Commerce leaders chafe at proposal to impose ethics, salary rules on nonprofit
A rewrite of the law governing the new private nonprofit setup to market the state and recruit industry would place its employees under state ethics laws and other rules. Commerce Sec. Sharon Decker and the PPP's CEO say lawmakers should reconsider.
Posted — Updated"The objective here is nimbleness, speed of movement, the ability to take action and to market the state effectively," said Commerce Secretary Sharon Decker. "I'm looking at all of the legislation with that lens. So, I've got concerns about legislation that might be preventive."
During the 2013 legislative session, lawmakers pushed forward with a bill that would have told the Commerce Department how to create the nonprofit and laid down rules for the corporation. But that bill never received final approval because it got bogged down in a fight over natural gas drilling.
But lawmakers did place a short provision in the state budget that gave the Commerce Department authority to move ahead with the transition. McCrory, Decker and others have taken those few paragraphs and run with them. A new nonprofit has been formed, and the state has begun the process of moving marketing functions over the to 501(c)(3) corporations.
Legislation that the Joint Legislative Economic Development and Global Engagement Committee formally recommended to the 2014 General Assembly session would place more rules around the new nonprofit.
Decker and Richard Lindenmuth, the chief executive of what is now called the Economic Development Partnership of North Carolina, both told members of the committee that they welcomed the legislation but had some objections.
For example, the legislation requires that the nonprofit raise $10 million from private sources before drawing down its state funding.
"That slows the process," Decker said after Thursday's meeting.
Asked by Sen. Brent Jackson, R-Sampson, whether the nonprofit would be subject to state ethics rules, Lindenmuth said Commerce officials were still negotiating with lawmakers on that point.
"That's an area for discussion. I don't think any of us intend to be less than truly ethical," Lindenmuth said.
However, he said, ethics and other disclosure rules could interfere with the ability of businesses recruiters to host business dinners and keep information from private industry secret.
He gave the example of a recent negotiation in which North Carolina was talking with a realtor who represented a business considering a move. Another state's recruitment team was allowed to talk directly to the company's officials, but North Carolina couldn't.
"The company was afraid that, if they announced their name here, it would be public information and, therefore, everybody would know that they were coming here, including their employees," Lindenmuth told the committee.
State personnel and expense rules could also pose a problem for the new nonprofit, he said. For example, he said that state workers are limited to a lower per diem than might be practical for some recruitment trips.
"I don't think we could find a $60 hotel in France at the Paris Air Show," Lindenmuth said.
Rep. Tom Murry, R-Wake, called the bill "a good faith effort" to address concerns from all parties, but said that it was still being negotiated.
The General Assembly session begins on May 6.
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