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NC Almost Done Privatizing Part Of Commerce Department


The North Carolina House and Senate are finalizing significant changes to how the state recruits and retains businesses. The chambers have passed slightly different versions of a bill to privatize part of the state Commerce Department.

Former Charlotte city councilman John Lassiter is the chair of the private side of what would be the state's public-private partnership. It's taking shape but can't do much until lawmakers finish writing the rules.   

Lassiter says one thing is clear, state leaders will still make the final call on incentives.

"But the partnership will be an active participant in identifying companies that look to relocate or expand, and begin some of that preliminary work to identify whether incentives are needed to make the deal work," he said.

He said Governor McCrory's idea in pushing for this is to make the state much more aggressive in how it recruits businesses.

"And that's the real difference," Lassiter said, "that we go from one that kind of is waiting for people to come to us, to one that says here are the opportunities we want to go get."

But privatizing economic development has its risks. A left-leaning Washington think tank called Good Jobs First released a report last year called "Privatized State Development Agencies Create Scandals Instead of Jobs."

Greg LeRoy worked on the report.

"There's about eight states that have privatized economic development functions from their state Commerce agencies," he said. "Some of the more recent ones like Ohio and Wisconsin have proved especially problematic. Some older ones like Texas and Florida have had recurring problems," including secret transfers of funds, blatant conflicts of interest and dubious job creation numbers.

But LeRoy said a state can pull it off without major problems, and he points to Michigan as an example.

The Michigan Economic Development Corporation has been around since the late 1990s. CEO Michael Finney said transparency is critical.

"Most of the kinds of rules that a typical state agency would be responsible for like freedom of information, etc - we really do live to the exact same standards that state of Michigan employees do for all intensive purposes," Finney said.

In North Carolina, the House passed a bill that would put the private side of the public-private partnership under the State Ethics Act. The Senate didn't go that far. Its bill tells the partnership to come up with its own ethics rules.

John Lassiter says he favors the Senate version.

"Well, we're not a state agency," he said, "and so you'd like to have something that looks more along the lines of what ethics policies and conflicts policies look in a traditional corporate environment."

Lassiter said those policies are critical, but there shouldn't be so much red tape that the partnership is just like another state department – then what's the point of the change?   

He said he's hopeful the House and Senate will reconcile their differences in the next week.