RALEIGH – Back in 2001, then-State Auditor Ralph Campbell released a scathing audit of the North Carolina Technological Development Authority, a state-funded nonprofit that among other things ran a business incubator in the Triangle area. Campbell excoriated the group for poor financial controls, excessive spending on travel and lobbying, and just all-around smarminess. Gov. Mike Easley, to his credit, engineered an end to state funding shortly afterward.
Now the group is back, sporting a different name (the First Flight Venture Center) but pretty much the same pitch for taxpayer support. Triangle Business Journal reports that two Senate bills are proposing the renewal of funding for the center, which was originally spun off of the state commerce department in the early 1990s. The total damage would exceed $2 million for the 2005-07 biennium.
I have mixed feelings about this development. I’m disappointed that the idea of tossing more state dollars into this or any other business incubator has come up again. I’m frustrated that it appears to have garnered the support of several local state senators, including some who really ought to know better.
On the other hand, I’m delighted that I now have a new parable to repeat about the persistence of wasteful government spending. If the Technological Development Authority is able to squander nearly $20 million of the taxpayers’ dollars with such reckless abandon over a decade, change its name, and then return to the trough within a couple of years, that ought to tell us a lot about how difficult it is to set fiscal priorities in state government.
How bad was it? TDA once spent $1,328 for a staff lunch. It spent $13,000 to send three folks to Hawaii. It paid its top executives more than $100,000 a year, and gave its president a $36,000 “performance bonus” after only three months on the job. It spent a large percentage of its annual taxpayer funding on a contract lobbyist whose job it was to, well, maintain that annual taxpayer funding.
Other than procuring ladies of the evening or serving as a money laundry for international terrorism, it’s hard to imagine how much worse the financial track record of TDA could have been. The problem isn’t just that the group was headed by questionable individuals. The function of incubating start-up businesses is itself unsuited to the public sector. Practices that may make sense in a competitive, for-profit environment do not pass muster when coercive funding is involved.
We don’t make our fellow citizens pay some of their hard-earned money into the state treasury so that a few other citizens (or non-citizens) can use it to start private businesses. This is not a proper government function. At the very least, one might say, it is not a high-priority government function during a time when school enrollments are surging, highways are congested and crumbling, and crime rates remain stubbornly high in many of our communities across North Carolina.
Ladies and gentlemen of Jones Street, I’ll gladly give up this story as a delicious intro to my stock civic-club speech if you’ll only make the right call here.
Hood is president of the John Locke Foundation.