Commerce gets ahead of itself in shifting divisions to nonprofit

December 15, 2013 

The state Department of Commerce is moving quickly to switch its business recruiting and marketing functions to a private nonprofit, and the change is already giving credence to concerns that it will muddle oversight of public funds and skirt legislative control. The General Assembly did not pass Senate Bill 127 creating the Economic Development Partnership for North Carolina, but Commerce Secretary Sharon Decker with the blessing of Gov. Pat McCrory has moved to set it up anyway. Decker says a provision of the state budget bill grants her the authority to create the partnership, but without details on how it should be done. Commerce officials say they’re using the failed Senate Bill 127 for guidance nonetheless.

The NC Insider, a state government news service owned by The News & Observer, recently reported that Decker also has a previously undisclosed blueprint for the Commerce Department’s reorganization and the shift of five divisions to the nonprofit. The moves will affect the jobs of 61 state workers and could cost as much as $1.8 million in severance payments. Some of those payments will be made to laid-off state employees who could pop up in new jobs on the private side of the arrangement.

Meanwhile, Decker has picked five members of the existing N.C. Economic Development Board to serve on an interim board for the Economic Development Partnership of North Carolina. All have contributed to McCrory’s election campaigns. One of them, John Lassiter of Charlotte, heads the Renew North Carolina Federation, a 501(c)4 group that collects donations from businesses and individuals to support McCrory’s agenda.

Republican and Democratic lawmakers think Decker may be stretching her authority.

The NC Insider reported that at a legislative committee meeting earlier this month, Sen. Brent Jackson, a Sampson County Republican, asked Tony Almeida, an economic adviser to McCrory, about what authority the administration had to move Commerce Department divisions into a nonprofit. “Is that part of Senate Bill 402?” Jackson asked, referring to the state budget bill. “That’s certainly not my interpretation.”

Almeida responded that the department was following Senate Bill 127. “Refresh my memory someone,” Jackson asked. “I don’t think Senate Bill 127 passed, did it?”

The McCrory administration says turning over some Commerce Department functions to a private nonprofit will make the state more flexible and responsive when it recruits new businesses. The idea has been tried in other states, and issues have arisen about conflicts of interest, excessive compensation and lack of accountability.

McCrory administration officials say oversight of the new entity will be strong, but it’s hardly encouraging if the effort is being launched without overt legislative approval. Lawmakers need to get a hold of the process before McCrory administration officials freelance any further.

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