What do a $30,000 well-appointed restroom and an isolated footbridge that dead-ends in a marsh have to do with helping tobacco farmers transition to nontobacco sources of revenue?
Not much, say critics of the Tobacco Trust Fund Commission’s priorities in a time of budget woes for the state. They think the funds should be redirected to more urgent projects.
“Some projects may be worthwhile,” said Sen. Andrew Brock, R-Davie, “but this originally was supposed to go to tobacco-dependent communities to help them transition into the 21st century, and very little of that actually [takes] place.”
Others raise the specter of political patronage. “I just wonder if there’s not favoritism and looking at grants in some members’ districts versus others — if there’s not political connections that influence some of the spending,” said Rep. John Blust, a Guilford County Republican.
The state-run trust fund was meant to assist North Carolina farmers, farm workers, and related businesses displaced by tobacco’s declining fortunes. It handed out a record number of grants this year.
The General Assembly created the commission as the result of a multi-state settlement of a lawsuit against tobacco companies in 1998. The overall settlement was valued at more than $200 billion, to be distributed over a 25-year period. The commission receives one-fourth of the estimated state’s $4.6-billion share of the settlement. Another quarter goes to the Health & Wellness Trust Fund and half to Golden LEAF (Long-term Economic Advancement Foundation).
The general statute governing the commission directs cash to agricultural programs “that will have the greatest favorable impact on the long-term health” of the state’s tobacco-related economy. To date, the commission has allocated more than $45 million to hundreds of projects.
Some of the commission’s funding seems to have a firmer connection to struggling tobacco farmers than others. As part of 36 grants totaling $6.1 million doled out this year, the commission bankrolled construction of a farmers’ market restroom near Wilmington and a footbridge in Fair Bluff, a small town on the South Carolina border.
The commission also contributed $450,000 to the N.C. Biotechnology Center’s building expansion, $61,000 to help send state employees on trade missions to East Asia, and $22,000 to study organic flour.
“We try to invest our money in the most diversified mix that we can, that’s appropriate, in hopes of generating new opportunities and new ideas for people out there,” said Jeff Jennings, the commission’s program officer. “It might be tourism, it might be diversification, it might be job retraining.”
In past years, the commission spent $28,000 to print 100,000 maps highlighting “agritourism farms” — agriculture facilities that supposedly will stimulate local economies by attracting out-of-town visitors — and a quarter-million dollars on a bio-fuels processing lab.
The commission has funded several other projects with an environmental focus, too. This year, it plugged $185,000 into workshops on risk mitigation measures required by the Environmental Protection Agency. In 2009, it devoted $245,000 for a cost-share program for at least 40 tobacco farms to use wind, solar, and water for power.
Biotech expansion
One of the largest grants this year went to the Biotechnology Center, a nonprofit, private organization created in 1984 to use public funds to finance biotech projects in the state. It’s now in the process of adding a 20,000-square-foot expansion to its headquarters in Durham at a total cost of $10.4 million.
The commission allocated nearly $500,000 earmarked for a “statewide agricultural biotechnology initiative,” housed in the new four-story circular building.
The center’s grant application says the building could result in $30 billion in “increased agricultural revenues” during the next 10 years, and that it would create 294,000 jobs.
Another part of the application says that a separate building would “enrich the architectural landscape” of the state. A line-item budget for the commission’s share of the project includes $79,527 for terracotta and stone; $23,262 for terrazzo, specialty flooring made of marble and stone chips; and $8,263 for acoustical ceilings.
The center also secured $2.5 million from the General Assembly over five years and is anticipating a $3.5 million federal appropriation for the next fiscal year. Most of the remaining funding sources are private.
Footbridge, restroom
Part of the commission’s goal is to revitalize formerly tobacco-dependent areas of the state by spurring development of other industries. Since 2007, it’s poured $450,000 into turning the Town of Fair Bluff — population 1,181 as of the last census — into a tourist destination.
The Lumber River runs near downtown, and elected officials and business leaders have led an effort to complete an information center and footbridge to attract visitors. The park also has a boat launch.
This year, the commission allocated $150,000 to the town to extend the footbridge another 1,400 linear feet, construct two pedestrian shelters, and finish renovations on the information center. The town also secured a $100,000 appropriation this year from the General Assembly.
Earlier, officials estimated the footbridge would create three jobs, and re-employ one worker, while assisting no current or former tobacco farmers. Instead, it would serve 2,000 tourists.
The town’s grant application says the enhancement project has “the potential to revitalize the economies of the immediate area, and the greater region” and “could lead to a complete turn around of our community.”
Asked if it that prediction was practical, commission president William Upchurch said he hoped so. “We really hope that this can be a shot in the arm in a town that we just don’t see where you could move a large corporation down there that would create jobs and educational opportunities for people,” he said.
Another grant for the 2010 cycle went to Poplar Grove, a historic peanut plantation north of Wilmington. A farmers market operates there each Wednesday from 8 a.m. to 1 p.m.
The nonprofit that runs the plantation initially asked for enough in grants to supply electricity, buy an LCD projector, install an LED message sign, and construct a stand-alone restroom for a total of $187,348. The commission opted to fund the restroom only.
The market currently has a membership of 56 vendors, with an average of 30 to 40 vendors participating each market day. In 2009, the plantation got a $50,000 grant from the commission to build a gravel parking lot next to the farmers market.
‘The dominoes are falling’
Applicants are responsible for estimating their project’s impact in 14 areas, including number of jobs created, tobacco quota holders assisted, and state tax revenue generated. There is no set formula for how grantees make those projections.
Of the applications reviewed by Carolina Journal, most made modest predictions, but they diverged frequently. For example, Poplar Grove representatives estimated the improvements would create 14 jobs and assist eight current or former tobacco farmers. In contrast, the Biotech Center predicted that every tobacco-associated farmer in North Carolina would benefit from its building expansion.
Commission officials are eager to tout the grants’ economic benefits. They say a $33,000 grant to fund partially an agriculture trade mission to China last August led to $52 million in tobacco orders. Five state Department of Agriculture employees — including Commissioner Steve Troxler — participated in the mission, accompanied by self-funded industry representatives.
In an e-mail exchange following the trip, Peter Thornton, the department’s assistant director for international marketing, valued the contacts made at $28 million. He also compared the growth of trade between China and North Carolina to a domino cascade, writing, “The dominoes are falling. They will continue to fall.”
Even so, officials admit it’s difficult to quantify the economic value of trade missions because of the variables involved.
“Can you attribute everything? I don’t know,” Upchurch said. “But I can’t believe it’s coincidental that so many follow-up phone calls and purchases took place shortly after they returned back to the U.S. from the contacts they made over there.”
The Agriculture Department secured $28,000 in additional commission grants this year for another trip to Asia.
Raiding the fund
The governor or legislature has diverted funds from the commission each year since it began issuing grants. For the 2010 cycle, lawmakers siphoned off $5 million. Last year, they took $15.3 million.
With an anticipated $3 billion budget hole to fill next year, and double-digit unemployment plaguing the state, some lawmakers say it’s time to rethink funding priorities.
“I don’t think it’s going to create jobs in the same way that the stimulus hasn’t created jobs,” Blust said.
Sen. Phil Berger of Eden, the Republican leader in the state Senate, said there needs to be a periodic review of where the cash goes. “We probably need to take a look at it in the context of taking a broader look at the entire tobacco settlement — where the money is going, what makes sense,” he said.
David N. Bass is an associate editor of Carolina Journal. Editorial intern Bill Flanigen contributed research and reporting to this story.