement ever pursued the situation, and Lindenmuth denied any wrongdoing in court records and to N.C. Policy Watch. He did, however, agree to return $250,000, nearly half of what he was paid for seven months of work at the company.”

Click here to read the rest of the story including more of Judge Houser’s scathing characterization’s of Lindenmuth’s actions. It will be interesting to see if Gov. McCrory stands by the appointment given the numerous controversies already swirling around his administration’s economic development efforts.

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Golf ball on teeState lawmakers are rushing through a bevy of important and destructive bills during the 2014 short session — often with remarkably little process or debate.  The Senate is even going so far as to take the most important bill of the session — the 274-page budget bill — from its moment of unveiling to final passage in just 48 hours. Meanwhile, House Speaker Thom Tillis threatened his chamber with a rare Friday session if they didn’t speed along a bill to legalize fracking.

Ah, but happily, the mad rush doesn’t apply to all matters. According to an announcement emailed out early this afternoon by the House Commerce and Jobs Development Committee, that august body will be devoting two full hours of precious short session time next Thursday to the subject of golf. This is from the announcement:

“NORTH CAROLINA HOUSE OF REPRESENTATIVES
JOINT COMMITTEE MEETING NOTICE AND BILL SPONSOR NOTIFICATION
2013-2014 SESSION

You are hereby notified that the House Committee on Commerce and Job Development will meet as follows:

DAY & DATE: Thursday, June 5, 2014
TIME: 10:00 AM
LOCATION: 544 LOB
COMMENTS: This is an informational meeting. The objective of the NC Golf Economic Impact meeting is to review the historic and ongoing economic contributions golf has made to the state. When examined in a historic context one reaches a simple conclusion: NC has been very good for golf and golf has returned the favor in kind. Read More

NC Budget and Tax Center

Partial privatization of the N.C. Department of Commerce took another step closer to reality yesterday when the Economic Development and Global Oversight Committee (or EDGE Committee) reported out updated enabling legislation that authorizes the establishment of a nonprofit corporation to conduct significant pieces of the state’s business development activities. Using last year’s SB 127 as a template, the new version of the bill includes important changes—some for the better, some for the worse, and some that make us go “huh?”

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