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Patrick Gannon: State may starve its own startup

RALEIGH – When you create or build something – say a child or a business – you typically try to nurture it so it can grow and thrive, right?

Officials at the state’s new public-private economic development agency don’t believe the General Assembly is doing that for them.

The words of several of the Economic Development Partnership of North Carolina’s top officials last week made clear the frustration felt inside the startup organization. The General Assembly created the partnership at the urging of Gov. Pat McCrory. Responsible mainly for job recruitment and tourism promotion, it opened in early October 2014 in Cary, so it’s not even a year old.

That frustration stems from the fact that the new organization is trying to recruit companies to the state in a competitive environment, yet legislators haven’t kept a constant flow of money available for North Carolina’s top incentives program, Job Development Investment Grants, or JDIG. That has created issues not only with the ability to offer incentives to compete with other states for major projects, but also, in some cases, with uncertainty over whether any money would be available at the time companies make decisions on where to build new facilities.

House and Senate versions of the state budget for the 2015-16 fiscal year proposed to trim operating dollars to the partnership, with the Senate cutting more. The House and Senate are negotiating a final budget compromise now.

John Lassiter, chairman of the partnership’s board of directors, likened the General Assembly’s actions to buying a new car, but then restricting its speed or limiting its fuel before even getting a chance to see what it could do. The partnership is compiling its first annual report to deliver to the Commerce Department and the legislature.

“Our hands are tied, or at least one’s behind our back,” Lassiter said. “Here we’ve got this great state, with a wonderful workforce, with strong educational systems that allow us to compete for the best opportunities in the world. But the market is such that if you don’t have some of these (incentives) tools … then you’re not going to be able to get in the final list.”

Legislators will say that they’ve reduced budgets in other areas of state government and that the partnership also raises private cash – it’s required to by law – to supplement taxpayer funding. The Economic Development Partnership has raised roughly $1 million to date from private donors, mainly large companies like Duke Energy and Red Hat. And, of course, many members of the General Assembly don’t like incentives at all.

Lassiter said many partnership employees left their jobs in state government to work for the new agency. Christopher Chung, the partnership’s chief executive officer, left a similar job in Missouri and moved to North Carolina. Now, at least some of them are wondering why lawmakers won’t let them do their jobs.

There were plenty of questions pre-partnership about whether privatizing the state’s economic development and tourism marketing efforts was a good idea. But the General Assembly, after much wrangling, passed the legislation that led to the partnership’s formation, which McCrory pushed for at the onset of his administration.

So far, the partnership is on track to raise the required amount of private funding in its first year, and – at least as far as we know – has steered clear of any major scandals, like the ones that have plagued similar organizations in other states.

Unless they want the governor to look bad (which wouldn’t be the first time), legislators should give the partnership what it needs to be successful – at least until if and when it proves it wasn’t the right decision in the first place.

Gannon writes columns for Capitol Press Association.

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