Commerce Department reorganization gets committee nod

Posted June 19, 2013

NC state seal in Senate chamber

— A newly created nonprofit would be in charge of recruiting businesses to the state under a bill that cleared the House Commerce Committee Wednesday. 

The measure is a rewritten Senate Bill 127 that now carries out the reorganization of the Commerce Department first pitched by Gov. Pat McCrory earlier this year. 

"We can't do things the same way and expect a different result," Commerce Secretary Sharon Decker told the committee Wednesday. Repeating an oft-used mantra, Decker and lawmakers said that using a nonprofit would allow job recruitment efforts "to move at the speed of business." It would also streamline responsibility for economic development efforts. 

Key features of the bill include:

  • Commerce Department functions involving federal dollars, in particular the section that oversees unemployment benefits, would stay in the government agency.
  • Job recruiting functions would be turned over a nonprofit run by a board with appointees from the private and public sector. 
  • State funding for regional economic development partnerships would be phased out. 
  • Decisions on Job Development Investment Grants and other economic development grants would remain under a government-run committee.

"We have a state rich in resources, but we're plagued by high unemployment," Rep. Tom Murry, R-Wake, said. 

The original bill that passed the Senate merely reorganized the state into eight "economic development zones," geographic areas around which the Commerce Department, Department of Environment and Natural Resources and other agencies would organize their efforts. According to Sen. Harry Brown, R-Onslow, those zones would allow for "one-stop-shopping" for both new and existing businesses seeking permits and advice on expanding in a particular area.

The rewrite of Brown's bill put forward by the Senate Commerce Committee incorporates that idea into the broader Commerce Department reorganization plan.

Concerns for rural and minority interests

Although generally supportive of the measure, questions were raised about how the new-look Commerce Department would care for vulnerable areas of the state and particular kinds of businesses.

In particular, rural lawmakers worried that both the taxpayer dollars and private dollars raised by the nonprofit would leave high-unemployment counties without the ability to recruit effectively.

"The Northeast does not have a lot of current assets, especially in the corporate world, to raise private funds," said Rep. Paul Tine, D-Dare.

While other areas of the state can lean on big businesses to chip in toward job recruiting efforts, northeast North Carolina has been hit hard by the recession and doesn't have those kind of home grown players who can contribute, Tine said.

But backers of the bill said Tine's concern is a reason to move toward the new system. Currently, the economic development partnership serving the northeast area is limited in where it can raise money.

"You'll be able to take advantage of private dollars that are coming from across the state" under the new system, Brown said.

Rep. Yvonne Holley, D-Wake, noted that the bill did not make specific provisions for looking after minority-owned businesses or firms owned by women. Drafts of the state budget now under negotiation between the House and the Senate would do away with funding for the Institute for Minority Economic Development.

Decker said those specific provisions weren't necessary. 

"Minority- and women-owned businesses are at the forefront of my mind," she said. "We have not explicitly identified on our board that there would be minority- and women-owned businesses represented because my expectation is, on any board across the sectors, there would be a divers representation....It must be managed that way."

She added that the new nonprofit's focus on small-business development would benefit women- and minority-owned firms, which tend to be smaller businesses. 

Conflicts of interest

The bill contains a lengthy provision that prohibits members of the new nonprofit from self-dealing or favoring one industry or geography over another. However, the measure does not put members of the board under the oversight of the state Ethics Commission. That means the board will not submit statements of economic interest, a public disclosure that shows a public officials financial interests. 

"We wanted to treat those like local governments," Murry said. 

It is likely that the next legislative stop for the is bill will be the House floor. From there, it would return to the Senate, where lawmakers could approve the measure with a single vote.

Updated: During its floor session Wednesday, the House re-referred this bill to the Appropriations Committee. 


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