Here is government logic at work.
If there are any two communities in North Carolina that dont need extra help, they are Cary and Charlotte two of the fastest growing and most prosperous places in the state. So state and local governments are spending about $35,000 per job in incentives or $94 million total to help bring MetLife, the insurance giant, to both cities.
Rural North Carolina, meanwhile, is hurting. Things are so bad that 47 counties have lost population over the past two years or so.
The states response? North Carolina is contemplating cutting programs and institutions and shifting policy in ways that will likely further damage the rural parts of the state.
Cuts add up
Consider some of the proposals of Gov. Pat McCrory.
• The governor is asking the legislature to gut the N.C. Rural Economic Development Center, which oversees efforts to help rural development. He is proposing to cut its annual budget from $18 million to $6.6 million. The center funds hundreds of grants money for water and sewer or to fix up buildings for businesses in rural areas. For example, it recently provided $925,000 in grants to run a gas line and renovate a building for a new $12 million sweet potato processing plant in Robeson County.
• The McCrory budget cuts off $65 million annual revenue to fund the Golden LEAF Foundation, a nonprofit in Rocky Mount set up in 1999 to receive money from the state settlement with the cigarette manufacturers. The money is used largely to help rural communities. Golden LEAF says it has helped create or maintain 48,000 jobs during its existence. (The foundation would still have $800 million of funds, but that money would be spent down if not replenished.)
• The Biofuels Center of North Carolina, created by the state in Oxford in 2007, to promote feed stocks for use as fuel, would see its $4.3 million budget cut by $1 million.
• The N.C. Biotechnology Center, a nonprofit created in 1984 in the Research Triangle Park to promote life-science businesses, would see its budget cut from $17.2 million to $7.2 million. While not all its projects are rural, it does have a strong influence in rural areas, including marine biotechnology in the southeastern part of the state.
• The governor is proposing to close five prisons, all in rural counties Wayne, Robeson, Duplin, Bladen and Burke eliminating 685 jobs and saving $54 million. A prison job may not be MetLife, but it looks like a good job to a lot of people.
• The administrations new transportation plan talks about building roads based on data driven information and introduces a new formula. While we dont know how it will play out, the betting is that there will be a shift in funding to urban areas where there is more traffic congestion and away from less traveled rural areas.
I am not suggesting there is an anti-rural bias here. On the contrary, McCrory, the former Charlotte mayor, has stressed his concern about reviving the rural sections and small towns across the state.
There are reasons for each of these changes. Conservatives such as McCrorys budget director, Art Pope, have never liked some of these targeted programs, preferring lower taxes and fewer regulations across the board as a means to spur economic development. The prisons are being closed because the inmate population is in decline.
But the unintended consequences of some of these policies are likely to harm rural areas.
The hands-off approach
North Carolina has been largely ruled by rural Democrats from governors such as Jim Hunt, Bev Perdue and Mike Easley and legislators such as Marc Basnight and Liston Ramsey. They tried to shift policies and set up programs to help rural areas and still rural North Carolina declined.
Now rural North Carolina is now largely represented by Republican lawmakers. It will be interesting to see how they handle programs designed to help their constituents.
Many may be attracted to laissez-faire government. But a hands-off policy in the rural areas may mean even faster decline in the countryside.
I recently took part in a panel discussion, where a conservative economist was asked what should be done if North Carolinas rural economy continued to collapse. Well, he replied, they could always move to the cities.
Maybe they can even get a job at MetLife.