Rural hay making

June 18, 2013 

The recent two-part series by News & Observer reporter J. Andrew Curliss reported extensively on the N.C. Rural Economic Development Center, a nonprofit, partially taxpayer-supported agency that brings businesses and jobs to rural areas. But for all he wrote, Curliss may have said the most with a photo he took.

It’s a photo of a cart containing a file on every member of the General Assembly. Each file contains biographical information and details of every project the center has put through the legislator’s district. The files tell the story of a well-intentioned undertaking that drifted from the high road into the swamp of spending to please individual legislators.

The files, no doubt, contain many sensible and effective investments in economic development. Much of the center’s funding helps local governments provide utility connections that make it possible for new businesses to start, expand or relocate in rural areas. But Curliss also found money spent on businesses that didn’t necessarily need government incentives or projects that didn’t succeed. And there are instances of money allotted for one project being applied to a substitute project.

Among the curious items, the center gave $300,000 to support a 14-screen theater near Charlotte that hardly seems rural, but it did have the support of state Sen. Tommy Tucker (R-Union County). Tucker subsequently received campaign donations from several of the project’s backers.

Funds build up

Meanwhile, the center has piled up unspent funds. It has $69 million on hand from delayed projects or deals that have fallen through. It has claimed to have created jobs before the jobs were there. The center’s director, Billy Ray Hall, who has headed the center since it opened in 1987, has managed to be paid more than a salary cap on state funds paid to employees of nonprofits. The cap is $120,000. Hall makes $214,000, thanks in part to corporate donors Hall won’t indentify.

The center responds that The N&O stories don’t reflect its overall record and its support in rural areas. Certainly an agency that allocates money to boost businesses and lets local officials deliver good news will have no shortage of those who like the way it works. Who doesn’t like Santa Claus?

What matters isn’t whether the recipients are happy, but whether taxpayers are. Those who read The N&O account would have to question whether their tax dollars are best spent to enable the opening of big box stores, fast-food restaurants and boondoggles like the Villages of Hallelujah Acres. The center put $149,000 toward a sewer line for the Hallelujah Acres project that was supposed to be a large mixed-use development on the outskirts of Shelby and the headquarters of a healthy living catalog and retail business run by the Rev. George Malkmus. Five years later, there are six homes there, including a $400,000 home owned by Malkmus.

Mission shift

From its inception and for a decade and a half afterward, the center focused on clean water projects, research and community development, not job creation. In 2004, lawmakers sent millions of dollars its way and gave it a mission to generate jobs. Since then, the center says it has made grant awards of more than $375 million that led to 32,000 “homegrown” jobs. The center’s annual appropriation has been about $25 million a year over the past four years.

The problem with designating an agency to “create jobs” is that it becomes a numbers game in which the agency becomes creative about counting. In the end, the center has become less about sustaining rural communities and more about sustaining itself by pleasing lawmakers and others who are politically connected.

Eighty five of North Carolina’s 100 counties are considered rural by the center. Despite the growth of its cities, the state’s rural character is essential to what North Carolina is. And that part of the state is in trouble. Rural counties have lost industries and jobs. State government should help and help boldly and broadly.

That doesn’t mean opening fast-food restaurants and big box stores. It means building utilities, transportation and high-speed Internet connections then connecting to that stronger base to businesses that can grow and pay taxes and decent wages.

Next step unclear

Republican leaders in Raleigh are at odds about how to do that through the North Carolina Center for Rural Economic Development. The House budget proposes funding it with $36 million. The Senate budget offers zero. Gov. Pat McCrory offers a middle amount and a plan to bring the operation under a new private-public partnership at the Commerce Department.

Whatever the course the government takes with the center, it needs to be a new one.

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