State Rep. Paul Luebke, D-Durham, introduced a bill last year that would prohibit consultants who advise the state on economic incentive programs to advise businesses on how to obtain incentives under those programs.
The proposed legislation, in this year’s short session of the General Assembly, was left for dead in the House Rules Committee while more urgent issues such as budget adjustments were addressed. But Luebke says he will re-introduce the bill in 2005 if he is re-elected, which is likely.
“I…had no time to ‘work it’ (this year), either to find co-sponsors or to ensure that the bill had a hearing before an appropriate committee,” he told Carolina Journal.
The bill would make illegal for a person or business that advises the state “on the creation or substantial modification of an economic development incentive program” to, within two years of the establishment of that program, advise a business or individual that seeks to benefit from those new incentives. A violation would be classified as a misdemeanor, and anyone convicted under the law would forfeit the compensation it received from both the state and the business it advised, and would be forbidden from advising the state or a business for two years after its conviction.
Luebke developed the bill after CJ reported that accounting firm Ernst & Young advised officials in North Carolina’s Department of Commerce on the structure of its economic incentives, then represented Time Warner, Inc. as the cable giant sought to obtain the brand new tax breaks offered by the state.
“In my judgment, making money from both sides of the street is a conflict of interest,” Luebke said. “Such a conflict should be prohibited, and that’s why I introduced the legislation.”
He also cited a CJ report about large corporations treating state governments as “cash cows” as an inspiration for drawing up the bill. The story told of how companies such as Microsoft, Boeing, and Wal-Mart were trading ideas about how to extract as much incentive money as possible from governments in exchange for establishing operations in their jurisdictions.
Luebke said he might try to add on to this year’s version of the bill, in order to address problems of economic conflict for state legislators “who hold substantial stock in businesses that are affected by legislation.” He said the new bill would prevent a conflict for a member of the General Assembly who might vote on a bill that likely affects the finances of a company that the lawmaker is invested in.
“The voters of North Carolina do not want special economic interests gaining an unfair advantage in the legislature,” Luebke said. “My bill would reduce that advantage.”
Paul Chesser is associate editor of Carolina Journal. Contact him at [email protected].