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North Carolina needs serious policy solutions that create real jobs, but if the new economic development legislation unveiled yesterday is the route the state is going, it looks like jobless workers are going to be kept waiting awhile.

After weeks of closed-door negotiations, the House unveiled the NC Competes Act (HB 117), legislation which included a provision doubling the amount of money the state could spend on the state’s primary business incentive program, the Job Development Investment Grant and renaming it the Job Growth Reimbursement Opportunities People Program. This program provides public dollars to “incentivize” private sector firms to create jobs and increase capital investment.

Unfortunately, the program has not always delivered on its promises, and until it is fixed, it is unlikely that spending more money on it will improve its effectiveness in creating jobs.

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News

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.

News

Stephen LaRoque, the former state representative accused of stealing $300,000 from federally-funded non-profits he ran, entered into a plea deal Monday.

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Former state Rep. Stephen LaRoque in 2011.

LaRoque, a Kinston Republican, plead guilty to one count of theft of $150,000 from a program receiving federal funds. The remaining 11 counts he faced will be dismissed, according to the court docket.

LaRoque also agreed to pay back $300,000 in restitution to the non-profit he once led, the East Carolina Development Corporation, according to a news release from the U.S. Attorney’s Office for the Eastern District of North Carolina.

The plea was offered Monday at the federal courthouse in Greenville. No prior announcement of the hearing was made on the docket for LaRoque’s case.

LaRoque, a co-chair of the powerful House Rules Committee, resigned from the legislature in July of 2012, shortly after he was indicted on the federal charges.

His sentencing will be on May 12, at the federal courthouse in Greenville before Senior U.S. District Court Judge Malcolm Howard.

The charge LaRoque plead guilty to holds a maximum punishment of up to 10 years in prison. He could also be ordered to pay a fine of up to $250,000, according to a spokesman for the U.S. Attorney’s Office.

LaRoque had been scheduled to go to trial next week, after convictions a jury handed down in a 2013 trial were set aside because of juror misconduct.

The federal investigation into LaRoque began shortly after a 2011 N.C. Policy Watch investigation that found improprieties in his management of two economic development non-profits that received millions through a U.S. Department of Agriculture rural lending program. The non-profit’s board of directors, which approved generous pay packages for LaRoque, consisted of himself, his wife and brother for several years.

His indictment on federal charges accused him of taking more than $300,000 from the non-profit to buy, amongst other things, a Greenville ice skating rink, replica Faberge eggs, jewelry and cars for his personal use.

Up until Monday, LaRoque had maintained he was innocent of criminal wrongdoing, and that the money he was accused of stealing was owed to him.

Shortly after his indictment, he said he wanted to seek revenge and “make heads roll” at USDA if he managed to get a political appointment heading the state office of the agency he was accused of stealing from.

This post has been changed from the original to correct the maximum fine LaRoque could face, up to $250,000. The post may be updated as further information about Monday’s plea deal is made available.

News

Steven LaRoque, the former Kinston state lawmaker facing federal charges of stealing from two federally-funded non-profits he ran, will find out this week if a judge agrees the dozen criminal charges in the case should be thrown out.

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Steven LaRoque, at a 2011 press conference.

A pre-trial motions hearing, scheduled for 9 a.m. tomorrow at the federal courthouse in Greenville, will be a sealed hearing and closed to the public, according to an order filed by Senior U.S. District Judge Malcolm Howard.

LaRoque’s trial – his second, after the first ended in a mistrial because of juror misconduct — is scheduled to begin on Feb. 2.

The Kinston Republican is accused of taking $300,000 for his personal use from an economic development group he ran that was funded through a U.S. Department of Agriculture rural business lending program. LaRoque is also facing accusations that, instead of funding struggling businesses to spur economic growth, he used federal money to offer loans to personal associates and political allies, and then took money to fund his campaign and buy jewelry, replica Faberge eggs and a Greenville ice skating rink.

The federal investigation began shortly after N.C. Policy Watch published a 2011 investigation into LaRoque’s management of the federally-funded non-profits.

LaRoque, a former member of House Republican leadership team, has maintained he is innocent of criminal wrongdoing, and that the money in question was owed to him.

Howard wrote in his Jan. 6 order (scroll down or click here to read) that he is sealing the hearing and closing it to the public in order to hear confidential information that may come up in response to a motion LaRoque filed seeking information about the grand jury that indicted him.

Grand jury proceedings are, by design, secret and details about the inner workings of the groups are very rarely released to the public.

“This hearing will be sealed due to the potential for disclosure of grand jury documents or other materials,” Howard wrote.

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Commentary

Veteran Raleigh journalist Seth Effron included the following fascinating chart in his daily “Quick Clips” this morning about the comparative success of Governors McCrory and Perdue in the field of job recruitment.

Commerce chart

 

In addition to in your email box, you can read Effron’s daily clips at Blue NC.