NC Senate proposes defunding Rural Economic Development Center

jmurawski@newsobserver.comMay 20, 2013 

  • Other provisions

    The Senate budget also:

    • Eliminates state funding for the N.C. Biofuels Center, Council on Governments and the Institute of Minority Economic Development.

    • Transfers the N.C. Energy Office from the Department of Commerce to the Department of Environment and Natural Resources.

    • Funds four positions to assist the N.C. Mining & Energy Commission, pay for marketing costs associated with the state’s shale gas resources, and pay for analyzing geological samples in the state’s shale gas basins.

    • Funds a new assistant secretary for rural economic development within the Department of Commerce.

In their quest to dismantle commissions and organizations created by Democrats in past years, N.C. Senate Republicans are taking aim at the granddaddy of them all: the state’s Rural Economic Development Center.

The proposed Senate budget defunds the Rural Center, which received about $16.6 million in the state budget last year. It also creates a new division with the Department of Commerce to oversee rural economic development.

The fight is over money, who gets to spend it, and who gets credit for spending it.

The Rural Center commands considerable power, doling out grants in 85 counties it classifies as rural, almost a third of which are no longer considered rural by the federal census authorities.

It has paid out more than $600 million in aid for sewer, water, building rehab and other infrastructure projects, and estimates it has created 33,000 jobs since 1987. The center says that its efforts have led to an additional $2 billion in investment in rural counties.

But Senate Republicans complain the legislature hands the Rural Center money year after year, but has no say in how it is spent. Critics say the Rural Center, whose board of directors has swelled to 50 members, has become bloated and inefficient.

“My concern is how we get these dollars in rural North Carolina in a quicker way,” said Sen. Harry Brown, of Jones and Onslow counties, and a co-chairman of the Senate Appropriations Committee. “There is a need to change how it’s set up, to streamline the process.”

But the Rural Center, which makes sure to invite lawmakers to make rural grant announcements in their districts, has become too powerful to simply erase out of existence. It has made itself essential to many economic development officials and elected officials.

In his proposed budget, for example, Gov. Pat McCrory recommended reducing the Rural Center’s funding by $6.5 million rather than pulling the plug altogether. And the Center is counting on its considerable support in the House, which also must approve the budget, to bury the Senate’s defunding effort.

Center officials say the Senate’s plan would cripple rural economic development.

“Those are the only venture capital funds that rural North Carolina has,” said Rural Center board member Larry Wooten, president of the N.C. Farm Bureau. “Why would you want to defund it and do away with it? I’m afraid the special needs of rural North Carolina will get lost in that reorganization.”

Proponents say their plan would increase rural aid funding.

The Rural Center was the result of a study by the N.C. Commission on Jobs and Economic Growth, inaugurated 26 years ago with the installation of UNC President Emeritus William Friday as board chairman and Democratic party stalwart Billy Ray Hall as director.

Before he joined the Rural Center, Hall was a deputy secretary, assistant director and chief economist for several state agencies under Democratic administrations. Hall remains at the helm of the Rural Center, and is paid $214,008 a year running in the 43-employee organization that spends more than $2.8 million a year on employee salaries.

Three of Hall’s deputies make more than $100,000 a year, and 23 more make more than $50,000 a year, according to information the center provided to the legislature last month. Two-thirds of the payroll comes from the state budget.

Hall issued a statement Monday saying he was shocked by the Senate defunding proposal and looks to House Speaker Thom Tillis to reinstate the center’s funding. Tillis’ spokesman, Jordan Shaw, could not be reached for comment.

Murawski: 919-829-8932

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