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Commentary, NC Budget and Tax Center, Raising the Bar 2015
Editor’s note: This is the latest installment in “Raising the Bar” — a new series of essays and blog posts authored by North Carolina nonprofit leaders highlighting ways in which North Carolina public investments are falling short and where and how they can be improved.We need an energy system that protects our vital resources and creates sustainable jobs. The good news is that North Carolina has great potential for such a system. The bad news is that the current budget takes us further from that goal, not closer to it.

The ongoing discussions of the 2015-2017 state budget provide a useful context for analyzing the health of our state’s economy. The budget’s treatment of the environment makes clear just how shortsighted the planning for economic development is in this state. Over the last several years, rather than pursue the myriad opportunities to leverage clean technology and innovation to protect our environment and spur job growth, the state budget has ignored the need to protect our state’s most valuable resources.

Since the Great Recession of 2008, cuts to North Carolina’s primary environmental regulatory body have constituted a wholesale assault on our state’s living environment. The scale and pace of cuts to the Department of Environment and Natural Resources (DENR) represent a structural dismantling of numerous regulatory bodies, diverting systems of revenue generation for the foreseeable future. If continued, these trends could spell disaster for North Carolina’s families. Instead, we should pursue a budgetary structure and job creation scenario that benefit both our economy and the planet by investing in renewable energy and energy efficiency, remediating current environmental degradation, and repairing existing infrastructure.

Our current reality, however, is far different. In 2009, 30 positions were eliminated from DENR. Over the next two years another 225 jobs were cut, but in Gov. Pat McCrory’s first year of office, while the economy was supposedly in recovery, another 131 positions went to the wayside, with 1,500 additional positions transferred out of the department over that same four-year period.

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Commentary

Be sure to check out the Sunday edition of Raleigh’s News & Observer for an excellent column by NC Budget and Tax Center economist Patrick McHugh: “Hold the applause for NC’s sputtering economic recovery.” As Patrick notes:

“The worst of the Great Recession is in the rearview mirror, but the recovery has left far too many people, families and communities worse off. When you take a sober look at North Carolina’s economic reality, the breathless self-congratulations ring a bit hollow. An alarming pattern has emerged: Economic growth is not producing broad prosperity, which is trouble for everyone….

We’ve also replaced a lot of middle-class careers with low-paying, dead-end jobs. Thousands of jobs have been lost in industries that were the bedrock of middle-class North Carolina for generations, particularly manufacturing and construction. These were jobs where hard work brought livable wages and opportunities for advancement, jobs that could support a family, and jobs that offered a piece of the American Dream.

At the same time, we’ve seen an explosion in low-wage service jobs with few opportunities to move up. The average wage in industries that have grown since 2007 – like hotels and restaurants – is almost $10,000 less than in industries that have declined. When growth doesn’t create good-paying jobs, the lack of prosperity reverberates through the entire economy as people stop going out to eat, buying houses, getting new cars and scale back in a host of other ways….

Leaders in Raleigh need to be constantly reminded that we cannot accept growth without broad prosperity. Too many people are out of work, too many paychecks are coming up short and too many communities are being left out of the recovery.

We have neglected the investments needed to provide our children a 21st century education and our working men and women skills training; to build a transportation system that can move at the speed of business; to help small businesses withstand the competitive pressure of the modern market. This lack of investment has blunted the recovery and left the deepest problems with North Carolina’s economy unaddressed.

Instead of taking pride in finally escaping the recession, we should be focused on building a future that North Carolina can really be proud of.”

Read the entire op-ed by clicking here.

News

North Carolina’s newly privatized economic development group may create a business advisory board with seats designated as rewards for private funders, board members said during a meeting Friday.

The Economic Development Partnership of North Carolina gets most of its funding from state taxpayers, but members of an advisory board could draw its membership from its private funders, said Jim Whitehurst, the CEO of Red Hat and a member of the public-private partnership.

Jim Whitehurst, Red Hat CEO. Source: Red Hat

Jim Whitehurst, Red Hat CEO. Source: Red Hat

At Friday’s meeting, Whitehurst said the structure of the business advisory board wasn’t finalized, but he envisioned 20 members from a variety of industries and areas of the state. He said the advisory board would be designed in conjunction with the group’s fundraising plan.

Several seats on the advisory council may go to those who donate to the private arm of the partnership, Whitehurst said, in response to a reporter’s questions after the open portion of Friday’s meeting.

“There may be a few seats for people that are large contributors,” Whitehurst said.

The Economic Development Partnership of North Carolina opened last October, when the state’s business recruitment, tourism and marketing functions were moved out of the state Commerce Department to the newly formed private non-profit.

Lawmakers, when they authorized the move, held the group subject to open meeting and public records laws, and members of the partnership’s board also must adhere to the state ethics law.

The general public is the biggest backer of the partnership, with more than $16 million in public dollars funding the venture.

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Commentary

Following sharp questioning of Commerce Secretary Skvarla in a Senate Finance Committee hearing Tuesday, it was readily apparent that the Senate would take a different tack on economic development than the House, which passed its own much-criticized package last month. In a surprise press conference yesterday afternoon announcing their own “jobs package” , however, Senate leaders made it abundantly clear that “different” didn’t mean “better” when it comes to growing an economy that benefits everyone in the state. While the bill does take a few positive steps forward on improving our state’s incentive programs, on balance, the bad outweighs the good and does not represent the most effective approach to economic development.

Most importantly, the proposal doubles down on tax cuts and company-specific tax incentives, instead of policies that benefit companies by adding economic value to communities. We’ve known for decades that North Carolina’s competitive edge in the global economy rests on providing companies with the skilled workforce and infrastructure they need boost to their productivity and ensure long-term profitability.

Unfortunately, the proposed changes to the Job Development Investment Grant (JDIG) program ignore these time-tested strategies for robust economic development in favor of budget-busting tax cuts and corporate incentives that have proved more expensive and less effective than advertised. In fact, 60 percent of JDIG projects have failed to live up to their promises of job creation or investment since the program began in 2002, and JDIG is out of money because the state spent more than half the available funds on a single project in Charlotte.

At a time when North Carolina needs to create at least 400,000 new jobs just to meet the needs of growing population, now is not the time to double down on ineffective economic development.

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Commentary

If you’re an unemployed or underemployed North Carolinian trying to get by in a community that’s never recovered from the Great Recession, take heart: things are actually just ducky according to conservative think tanks — no matter what your eyes and bank account tell you.

For “confirmation” check out this morning’s Locke Foundation missive from the group’s former director: “Job Growth Sizzled Last Year.” The column is just the latest in an ceaseless series of articles designed to spin the situation in North Carolina and convince people that two obvious things are not true: a) The state economy continues to struggle to generate good jobs to replace the ones lost in the Great Recession and b) the North Carolina recovery that has occurred is mostly just a reflection of national trends.

Happily, some analysts and experts aren’t just trying to cover up for the destructive and counter-productive policies of the McCrory administration and the General Assembly (which, together, have about as much to do with the limited good news that has taken place in the state as they do with the price of tea in China).

Patrick McHugh of the Budget and Tax Center, for instance, explained what’s really going on in the North Carolina economy Monday in this new report: “Growth Without Prosperity.” This is from the release that accompanied the report:

“The worst of the Great Recession is behind us, but the damage lingers, weighing down communities and families across North Carolina. We are now seven years removed from the financial crisis of 2008, but in North Carolina wages are down, job creation is lagging, and many communities are still stuck in recession. Read More