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A federal judge denied former state lawmaker Stephen LaRoque’s requests this week to dismiss charges related to $300,000 that federal prosecutors believe he stole from two federally-funded non-profits.

The orders issued Monday and Wednesday by Senior United States District Court Judge Malcolm J. Howard clear the path for LaRoque’s May 20th trial at the federal courthouse in Greenville, where a jury will decide his guilt or innocence on the allegations.

LaRoque-PCLaRoque, a Kinston Republican who resigned his legislative seat following his 2012 indictment, faces possible prison time, if jurors elect to convict him.

N.C. Policy Watch first raised questions about LaRoque’s excessive compensation from the non-profits in an August 2011 investigation, “Public benefits, personal gains,” and a federal grand jury began its own probe a month later by issuing subpoenas to LaRoque for records. The two non-profits were part of a U.S. Department of Agriculture program seeking to combat poverty by creating a mechanism to offer loans to small business owners that traditional banks shunned. Instead, the investigation found LaRoque received generous salaries from a board of directors that consisted of his immediate family members while close associates of LaRoque’s received loans.

Howard’s orders to uphold the charges were filed on Tuesday and Wednesday, and let 10 of the 12 charges LaRoque faces stand. He also ordered that witnesses for both the defense and prosecutions except for the two FBI case agents be sequestered during the trial, meaning they can’t talk be in the courtroom during testimony nor share their own testimony.

Howard has not yet ruled on a final motion from LaRoque to dismiss two additional counts of falsifying tax reports. Read More

Bill SchwekeOne of  North Carolina’s most experienced and insightful economic development experts, retired CFED wonk and former Senior Fellow Bill Schweke, forwarded the following brief essay in response to the series in Raleigh’s News & Observer on North Carolina’s rather amazing generosity in dispensing tax breaks and other giveaways to businesses in the name of “economic development.”  

JUST SAY “NO”
By William Schweke

The more things change, the more they stay the same. The new series in Raleigh’s News & Observer (“The Missing Money”) provides a near perfect illustration of this adage in the field of taxes, subsidies, and business attraction.

Like most states desperate for new jobs during the Great Recession, the price tag for the state’s package of general tax loopholes and company-specific, tailored incentives has increased significantly, during the past few years, with very little pushback from critics.

Indeed, the debate has tended to be framed as follows: Read More

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.  Read More

Later today, Governor McCrory will announce his proposals to convert the Department of Commerce into a public private partnership that administers at least some of the state’s economic development programs.  North Carolina taxpayers should be concerned.

Although we won’t know the specifics of this privatization scheme until the Governor’s announcement, we do know from previous public statements that the plan will likely involve the creation of a nonprofit economic  development authority that receives financial support from both taxpayers and corporate donations in exchange for overseeing a range of activities related to industrial recruitment, existing industry support, and possibly small business development. This may also include administration of the state’s incentive programs—the Job Development Investment Grants (JDIGs), the OneNC Fund, and the Jobs Maintenance and Capital program for large employers.

Privatizing economic development isn’t new—a number of states have experimented with this approach over the past two decades, and the results are not encouraging. According to one recent report, states that have adopted public private partnerships for their economic development efforts have seen the misuse of taxpayer dollars, questionable incentive awards to failing companies, the appearance of pay-to-play incentive granting to those companies providing financial support to the partnership, and frequent lack of transparency and accountability with how the partnership spends taxpayer dollars.

And to top it all off, many of these partnerships haven’t proven to be very effective in generating the job creation results promised

Read More