RALEIGH – I’ve always liked state Sen. Dan Clodfelter, a thoughtful Democratic legislator from my home county of Mecklenburg. But since we’re pretty close to ideological opposites, I don’t often get the opportunity to agree with him.
Today I do. The latest edition of the Triangle Business Journal reported that North Carolina’s escheats fund is running dry. Managed by the office of the state treasurer, the escheats fund holds unclaimed money such as abandoned bank deposits and uncollected inheritances. Traditionally the state treasurer has held the money in trust, attempting to find the owners and return it to them while spending the investment proceeds on financial aid for in-state college students.
If you leave a pot of money in Raleigh too long, though, state legislators will try to get their hands on it for other purposes. Years ago, the General Assembly authorized the expenditure of the principal of the escheats fund, not just the investment returns, on financial aid. Since then, the value of the fund has dropped precipitously.
According to the treasurer’s office, if present trends continue the escheats fund will drop from $535 million last year to $332 million in 2010 and $135 million in 2011, disappearing altogether in 2012.
Clodfelter, co-chair of the Senate Finance Committee, told TBJ that it had been a mistake for the state to dip into the fund’s principal – pointing out that the money belonged to someone else and that its value should have been protected so it could be claimed by its rightful owners.
Agreed – but there’s more to the story than that. It wasn’t just the legislature’s desire to expand financial aid that has depleted the escheats fund. The General Assembly also voted to extend a $22 million “loan” to the troubled Global TransPark project. As Carolina Journal’s Don Carrington reported earlier this month, the principal and interest on the loan now exceeds $37 million – and the TransPark has no realistic chance of repaying any of the money anytime soon.
State government’s mismanagement of the escheats fund is far from the most outrageous or consequential case of North Carolina’s fiscal irresponsibility. But it’s symbolic of the larger problem. Policymakers considered it not just permissible but even noble to take money belonging to someone else and spend it on their own pet projects. Now that their recklessness threatens to deplete the escheats fund, lawmakers are talking about compelling North Carolina taxpayers to bail it out with general revenue.
Then this fall, most of these same lawmakers will come before the voters and campaign for reelection based on their record of public service. Amazing. If we could turn gall into gold, North Carolina would always enjoy a surplus.
Hood is president of the John Locke Foundation