RALEIGH – Remember the old commercial for Reese’s Peanut Butter Cups? There’s a collision that gets someone’s chocolate in someone else’s peanut butter. Then they marvel at “two great tastes that taste great together.”
Over the past two decades, two of the worst tastes in North Carolina government have been the Global TransPark and the Golden LEAF Foundation. Both were products of a political class that had more power than sense. The TransPark was the 1980s brainchild of a UNC-Chapel Hill sociologist, John Kasarda, who thought that North Carolina could create a just-in-time manufacturing hub around an elongated rural airstrip. He was wrong. Unfortunately, he convinced former governors Jim Martin and Jim Hunt to pursue the idea, and they convinced state and federal lawmakers to plow nearly $90 million into the Kinston jetport.
Taxpayers ended up with a long, little-used runway and a few small, heavily subsidized tenants relocated from elsewhere in the state. Having promised that between 50,000 and 60,000 net new jobs would be created by the end of the 1990s – the real number being, actually, zero – state politicians ducked and covered, while quietly “loaning” the project an additional $32 million out of the state’s Escheats Fund.
Meanwhile, then-Attorney General Mike Easley signed onto a national lawsuit against the tobacco companies alleging that their chicanery about the risks of smoking had resulted in billions of dollars in cost to state Medicaid programs. The states wanted cash. They got it. But Easley invented the (even more dubious) claim that the companies had tricked rural North Carolina into becoming dependent on tobacco cultivation, so that the proceeds of the settlement could be diverted outside the normal state budget and deposited in “trust funds” that politicians could tap for their pet economic-development schemes.
The tobacco settlement was essentially a huge and regressive tax increase on smokers. Having been stuck with it, the General Assembly should have devoted the annual payments to offsetting other taxes, such as the regressive sales tax, as some of us recommended at the time. Instead, they routed half of the expected settlement into the newly created Golden LEAF Foundation. So far, the foundation has accumulated an investment portfolio worth some $700 million and given millions of dollars in annual grants, often little more than special favors to politically connected businesses, nonprofits, and local pols.
Now, these two political projects have collided. A couple of weeks ago, Easley and a gaggle of politicians stood at the TransPark to announce that Spirit AeroSystems would manufacture aircraft components at the site, potentially employing more than 1,000 workers. The company will receive a package of incentives totaling as much as $180 million, anchored by a $100 million grant from Golden LEAF to build the Spirit plant. The epitome of grace, the governor took the opportunity to tell longtime TransPark critics to shut up. “Today, we start to silence all of those naysayers over the years who’ve been heckling from the sidelines,” he boasted.
Sorry, but these two bad tastes just taste worse together.
First, Spirit’s plant is not a just-in-time facility. It won’t be shipping its products by air. Indeed, I can’t find any evidence that the TransPark itself will be used for much of anything. Spirit’s Airbus fuselages will go out by ship. The plant could have been located anywhere with links to a seaport. Indeed, it probably would have made more sense to locate nearer to a port. Spirit located in Kinston simply because it was paid handsomely to do so.
Second, Golden LEAF is again being used as a political slush fund rather than acting as a nonpartisan grantmaker serving rural North Carolina. Why has it just pledged to spend the equivalent of one-seventh of its current corpus to build a factory for a single company? Because it was told to do so by the politicians who really call the shots and who seek to deflect criticism of their past foolishness.
Based on past experience, I suspect we will learn a great deal more about the Spirit/Golden LEAF deal once the state’s file becomes public and the company really starts spending its own money. Perhaps there will be a thousand new jobs. But don’t be shocked if the real number is lower.
Do I begrudge the residents in and around Kinston the opportunity to find better employment? Of course not, particularly after all the failed promises of the past. Make no mistake, however: for the state as a whole, the latest deal is another expensive giveaway of public funds to a local project that never made business sense. To the extent they hear the details, most North Carolinians will be angered, not appeased.
Hood is president of the John Locke Foundation.