'Brink of a crisis': Secretary of state begs for staffing boost as NC businesses boom

The Secretary of State's Office handles a wide range of paperwork, including new business filings, which are up 70% since the pandemic. Like a lot of state agencies, its head is begging for a funding boost.

Posted 4:44 p.m. Aug 1 — Updated 10:57 p.m. Aug 1

Travis Fain

, WRAL state government reporter

Secretary of State Elaine Marshall pleaded Tuesday for a staffing increase to help her office deal with a massive uptick of new business creation in North Carolina — a surge that is generating an overwhelming amount of paperwork for her office.

“We are on the brink of a crisis,” Marshall, a Democrat in her seventh term, said during a meeting of North Carolina’s statewide elected officials.

Marshall said her agency generated nearly $191 million for the state budget last year, subsidizing other state operations with the fees that came into the Secretary of State’s office, which processes a wide range of paperwork and has an annual budget of almost $18 million.

Over the past three years the office boosted state revenues by $500 million, Marshall said, which works out to about $1 million a year for each agency employee. Since the pandemic, the state has seen a 70% increase in new business creations, she said.

“We are exploding with growth,” Marshall said. “When a wagon is overloaded, no ox can move it.”

Marshall said she has asked the General Assembly’s Republican majority for budget increases, but she doesn’t think that message has been heard. Spokespeople for top legislative leaders, who are negotiating a final budget and hope to pass it into law this month, didn't immediately respond to a request for comment.

Marshall is not the only state official begging for an increase. Other agency heads have been sounding the alarm on vacancy rates and hiring troubles for months, including Republican elected officials responsible for slices of state government.

Commissioner of Agriculture Steve Troxler told lawmakers in March that it had become impossible to compete with private sector wages in crucial positions. Insurance Commissioner Mike Causey thanked Marshall for her remarks during Tuesday’s meeting, saying his own agency generates hundreds of millions of dollars for the state and that boosting staff can boost revenue.

“It is important that these Council of State agencies have proper staff,” he said.

Democratic Gov. Roy Cooper’s administration, and the State Employees Association of North Carolina, have made similar arguments, pointing to the costs of high turnover and the slower services that result when agencies are understaffed. Applications to work for the state were down 43% last year compared to 2019, according to the Office of State Human Resources, and more than one-third of people who started a job with a state agency last year left before spending a full year in that role.

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Top legislative leaders have acknowledged the issue and have said they plan to address it in the budget. Speaker of the House Tim Moore and Senate Republican Leader Phil Berger, the legislature’s top leaders, recently said they struck agreement on employee pay raises, but they haven’t released details.

Both chambers backed increases well below Cooper’s request in budget proposals released earlier this year, and Republican lawmakers plan to accelerate tax cuts in this budget beyond already-planned-for cuts passed in recent years, though they have not said by how much.

Cooper has opposed corporate and personal income tax rate cuts already on the books, as well as any accelerations. Republican leaders say those tax cuts are a big part of the reason North Carolina has been named the No. 1 state for business two years running by CNBC — a success fueling Marshall’s staffing issues.

Cooper says Republican lawmakers are overplaying the state’s hand.

“We have the ability to fund [state needs], and here they are arguing about the quantity of tax breaks for those who really don’t need it,” the governor said Tuesday.

Cooper’s budget proposal called for about 13 new full-time positions in the Secretary of State’s Office. House and Senate budget proposals suggested three new positions, but Marshall said those positions are already on staff. Two of them are temporary positions that would become permanent under the House and Senate proposals. One is a grant-funded position that would state would fund instead, she said.

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