By By JONATHAN CLAYBORNE
jonathan@wdnweb.com
Staff Writer
The N.C. Senate on Thursday gave initial approval to a bill that would help bridge an anticipated $3.7 billion state funding gap by moving around tens of millions of dollars.
Among the dollars that would be moved are funds for job-creation projects.
Included in this category is money from the Golden LEAF fund, which has been instrumental in economic-development projects across the eastern part of the state.
Golden LEAF funds were tied to last December’s announcement that appliance panel-maker PAS USA would hire 239 people to work in its Washington plant as part of an expansion.
Golden LEAF granted $750,000 to the nonprofit Beaufort County Committee of 100 to buy new equipment and lease it to PAS.
On Thursday afternoon, the Senate voted 30-18 to approve Senate Bill 13, a budgetary bill that requires readings on two separate days before being passed on for consideration by the House.
The bill would use more than $67.5 million of Golden LEAF funds to help plug the budget hole. The bill also would take millions from the One North Carolina Fund, another economic-development pot pledged for Beaufort County projects recently, including the PAS expansion.
In an interview with the Washington Daily News, Sen. Phil Berger, R-Rockingham, Senate president pro tempore, indicated the bill isn’t indicative of a movement toward cutting into state incentives to businesses in a permanent way.
“This is intended as a temporary measure,” Berger said. “We were looking at situations where there were unencumbered funds that could be held for the purpose of addressing the $3.7 billion budget gap we’ve got next year. The debate on the Senate floor seemed — if all you heard was the debate and you didn’t read the bill — it appeared to be a debate about the propriety of incentives. I think the opposition to the bill, their statements are way overblown in terms of what the bill does to the existing incentive programs.”
Berger acknowledged there has been a larger debate about whether incentives are appropriate, but he asserted the Senate bill isn’t about that.
“And that debate has in many respects centered around what’s the value of the idea of paying businesses to come here, the incentives programs,” said the Senate leader. “And I think that debate will probably be addressed at some point in the future. The outcome of that — I don’t think you can assume that because somebody voted for this bill that that person wants to eliminate incentive programs.”
Al Klemm is a Beaufort County commissioner and chairman of the Beaufort County Economic Development Commission.
“They need to leave Golden LEAF alone because the Legislature will just (throw) away the money,” said Klemm.
Golden LEAF money was intended to help poor, rural counties that were tobacco-farming centers and often are designated as Tier 1, or the most economically distressed counties in the state, he said.
“I don’t want to see them manipulate it,” Klemm said of the money. “Leave it alone.”
Golden LEAF money has been expended on initiatives that helped Beaufort County, he pointed out.
“Never trust a politician,” Klemm concluded.
Dan Gerlach, president of Golden LEAF, said it’s uncertain what effect the bill would have on the foundation.
The passage of Senate Bill 13 might dramatically scale back the money Golden LEAF grants out for projects, he theorized.
“One thing I will tell you is once you divert money one time then it becomes easier to vote it out next year and the following year,” Gerlach commented.
Golden LEAF was created in 1999 as a nonprofit corporation by court order in a consent decree that resolved tobacco litigation started by the N.C. Department of Justice.
The foundation receives half of the funds coming to North Carolina as a result of the master settlement agreement.
LEAF stands for Long-Term Economic Advancement Foundation.
Tom Thompson, Beaufort County’s chief economic developer, said he had “mixed emotions” about the Senate GOP’s proposal.
Thompson contends the state’s central and western metropolitan areas are disproportionately favored in Job Development Investment Grants, which are awarded to new and expanding businesses.
“So, the state system isn’t working for rural areas,” he said.
He added “incentives are part of the game in economic development,” and he insisted industries look “very carefully” at spreadsheets tabulating the pluses and minuses of competing states.
“Does it need to be fixed? Absolutely,” Thompson said of the way economic incentives are parceled out in this state.
He added it’s not worth “throwing out the baby with the bath water.”
For his part, Berger said he understood the One N.C. Fund has a current balance of $51 million, and that the bill under consideration would set aside just $5.2 million of that amount.
“Everybody agrees that we’ve got a hole that’s got to be filled or a gap that’s got to be bridged that is very wide and very deep, and that’s that $3.7 billion,” he said.