News: CJ Exclusives

Study Calls for Audit of Commerce Dept.

RALEIGH — Researchers from the Kenan Institute of Private Enterprise at UNC-Chapel Hill released a report last week entitled ” Improving North Carolina’s Economic Development Delivery System: A Report to the North Carolina General Assembly.” Lawmakers ordered the report in September after some of them had questioned the value of the seven regional economic development partnerships in the state.

Author Dr. Michael I. Luger and his team interviewed more than 200 economic development professionals in the Department of Commerce, the regional economic development partnerships, public and chamber of commerce local economic development organizations, non-profit organizations, and allied businesses. They also surveyed many others not involved in the interviews.

The legislation specifically asked the author to identify ways to improve communication and coordination in the business-recruitment process, to establish performance measures, and to recommend a mechanism to guide lawmakers in the appropriation process.

Luger concluded that North Carolina “needs both strong regions and a strong state.” He called for more funding for marketing programs but also recommended that the entire Department of Commerce budget be audited.

“To attract and retain the best specialists,” he said, a merit-based pay system should be implemented for state economic developers. Meanwhile, the salaries of poor performers should be reduced, he said.

The state’s industry recruitment program is “only one small part of an effort to build a more competitive economy,” Luger said. “Existing industry service and cultivation of entrepreneurship are critical emphases as well, and they currently do not get systematic attention.”

Luger said legislators should take his work seriously. “We judge the success of our work generally, and particularly in this case, by its actual use as a guide to public policy. We are not in the business of producing yet another report that will sit on a shelf and possibly be cited by the next group who studies the problem. We look forward to working with the legislature in probing the depths of the report and implementing its recommendations,” he wrote.

Luger did not interview any critics of the current system. Analysts at the John Locke Foundation and elsewhere have long maintained that state government funds too many economic development programs and that a better policy would be lowering the tax burden for all businesses.

The Luger report is available from the Fiscal Research office or can be found on the General Assembly’s web site.

Carrington is associate publisher of Carolina Journal.