NC Rural Economic Development Center: Just Another Politicized Slush Fund? | Eastern North Carolina Now

    Publisher's note: This post, by Brian Balfour, was originally published in the Budget & Taxes, Politicians & Politicking section(s) of Civitas's online edition.

    The N&O and Char-O ran an in-depth two part series examining the North Carolina Rural Economic Development Center.

    In part one, the article examines dubious claims of job creation and points out that Rural Center grants often go to big box retailers and national chains like Walmart or Wendy's. Rural Center board member (and also Board Chair of the Civitas Institute) Bob Luddy exposed what a typical Rural Center board meeting is like:

    "Here's what they do in a board meeting. They spend an hour and 15 minutes praising each other for the amazing work they're doing. And they spend 10 minutes to just ram these grant resolutions through, maybe five minutes. There's no discussion."

    As a sidebar to part one, Rural Center president Billy Ray Hall's salary is discussed. The article states that Hall's total compensation in the most recent year available was $283,000. Not bad for a job giving away other people's money.

    Another short article highlights specific Rural Center grants that appear to have been political favors, and yet another grant that fell through, created no jobs, yet the Center still publicly reports 20 new jobs created.

    Part two of the series examines several grants that the article suggests either directly or indirectly helped business interests of politically influential people and elected officials. (Full disclosure: the article discusses a Rural Center grant to a Rocky Mount developer to rehab a vacant shopping center, which ended up housing - among other stores - a Rose's discount store. Rose's is part of Variety Wholesalers, a company owned by Art Pope, former Civitas Board member).

    Yet another sidebar article discusses the future of state government subsidies for the Rural Center, which has been a source of disagreement among the various budget proposals introduced thus far this session. The Senate plan would zero-out the state subsidy for the Rural Center, Gov. McCrory's budget would reduce its subsidy from $17 million down to $7 million, and the House budget plan would increase the subsidy to $20 million in FY 2014-15.

    Recent documents show the Rural Center still receives roughly 70 percent of its funding from the state government, and that Hall's top three aides receive in excess of $120,000 each in annual salary.

    A particularly interesting passage in the articles that underscores the highly politicized nature of the Rural Center is the mention of Hall's file full of red folders with the names of every state legislator complete with a running tally of Rural Center grants directed to their districts. This way, Hall can remind legislators about the local projects his group has helped to finance and hold it over their heads at budget-writing time.

    In response to the articles, Gov. McCrory's office issued a press release declaring that the articles confirm what his administration already suspected: "the statewide economic development system is broken."

    Finally, the Civitas Institute had been doing its own research into the Rural Center - and you can see our first of a two-part series examining the Center here.