McCrory plan enlists private sector to aid NC development

dbracken@newsobserer.com, rchistensen@newsobserver.comApril 8, 2013 

Gov._Pat_McCrory_01

Governor Pat McCrory

— Gov. Pat McCrory proposed a major restructuring of the state’s Department of Commerce on Monday that calls for all of the agency’s economic development functions to be shifted to a new nonprofit corporation.

The overhaul, designed to get the private sector more involved in luring new businesses to the state, is similar to efforts undertaken by several other Republican governors in recent years.

It would basically gut the state’s Commerce Department, shifting much of the work done there to a new public-private partnership tasked with negotiating corporate economic incentives packages, boosting the state’s imports and exports and promoting travel and tourism.

The partnership would use taxpayer money, and be governed by a board of directors that would be led by the governor and include several state legislators as well as businessmen. McCrory said the agency would make North Carolina both more nimble and more aggressive in pursuing jobs.

“The fact of the matter is we have got to look at a better way of doing things,” he said at a news conference at Copland Textile Fabrics in Burlington. “We can continue to do it the same way. Or we can change it and get better results. Right now it’s a competitive world for jobs. We have to do it better.”

Among the few Commerce activities that wouldn’t transfer to the new agency is the Division of Employment Security, which administers the state’s unemployment insurance system.

Most other details of the restructuring have yet to be worked out, including what would happen to the roughly 500 employees who now work for Commerce.

Transparency questions

Robert Orr, a Raleigh lawyer who has been a longtime critic of the state’s economic incentives deals, questioned how transparent the new agency would be.

Would the partnership and its employees fall under the state’s open records laws? Would those doing business with the partnership have to disclose their lobbying connections? Would there be accountability in following up to see whether incentives recipients are doing what is required?

“There are a host of issues around economic development and transparency,” Orr said.

Also unclear is how the partnership would work with local economic development officials, including North Carolina’s seven regional public-private economic development agencies. One of those agencies is the Research Triangle Regional Partnership, which now works with Commerce Department officials to market a 13-county region.

Charles Hayes, the partnership’s president and CEO, said he welcomed any effort that would get the private sector more involved and allow officials to react quicker to opportunities.

“The devil’s always in the details but I think it’s great,” Hayes said. “… There’s always room for improvement.”

Sharon Decker, the state’s commerce secretary, said the new public-private agency would allow the state to respond with one voice and to be more proactive in targeting certain types of industry.

“We have to be able to move faster in terms of job recruiting,” Decker said.

She said there have been examples where North Carolina lost industrial prospects because it moved too slow. Decker also said the new structure will be more transparent than the current system.

Keith Crisco, who served as Secretary of Commerce in Gov. Bev Perdue’s administration, said during his tenure the department landed about 640 of the roughly 800 projects that were serious enough prospects to be given code names.

Other states’ efforts

The public-private approach has become popular among Republican governors seeking to boost job growth, and it’s now in place in such states as Indiana, Arizona and Florida.

Crisco said that in theory a public-private partnership has a number of advantages. Such an agency can compensate its employees more and pay bonuses, which can help it attract better talent.

It also may be able attract more private dollars to economic development efforts, although Crisco said that hasn’t necessarily been the case in the other states that have tried it.

Crisco supports any effort to get the private sector more involved, but he said it’s the product being pitched that is the most important thing.

“If this is to deliver more efficiently some of the good things that North Carolina has it could be a good thing,” he said. “But the reorganization itself is merely a vehicle to deliver our product and our product must be competitive.”

Over the next 45 days the Department of Commerce will develop a plan for the partnership as well as a timeline for implementing the changes. Bill Elmore, the Charlotte-based vice chairman with Coca-Cola Bottling Co. Consolidated, is to lead the effort. Decker serves with Elmore on Coca-Cola Bottling’s board of directors.

The plan would need to be approved by the legislature. Rep. Tom Murry of Morrisville, who has agreed to co-sponsor the bill, said legislation outlining the changes will be introduced in the General Assembly this week.

Murry, who has been in correspondence with Indiana Gov. Mitch Daniels on the issue for the past two years, introduced a similar bill in 2011.

Charlotte Observer staff writer Andrew Dunn contributed.

Bracken: 919-829-4548

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