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Update: Both the Senate and House passed versions of the bill Thursday on second readings, with the House tacking on language placing the economic development partnership back under state ethic rules. The proposals will be back next week for final passage in each chamber.

Parallel bills to privatize pieces of the state’s economic development work is on the path to approval at the state legislature, with changes emerging Tuesday that lower the private fundraising requirements and restrict some of the transparency measures.

The Senate is supposed to consider the bill on the floor today.

N.C. Commerce Sec. Sharon Decker

N.C. Commerce Sec. Sharon Decker

The most reason versions of the 19-page House Bill 1031 and Senate bill 743 would also reduce the required amount the Economic Development Partnership of North Carolina must raise from private funders, leaving the group to raise $6 million from private funders over the next five years.

(To read the entire bill, click here.)

Taxpayers are expected to contribute $90 million over that same period. That’s if Gov. Pat McCrory’s request to transfer 67 positions and an estimated $18 million next year to the new group from the Commerce Department is endorsed by lawmakers in budget negotiations.

Draft legislation had initially put the group on the hook to raise $10 million from private sources immediately, but the language endorsed by House and Senate committees will lower that to $6 million over five years, a move that Republican sponsors is more realistic for a startup group.

The privatization proposal would set North Carolina on a path of its economic development that a dozen other states have embarked on, with mixed results. The public-private partnerships, sometimes referred to as PPPs, have come under fierce criticism in other states with accusations that the private setups have wasted taxpayer money, exaggerated job claims and been used to reward political campaign donors and supporters.

The current form of the bills also remove provisions putting members of the nonprofit’s board and top employees under state ethics rules, which require an annual public disclosure of financial interests as well as put in varied prohibitions on accepting gifts and performing favors. The ethics law also attaches criminal penalties for accepting money or gifts from those looking to s curry favor from public servants. (Click here for a background story). Read More

jobseconomyDon’t get us wrong; it’s almost always great whenever a new employer is creating jobs in North Carolina. And the phenomenon of politicians claiming credit for job creation is nothing new; everyone likes good news and wants to be around when it’s delivered.

That said, today’s press release from the office of Governor Pat McCrory announcing the expansion of a plastics manufacturer in Henderson County borders on the ridiculous. This is from the release:

“Governor Pat McCrory and N.C. Commerce Secretary Sharon Decker announced today that Elkamet Inc. is expanding its North Carolina manufacturing operations in Henderson County.  The company plans to create 20 new jobs and invest more than $2.5 million over the next three years in East Flat Rock…. Read More

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.

 

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.

12-3In case you missed it, the McCrory administration took yet another step in recent days to assure that the always opaque and ripe-for-corruption business of bestowing economic “incentives” (i.e. giveaways to corporations) becomes just a little bit more opaque and even more vulnerable to corrupt practices.

As many folks are already aware, McCrory and his Commerce Department Secretary, Sharon Decker, have been moving to privatize the Department’s business recruiting/incentives work for some time. The plan — not yet fully fleshed out because the General Assembly has yet to formally  sign off on the deal — is to fire a bunch of Commerce Department employees and then recreate and re-establish their functions in a publicly-funded, private nonprofit.  To make matters worse, the whole thing appears to be thoroughly infused with partisan politics as one of McCrory’s top fundraisers has been designated to serve on the board of the new nonprofit (the fundraiser, John Lassiter, finally resigned last week from his position on the renew North Carolina Foundation — a group that exists to generate pro-McCrory propaganda — after months of drum-banging Chris Fitzsimon).

The latest outrage, however, involves the hiring of the new nonprofit’s first executive director. Read More