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In good news on the government accountability front this week, Governor McCrory and Commerce Secretary Decker put the brakes on privatizing the state’s economic development efforts, postponing the creation of the new nonprofit development corporation until the start of the new fiscal year in July. Ostensibly, the move is intended to make sure the transition to this new public-private partnership goes as smoothly as possible, given the catastrophic mistakes and complete lack of accountability suffered by other states when trying this approach. And the legislature would like to weigh in as well, given that the authorizing bill for all this never passed last year.

So it’s worth taking advantage of this pause in the rush to privatization to ensure that the state’s economic development efforts remain both effective and accountable. Fortunately, North Carolina has a long tradition of accountability in business development, a point made in a well-timed study released this week by national economic development watchdog Good Jobs First, and this is a tradition the state should continue.

According to the report, the Tarheel State has the third best accountability system in the country in terms of monitoring and disclosing whether companies live up to their promises of job creation.

This is a tradition that the state needs to continue and extend to the activities of the new development corporation, including the private sector donors and the proposed closing fund.

 

Governor McCrory’s Economic Development Board released it’s long-awaited strategic plan for the state’s economic development efforts this afternoon. Here is the Budget and Tax Center statement in response:

We all want to create jobs and grow an economy that works for everyone in North Carolina, and the best way to make sure that happens is to focus on raising family incomes after a decade of decline. While the Governor’s plan includes a number of useful proposals, there is an important contradiction between the plan’s call for additional tax cuts and the resources necessary to achieve the goals related to workforce development, innovation/entrepreneurship, and rural prosperity. These goals will be impossible unless the state provides adequate investment in higher education, community colleges, and rural community development initiatives. Funding for these initiatives are already well below where they were before the recession started in 2008, so it’s unlikely the state will be able to make significant progress on achieving these goals given the steep revenue losses resulting from last year’s tax cuts and any future round of tax reductions.

 

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.

This is from the release distributed this morning by the N.C. Budget and Tax Center:

Sometimes growth just isn’t enough. That’s the conclusion of our new report, which argues that North Carolina needs a fresh approach to economic development that focuses specifically on raising incomes for all North Carolinians instead of assuming that economic growth will simply lift all boats to economic prosperity. Read More

Folks interested in economic development policy should check out a new report released by the Budget and Tax Center today.  As discussed in the report, the state needs a fresh approach to creating jobs and growing the economy—an updated economic development strategy that fits the demands and challenges of the 21st century. At the heart of this new approach, the primary goal for the state’s economic development efforts should be achieving growth in median household income.

The fundamental challenge facing North Carolina’s economy in the first decades of the 21st century is how to replace rapidly vanishing jobs in declining manufacturing industries with jobs in growing industries that pay enough to allow workers and their families to make ends meet and achieve middle class prosperity.

To meet this challenge, the state should refocus its economic development goals to not just to promote “growth” for its own sake, but to ensure that as many people and regions as possible benefit from growth.  As a result, North Carolina should adopt an integrated, “all-of-the-above” approach to economic development, one that leverages the state’s existing assets and strategies—such as its top-notch research universities and regional clusters of thriving industries like pharmaceutical manufacturing—to support all types of business growth. This involves the expansion of existing businesses and the creation of new homegrown businesses, alongside strategies for attracting outside businesses to the state.

This involves fostering businesses in industry clusters that are not only expanding, but that also pay high wages and offer good benefits, and to target those efforts to the regions of the state that lagging behind.

Finally, a 21st century strategy requires 21st century ways of measuring whether that strategy is succeeding. As a result, policymakers need to use a broader range of indicators beyond economic growth— including median household income and poverty rates—that reflect changes in the standard of living and the ability of families to prosper in the 21st century.

For more details, see the report.