Opinion: Daily Journal

No More Self-Dealing in Legislature

RALEIGH — Rep. Earl Jones, a freshman Democrat from Greensboro, believes that he has a property right to your tax money.

That’s essentially the argument he is making in court as he challenges the actions of two state officials whose adverse audit of the Guilford County Community Action Program precipitated a loss of federal funding for the organization.

Jones is making a 14th Amendment claim against the two Department of Health and Human Services officials, who found a number of financial irregularities at his nonprofit anti-poverty program, including late payment of taxes. The 14th Amendment provides that no state may deprive any person of life, liberty, and property without due process of law.

“Obviously, plaintiffs have not been deprived of life or liberty, so they must be alleging that they have been deprived of a property right without due process of law,” Special Deputy Attorney General Alexander Peters wrote in his motion to dismiss the suit. But Jones and the other plaintiffs in the suit (recipients of the nonprofit’s services) don’t have a property right in federal funding or in favorable treatment by the state agencies that control those federal funds, Peters continued.

It’s wonderful to see our Attorney General’s office making this necessary and undeniable argument. One hopes the motion to dismiss sails through. But there’s a larger policy issue here.

For years, a number of elected legislators have used the power of their office to steer state or federal funds to nonprofits under their control and, in some cases, employing them. This is a recipe for abuse and for wasteful spending. Self-dealing in taxpayer money stinks to high heaven, but fellow legislators often feel compelled to just pinch their noses and look the other way rather than ask tough questions.

The case of former Sen. Frank Ballance’s John Hyman Foundation, which Carolina Journal Online has been following for months now, is a particularly egregious example. For years and years, the Hyman Foundation in Northeastern North Carolina routinely got grants of state aid without Ballance’s fellow lawmakers ever asking meaningful questions about what it did or how it spent the money. Nor did anyone check to see if the foundation even qualified for government funding in the first place (it probably didn’t because it consistently failed to comply with federal tax law by filing annual 990 forms).

There needs to be a clear policy against lawmakers operating nonprofits that receive state funding or federal funding that flows through the state or is in some way influenced by state regulatory actions. This isn’t just the appearance of a conflict of interest. It’s the real thing.

Some might argue that an iron-clad policy against self-dealing would exclude some individuals involved in the nonprofit sector from running for state office. Good. That would help. There is no inalienable right to hold a government post. Some citizens have employment or personal relationships that should make them ineligible. They should have to choose one or the other.

Hood is president of the John Locke Foundation and publisher of Carolina Journal.