NC commerce secretary lays out jobs plan

jfrank@newsobserver.comMay 29, 2013 

prayerbreakfast_09

N.C. State Commerce Secretary Sharon Decker, also an elder in the Presbyterian church, spoke on the power of prayer at the Twenty-Sixth Annual YMCA Community Prayer Breakfast, Tuesday morning, April 30, 2013.

DAVIE HINSHAW — dhinshaw@charlotteobserver.com Buy Photo

  • Commerce transformation

    N.C. Commerce Secretary Sharon Decker offered new details about the move to privatize portions of the agency’s job recruitment efforts under the N.C. Economic Development Partnership. The highlights include:

    •  Consolidating regional economic development boards, the N.C. Rural Economic Development Center and other outside entities under the private partnership.

    •  Moving the state’s business and industry recruitment and international trade office, as well as marketing, tourism, film and sport, to the partnership, which is governed by a 15-person board of political appointees.

    •  Dividing the state into seven “prosperity zones” that can develop regionalized economic development targets and co-locating them with other state agencies, such as transportation, to allow better coordination.

    •  Consolidating grant and incentive programs under one office to better coordinate efforts.

    •  Working with nonprofits that address targeted job creation efforts. The groups would apply for grant funding rather than receive money in the state budget.

    •  Allowing companies and associations to buy memberships in the nonprofit job-recruitment partnership.

    •  Developing a new brand for the state to debut in 2014, timed to the U.S. Open golf tournaments in Pinehurst.

— Gov. Pat McCrory’s top job recruiter offered new details about the administration’s strategy to revive the state’s economy Wednesday, telling lawmakers that North Carolina must streamline its efforts and return to its roots to reduce the high unemployment rate.

Commerce Secretary Sharon Decker said the administration’s plan to privatize major elements of the state’s economic development effort is needed to kick-start an idling economy with an 8.9 percent jobless rate, the nation’s fifth-highest.

“Although we’ve spent a lot of money and we’ve done a lot of good work, the needle isn’t moving, so it says to me we’ve got to do things differently,” she said.

“As you look at the history of North Carolina, our core has been agri-business, manufacturing, small business and entrepreneurship,” she added. “In this plan … we’ll go back to our core, and that’s primarily how we will get out of this fiscal situation, by focusing on what we know and know well.”

The McCrory administration announced in early April a blueprint to refocus the state’s job-recruitment energies by consolidating regional and external entities and creating the N.C. Economic Development Partnership, a private nonprofit, to help guide the effort.

It’s the administration’s most comprehensive move yet to address the state’s economic situation. McCrory said in the 2012 campaign that he expects to see North Carolina’s unemployment rate fall lower than its neighbors’ at the end of his term and beat South Carolina after his first year in office. South Carolina’s seasonally adjusted jobless rate for April is 8 percent, nearly a full percentage point better than North Carolina’s, according to federal figures.

Decker’s presentation came as the state released new unemployment data. The seasonally adjusted numbers show that unemployment improved in just 32 of the state’s 100 counties in April with another 20 constant since March. Graham County in the western part of the state has the highest jobless rate at 16.5 percent.

House lawmakers pressed Decker on how the new economic development strategy would help rural areas such as Graham that are experiencing chronically high unemployment.

“We don’t want to get lost in the shuffle because we don’t have a lot of voices,” said Rep. Chris Whitmire, a Brevard Republican.

Decker, who lives in economically depressed Rutherford County, assured lawmakers that “rural North Carolina needs to be at the center of the state’s focus.”

Creating prosperity zones

The proposal adopts a model advancing in a separate Senate bill that divides the state into eight “prosperity zones” to encourage regional collaboration. Each will develop its own economic development strategy in coordination with a statewide plan.

James Kleckley, the Bureau of Business Research director at East Carolina University, said in an interview that he is worried about the commerce reorganization and the new zones.

“When you have a rural community, it may be somewhat more difficult to get attention,” he said. “It’s troublesome.

“In a lot of ways rural areas can face different hurdles than what you face in urban areas,” added Kleckley, who seasonally adjusts the county unemployment data. “Not just population loss but in difficulty of getting businesses to relocate there.”

The full details of the public-private partnership remain unclear as lawmakers and administration officials continue to meet behind closed doors to draft the enabling legislation. But Decker gave the House Commerce and Job Development Committee a more comprehensive outline of the effort, saying the bulk of the transition could take place by the end of the year.

Under the plan, the private partnership would assume the Commerce Department’s role in guiding tourism, travel and international trade development, as well as taking over responsibilities from regional economic development commissions.

Other outside entities, such as the N.C. Rural Center and part of the N.C. Biotechnology Center, could also move to the new private nonprofit, which would be governed by an oversight committee of political appointees. Decker envisions a more limited role for these organizations, saying they could operate under a state contract.

House lawmakers expressed concern about eliminating the regional partnerships in favor of these new zones. “My concern is we have a lot of really good things going,” said Rep. Susan Fisher, an Asheville Democrat. “If we are doing a good job, why should we have to reinvent them?”

A new brand for N.C.

A major component of the commerce overhaul is a new branding campaign for the state. Decker said she expects to hire an outside firm to do the work later this year and launch it in June 2014 to coincide with the U.S. Open golf tournaments in Pinehurst. “Millions of people around the world will have visibility to North Carolina, and it’s a perfect time to introduce that brand in a way that will be seen worldwide in one fell swoop and very effectively,” Decker said.

Republican lawmakers also pressed the issue of using taxpayer-funded incentives to help private business, a matter complicated by the new private partnership. “You have kind of this swirl of private and public money that concerns me,” said Rep. Chris Millis, a Hampstead Republican.

In response, Decker said the new system will include a “firewall” between the private and public portions. But she defended the use of incentives, saying they are a necessary tool for job recruitment. Decker said she wants to extend the state’s film credit program with some adjustments.

She also told lawmakers that eliminating the corporate income tax, as many Republicans are advocating, would not eliminate the importance of incentives. “I’d like to think that, but the current facts don’t support it,” she said.

Model not without trouble

The North Carolina public-private partnership is largely modeled on Indiana’s system.

The Indiana Economic Development Corp. received 70 percent of its money from the state with the remainder of its budget supported by private companies and associations. It employs 50 staffers, far less than the roughly 3,000 at the N.C. Commerce Department.

But the Hoosier state’s system is not without problems. Indiana state lawmakers are pressing for more details about inflated job-creation numbers after reports that many of the announced jobs backed by taxpayer dollars did not come to fruition.

In his campaign, McCrory called for a re-evaluation of the state’s job-creation efforts, but the privatization move goes much further. Shortly after his November win, his transition team – led by his top jobs adviser, Tony Almeida, and Blannie Cheng – prepared a white paper making the case for the transformation.

The document outlines how shrinking state dollars and uncertain federal funds require a new approach.

But it acknowledges that “a significant portion” of the entity’s funding would come from the state. Businesses and corporations could also buy memberships, much like a Chamber of Commerce.

The paper acknowledges that “other states’ experiences with public-private partnerships have not been without issue,” but it says North Carolina can do it better.

Frank: 919-829-4698

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