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McCrory’s dumb and and dangerous economic development scheme

Chris Fitzsimon NC Policy Watch

December 12, 2013

The more we learn about Gov. Pat McCrory’s plans to privatize the state’s economic development efforts, the more troubling they look.


The News & Observer reported recently that a draft of the proposal the paper had obtained called for shifting millions of public dollars and dozens of public jobs to a private nonprofit corporation that will recruit businesses to the state and negotiate incentive deals.


The story quoted Republican legislators who were not too thrilled that McCrory seems to be proceeding with the plan even though legislation to implement it was not approved by the General Assembly.


Lawmakers did approve a budget provision that allows Commerce Secretary Sharon Decker to set up the nonprofit, but a bill detailing how the new entity would operate and authorizing the shift of jobs and public funding from Commerce never passed – but bizarrely, the McCrory Administration is proceeding as if it had.


The News & Observer also reported that State Budget Director Art Pope must approve the plan to move 65 jobs and as much as $20 million in taxpayer money to the new nonprofit, approval that state lawmakers would normally have to make.


And as sketchy as the process to set up this privatization racket appears, that’s not the most troubling part. Even more worrisome are the experiences in other states that have tried similar schemes and the blatant conflicts of interest that loom on the horizon if the proposed plan becomes a reality.


A report two years ago from the national group Good Jobs First found that several states that have privatized economic development have seen a series of problems including misuse of taxpayer money, excessive executive bonuses, and questionable subsidy deals.


It is also not clear if the new nonprofit that will be using and distributing taxpayer dollars will be bound by the same open meetings and public records laws that currently apply to economic development efforts in the Commerce Department.


Then there is the startling conflict of interest that remains one of the most underreported aspects of the story. One of the members of the private nonprofit’s initial board according to the draft plan cited in the News & Observer account will be John Lassiter, identified in the story as the president of Carolina Staffing.


But Lassiter, also a former McCrory campaign manager, is playing another role in helping the governor. He is heading up the Renew North Carolina Foundation, a political advocacy organization closely tied to McCrory that is raising millions of dollars in anonymous corporate contributions to run television commercials defending McCrory’s record.


That means the same man asking companies to give money to help McCrory politically is also part of the group negotiating millions of dollars in incentive deals with corporations thinking of coming to North Carolina or businesses considering leaving the state.


McCrory named Lassiter chair of the economic development board that helped create the new nonprofit. That was bad enough. Now Lassiter will actually serve on the board of the new entity that is actually overseeing the lucrative deals. It’s hard to imagine a more blatant conflict of interest.


Former Gov. Jim Martin, a Republican and in many ways McCrory’s role model in the job, once called a similar proposal to privatize Commerce an “incredibly dumb and dangerous idea.”


Martin, it appears, was on to something. The idea is still dumb – and more dangerous than ever.


Fitzsimon is the founder and executive director of NC Policy Watch. For more information, visit www.ncpolicywatch.com.