Local Politics

Bonus plan for banking officials draws fire

Posted May 27, 2009
Updated May 29, 2009

— State lawmakers on Wednesday criticized a program in the state Office of the Commissioner of Banks that pays workers annual bonuses equal to 5 to 10 percent of their salaries.

Seventy-two of 90 workers in the office received bonuses last summer totaling $478,081 – 13 managers were ineligible for bonuses – and the office has another $200,000 in its budget for the 2009-10 fiscal year for bonuses.

Money in hands Lawmakers look to cut banking office bonuses

"I think we were a bit appalled and caught off guard because we weren't expecting to see any performance bonuses in this economy," said Rep. Pricey Harrison, D-Guilford.

Although the Commissioner of Banks is funded by assessments from the state-chartered banks, mortgage companies and other financial institutions the office regulates, lawmakers still have oversight of its operations as part of the overall state budget.

"Right now, we're cutting everyone's salaries, and there's just no room for performance bonuses," said Harrison, who proposed legislation to do away with the bonus program.

Gov. Beverly Perdue last month ordered a 0.5 percent pay cut for state workers to help balance the 2008-09 budget, and lawmakers are weighing deep cuts to all state agencies to erase a growing deficit in the fiscal year that starts in July.

Commissioner of Banks Joe Smith said his employees received the state-mandated pay cut, but he said he hopes the bonus system will remain in place.

"We were trying to do the right thing. We're trying to make state government better," Smith said.

Lawmakers approved the bonus system in 2005 to help the office attract and retain top-flight talent.

"We weren't doing it with taxpayer money, and we've done it under supervision," Smith said.

The bonuses amount to about 4 percent of the office's $12.5 million annual budget, officials said.

Still, Harrison said, doling out bonuses in a tight budget cycle doesn't send the right message to the public.

"It just was not a Kosher mood, and we felt like they ought to be treated like everyone else," she said.

The state Department of Insurance and the North Carolina Education Lottery also receive no funding from the state budget, and DOI officials have argued unsuccessfully that they should be exempt from state cuts. Lottery officials have said they would do what the state asked.

"I hope, really frankly, that one day, when we work our way out of this current situation, we can work toward the same kind of benefits for every state employee, not just for us," Smith said.


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  • superman May 28, 2009

    Doesnt make any difference where the money comes from. Fair is fair-- I understand that a lot of Mary's salary doesnt come from state funds either. Money doesnt just fall out of the sky. The consumer is always paying. Just depends on which pocket it is coming out of. If a business or company has extra money they came give away as a grant or bonus they should cut their cost and give the savings to the consumer. If Progress Energy gives an organization a million dollars-- just where do you think they got it from? There are not that many money tree farms left in this country.

  • Caveman93 May 28, 2009

    I think the bonuses would be just and deserved if that employee saved the state significant money and performed their job duties above what was expected of them. I think bonuses are warrented if the state has the money available and their budget is balanced. Otherwise, no bonuses at all should be awarded.

  • CrewMax May 28, 2009

    It's good to be king.

  • temp May 28, 2009

    The bonuses were paid for work done in the 2007-2008 timeframe. The actual money was paid out in Aug 2008 but had to have been approved months earlier. This was all way before everyone knew the economy was so bad. The article says that the 2008-2009 bonues were NOT PAID. Also, did anyone see how much the budget shortfall was going to be, I think it's 4.5 BILLION dollars. Is everyone so worried about less than 5 hundred thousand dollars? Does everyone want the people who work at the Commissioner of Banks to work like the stereotypical state employees?

  • gnew46 May 28, 2009

    Very appalling with the economy as it is and state and local employees having to accept pay cuts, furloughs and loss of benefits. The state did not mind withholding tax refunds to help balance the budget nor do the majority of workers receive this type of special treatment. With the economy as it is and people losing jobs every day, there is plenty of talent available, so the argument that the bonuses are needed to retain employees is total hogwash. Go figure, only in state government.

  • Andiecat May 28, 2009

    The Utilities Commission, the Banking Commission, and the Insurance Department are funded and fully supported by fees from entities they regulate. There is no General Fund money involved. I also heard that the Department of Inaurance is being forced to cut programs. This is very bad policy and totally unnecessary. These three agencies regulate industries to protect the public. The reason they are funded they way they are is to avoid reducing regulation and the protection of the public when the State is having budget problems. If these agencies are forced to cut, it matters to the public and does not matter to the General Fund (i.e., the State treasury).
    Does Rep. Harrison know there is a banking crisis and NC needs to be on top of it?

  • rangerchef May 28, 2009

    Tax man - you missed the point as did this article. This agency is NOT FUNDED by state tax dollars.

    As a University employee who makes a living off of grants (read NOT FUNDED by state taxes) this pay cut and pay raise mortatorium will be disastorous to University budgets. I have no incentive to go out a find more grants. The State (university) already takes 40-50% of a grant I get - now they are planning on taking more. What happens when I can't deliver on the grant because all the money I was gonna use to pay salary and buy materials with - was diverted to the state govt?

    The groups I get money from are paying me and a staff to do a job - NOT TO balance the budget. Breach of contract, period.

  • PaulRevere May 28, 2009

    Queen Mary Easley says she's not resigning from NC State, so why not give these folks a bonus?

  • Tax Man May 27, 2009

    These "bonuses" need to be stopped and if already paid, recalled. There is NO reason any state employee should get any increase in pay or any bonus until the taxes are reduced and the budget is fully balanced. In fact, these employees need to take their "pay cut" like the rest of the state employees! If this department tries to pay these bonuses then everyone who accepts them should be permanently terminated from any government service or working for any company that sells or serves our state. This is just plain ridiculous! NO Bonuses for ANY NC employee until the state can live off what it receives in regular taxes! We had over $3 billion in surpluses over the last 3 years and we went and wasted it. Now is the time to reduce spending and get back on track. Whoever proposed this should be fired and criminally investigated. Probably one of Easley's buddies.

  • coolwill May 27, 2009

    And they are still spending down town.