Gov. Pat McCrory’s administration is repackaging the way it performs economic development efforts, moving the function from the Department of Commerce to a nonprofit private corporation.

Administration officials hope the move would free up efforts to recruit businesses while providing rewards for the individuals who bring jobs to the state, not just tax breaks and cash incentives to the businesses themselves.

Senate Bill 127 allowing the N.C. Department of Commerce to contract with a nonprofit corporation to conduct economic development functions has advanced in the General Assembly, although support for the bill was not unanimous.

During review in the House Commerce Committee, Commerce Secretary Sharon Decker urged members to approve the changes in law.

“We can’t do things the same way and expect a different result,” Decker said.

During House floor debate June 26, Rep. Tom Murry, R-Wake, the House handler of the bill, argued for the change.

“I think this is going to help the Department of Commerce move at the speed of business instead of the speed of government,” Murry said.

A few House members expressed reservations. Rep. Joe Sam Queen, D-Haywood, said he felt the move would centralize power in Raleigh at the expense of outlying regions in the state.

“Our biggest trouble in western North Carolina is getting any attention out of Raleigh,” Queen said.

Rep. Chris Millis, R-Pender, said he opposed the switch because it continued the practice of offering incentives to new or expanding corporations. He argued that incentives force businesses that pay taxes to wind up “funding their competitor[s].”

Supporters far outnumbered opponents in the House, as the bill passed its initial vote by a 76-38 margin.

Rep. Pat McElraft, R-Carteret, said that things needed to change in the Department of Commerce. Rep. Frank Iler, R-Brunswick, said a company decided not to move to his part of the state because South Carolina could put together an incentives package more promptly.

“South Carolina had a board in Columbia of department heads that could react very quickly to put offers on the table for this corporation,” Iler said.

Commerce officials are hoping the nonprofit, which would not be bound by inflexible government compensation guidelines, can make it easier to retain the most productive recruiters.

“We want folks that are getting the job done to be rewarded for doing that, and those who don’t … not be rewarded,” said department spokesman Josh Ellis.

Brent Lane, director of the Carolina Center for Competitive Economies at the Kenan-Flagler Business School at UNC-Chapel Hill, said it has been difficult for Commerce to hang on to its talent.

“We need to be able to reward high-performing economic developers,” Lane said. “Otherwise, what are they going to do?”

Ellis said that the business and industry team of the Commerce Department has 24 full-time economic developers, although two positions are vacant. Their salaries range from $45,263 to $85,505, not including the manager.

Decker said that the change would allow “us to create a new organization that can move a lot faster, be a lot more nimble.”

Economic development functions “will be dispersed across the state of North Carolina,” she added. “It won’t all be in Raleigh.”

She said those functions would include the recruitment of new business, support for existing business in North Carolina, and helping the travel and tourism industry.

“One of the things that we intend to do is restaff sports marketing for the state of North Carolina,” Decker said. “There’s a tremendous opportunity economically for travel and tourism around youth sports leagues, youth sports competitions across the state.”

She cited the Cleveland County city of Shelby, which hosts baseball’s American Legion World Series.

The nonprofit corporation’s board would have 15 members, nine of them appointed by the governor. The speaker of the House and the president pro tem of the Senate each would appoint three members, filling the board.

Conflict-of-interest provisions aimed at preventing any member of the board from using his or her position for personal gain are part of the bill.

The nonprofit corporation would be overseen by an Economic Development Oversight Committee, including four Cabinet secretaries — Commerce, Transportation, Environment and Natural Resources, and Revenue — along with the director of the Office of State Budget and Management. The speaker of the House and president pro tem of the Senate each would appoint a member to the committee; those appointees could not be members of the legislature.

Ellis said that too often North Carolina loses to other states in recruiting businesses because it takes too long to put the economic development pieces together.

“Any way that we can be faster in terms of coming up with a formal proposal to a company will put North Carolina in a competitive place,” Ellis said. “If you think about it from a company’s perspective, time is money.”

The proposal also divides the state into eight geographic “prosperity zones.” Those zones are designed to promote interdepartmental cooperation in industrial recruitment. The bill requires that the departments of Commerce, Environment and Natural Resources, and Transportation each provide one employee from their regional offices to serve as liaisons with other agencies and planning bodies to work toward economic development.

Lane cautioned against high expectations of a change in structure without a corresponding strategic change.

“The structure is not going to determine success if the strategy is flawed,” Lane said.

Lane said that tax reform is a “necessary part” of the state’s strategy, but added that it is “not a panacea.” Changes in infrastructure, regulations, and education also are necessary, he said.

Barry Smith (@Barry_Smith) is an associate editor of Carolina Journal.