The Republican-controlled Senate wants to take money used to recruit businesses to the state away from Gov. Bev Perdue, who has made attracting jobs a central theme of her administration. The conflict is the first public rift between the legislature's new GOP majority and the Democratic governor as they both try to fill the $3.7 billion budget hole the state is facing.
Republicans propose to sweep unspent money from about 20 accounts and divert outside money that goes to special funds including the Golden LEAF Foundation. Legislators say they want to build a cash cushion as they prepare next year's budget.
Earlier this week Perdue had agreed to save at least $400 million by cutting agency budgets. The Senate thinks it can get to $800 million - $142.4 million of that by taking money from state accounts. A Senate committee passed the proposal over objections from Perdue and some Democratic senators. The full Senate is scheduled to vote today. If the proposal passes, it moves to the House.
Perdue is fighting the part of the plan that takes unspent money from major job recruitment accounts, including:
$5.2 million from the One North Carolina Fund
$3 million from Job Development Investment Grants
$67.5 million from the Golden LEAF Foundation
"We simply can't raid our job-creating funds at a time when more and more North Carolinians need our help in bringing jobs to this state," Chrissy Pearson, Perdue's spokeswoman, said. She would not say whether Perdue will veto the bill if it passes.
"We'll see what form it takes in the end," Pearson said.
Commerce Secretary Keith Crisco said the move would signal to companies and other states that compete with North Carolina for corporations that North Carolina isn't going to recruit businesses as aggressively as in the past.
The cuts "will bring our recruiting function to a screeching halt," Crisco said.
The proposal takes only money that has not been committed, said Sen. Richard Stevens, a Cary Republican and a chief budget writer.
Incentives? Just ask
It's a fraction of the total budgeted this year for job recruitment, he said, and if the state has a company it wants to reel in with incentives, the Perdue administration can take the request to the lawmakers. So far this year, the state has awarded grants to companies as diverse as Red Hat, the Raleigh software maker, and NS Aviation, a startup that services aircraft.
Red Hat, which was being courted by three other states, agreed to stay in Wake County and create 540 high-paying jobs over the next nine years, in return for as much as $15 million in state incentives. NS Aviation received $300,000 from the One North Carolina Fund to create 308 jobs in Forsyth County.
Companies receive incentives only if they make hiring goals and deadlines; but the practice has faced increasing criticism, particularly as governments have struggled with budget shortfalls. Republican leaders indicated earlier this year in a meeting with News & Observer reporters that incentives were a possible target - even as they looked at other ways to make the state more attractive to companies.
Compromise needed
Political consultant John Davis said in an interview that disagreements between Perdue and the legislature are inevitable. But the state's financial crisis will force both sides to compromise, he said.
"I imagine there will be a flurry of new ideas that are all things Republican and will not be acceptable to a Democratic governor," Davis said. "The necessities of the day are that drastic compromises must be made by both sides. Ultimately, you will see them rush to the middle to work things out."
The decision to grab Golden LEAF Foundation money breaks with past practices of leaving it untouched, no matter the state's financial problems. The foundation was set up more than 10 years ago, and is funded with half of the state's share of cigarette companies' settlement with the states. It uses some money for economic development grants. Golden LEAF must save much of its money, and has about $500 million in assets.
Money from Golden LEAF, the Health and Wellness Trust Fund and the Tobacco Trust Fund - all supported by lawsuit settlement cash - would account for more than half the $142.4 million the Senate would get from tapping special funds.
Democratic senators told Republicans to expect constituents to call complaining about taking money essential to improving state employment.
"We need to fight for every job in this country, and this is the only way you can fight for them," said Senate Minority Leader Martin Nesbitt, an Asheville Democrat.
Republicans said their proposal was an easy step, and that decisions are about to get harder.
