Commerce moving ahead with public private partnership
Posted August 15, 2013
Raleigh, N.C. — North Carolina's Commerce Department is moving ahead with plans to create a private nonprofit to handle many of the job recruitment functions now carried out by state employees.
Commerce Secretary Sharon Decker said she hopes to hire an executive director for the new nonprofit sometime in the next 45 days.
"We are moving forward," she confirmed Thursday, adding that the department would likely be ready to report its progress to lawmakers two months from now.
As the General Assembly session wound down in late July, lawmakers declined to pass a bill giving instructions on how to revamp the Commerce Department. Although the provisions dealing with economic development were not hugely controversial, an attached provision that would have fully cleared the way for natural gas drilling in the state dragged the measure down.
However, the state budget contained a much-less-detailed provision instructing the Commerce Department to create a public-private partnership. In many respects, Decker has more latitude in building the new entity and defining its relationship with the state than if Senate Bill 127 had passed.
"We are using Senate Bill 127 as our guideline," Decker said, adding that lawmakers and the administration largely agreed on what the partnership arrangement should look like.
Officials in the McCrory administration have pushed for privatization since before the Republican took office, with advocates for the change saying it would both streamline and speed up job recruitment. Some Senate leaders were skeptical of the plan, but it had vocal backing from House members such as Rep. Tom Murry, R-Wake.
Recruiting separate from incentives
As outlined by Senate Bill 127, the "private" part of the public-private partnership would be a nonprofit created by the state. It would hire economic developers – many likely to be one-time Commerce Department employees or former employees of regional economic developers – to recruit companies to the state and help existing companies expand. However, incentive grants would still be overseen by public employees.
Job recruiters with the nonprofit "will not be the decision makers," Decker said. She said the relationship would be more of a "firewall" than exists in the department now, although nothing would keep the nonprofit for lobbying on behalf of a client company.
With virtually no exceptions, the Commerce Department can refuse to talk about businesses it is hoping to lure to North Carolina or help expand here in exchange for tax breaks or help with infrastructure and training. However, after those grants are made, the department must turn over communications and applications associated with a project.
Had Senate Bill 127 been passed, the new nonprofit would be subject to the same open meeting and open records laws that apply to the Commerce Department. The budget provision giving Decker permission to move forward contains no such requirement. Asked how she planned to ensure that the nonprofit's operations were transparent, Decker said she planned to make it subject to open records and meetings laws regardless.
"There is no reason to be anything but transparent," she said. "We don't need to be doing anything that we would have concerns about folks finding out about."
Rural Center, minority economic development transfers under way
In addition to creating the new nonprofit, the department is also working on assuming responsibilities currently assigned to the troubled North Carolina Rural Economic Development Center. Lawmakers stripped the center of its funding in the state budget, opting to create a new division within the Commerce Department.
Asked whether those rural economic development functions would stay in the department or move to the partnership, Decker said the legislation specifies that they should be handled by a government division and that she was in the process of hiring a new assistant secretary to run the agency.
The existing Rural Center board has a meeting scheduled for Aug. 28, Decker said, and she hoped to have a transition plan developed by then.
The state budget also took funding away from nonprofits that support minority economic development. Decker said her department was still working on how to ensure that work continued. In particular, she said that she expected the Commerce Department to work with the Office for Historically Underutilized Businesses in the Department of Administration. She also noted that the budget anticipates making grants for economic development work available to non-government nonprofits next year.