- Associated Press - Thursday, June 5, 2014

RALEIGH, N.C. (AP) - North Carolina lawmakers gave initial approval Thursday to similar but competing bills that would transfer many Commerce Department functions to a private nonprofit corporation, bringing closer to reality Gov. Pat McCrory’s proposal for business recruiting and marketing.

The House and Senate backed proposals that lay out terms of the state Commerce Department’s contract with the nonprofit Economic Development Partnership of North Carolina.

Lawmakers authorized McCrory’s administration last year to plan a privatization strategy. The corporation, which has been formed and has named an executive director, would hire employees to take over agency functions to attract and retain businesses in the state, encourage international trade and promote the state’s brand and tourism.

Commerce Department officials have said the shift will allow the state to compete more aggressively with other states to land businesses and do it at a lesser cost to the state. Outside companies also are expected to give operating funds to the corporation.

“We have come to a bill that allows us what we’ve been after, which is to leverage private investment, to allow us to reduce the public investment in operating costs for sales and marketing, and be able to move with greater speed and agility,” Commerce Secretary Sharon Decker said in an interview before Thursday’s floor debates.

The bills require the partnership to raise $5.75 million in private money over five years, including $250,000 initially to tap into state operating funds, which Decker estimated this week at $17.5 million a year. A 17-member partnership board will be formed.

Another seven-member panel led by Decker but containing three legislative appointees is supposed to ensure the corporation is doing its job. “We’re going to be analyzing how this partnership does and whether it works,” said Rep. Tom Murry, R-Wake, the House bill’s chief sponsor.

State funds for individual partnership employee salaries are capped for now at $120,000, but workers can receive bonuses. House Republicans used parliamentary procedures to block votes on amendments to lower the maximum state pay and to raise the level of minimum private contributions.

“This public-private partnership is far too private and not public enough,” said Rep. Graig Meyer, D-Orange, who voted against the bill.

The full House voted in favor of an amendment by Rep. Rick Glazier, D-Cumberland, requiring employees to meet the ethics standards required of legislators and executive branch officials in state law. Those who make at least $60,000 annually also would have to file annual economic disclosure statements.

The actual awarding of tax credits and other incentives to businesses would remain with McCrory, the Commerce Department and a state board.

Some GOP legislators in each chamber voted no. “I have a philosophical problem with taking taxpayers’ money and using that to entice … businesses to locate here,” said Rep. Dana Bumgardner, R-Gaston, who voted no as the House bill passed 73-41.

Some Republican senators didn’t like a new incentive grant program for the film industry that was tacked onto the Senate version. Nearly all Senate Democrats ended up voting for the bill, tentatively approved 38-6.

Both bills also would complete a plan started last year to retool how rural economic development is managed. Several small-town GOP House members spoke up for the plan. “Let’s give this a chance to work,” said Rep. Josh Dobson, R-McDowell.

House Minority Leader Larry Hall, D-Durham said highly-populated areas would win out in the new program. In a release after the vote, he alleged the Partnership would be effectively a “slush fund” allowing Republicans to reward “special interest supporters.”

The bills say the Partnership is subject to public records and open meeting laws, but some documents about companies that don’t seek state incentives or wind up locating outside North Carolina may be kept confidential.

Both versions are expected to receive final approval next week. A compromise will have to be worked out to send to McCrory’s desk.

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