Meet the new state agency. (Same as the old scandal-plagued state agency?)

McClatchy and other mainstream media outlets blew the doors off of The NC Rural Center earlier this year — exposing all kinds of cronyism and corruption to public view.  Politicos in Raleigh expressed their outrage and huffed and puffed about how something like this would not be allowed to happen again. 

Funding was snatched from the Rural Center and moved to a new Rural Economic Division of the state Department of Commerce.  So how is this new scheme supposed to work? The smart folks at the UNC School of Government attempt to enlighten us:

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In the Appropriations Act of 2013, the Secretary of the Department of Commerce was granted flexibility to reorganize the department and to establish a public-private partnership for economic development, presumably with a new private nonprofit entity. No other details for the new nonprofit were included in the authorizing provision, as more specific requirements for the nonprofit were to be provided in a separate bill, SB 127, which was not taken up prior to adjournment. Although not enacted into law, SB 127 is worth a look because some variation of it will probably be taken up in the 2014 short session. The bill outlines the concept for the new nonprofit, which will perform a number of statewide economic development planning, marketing, and coordination functions. The bill also describes eight proposed “Collaboration for Prosperity Zones,” which are regional groupings of counties that are intended to supplant Commerce’s existing framework of seven economic development regions represented in the diagram at the top of this post.

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For more detail on how funds in the Economic Development category are used, see this presentation by Commerce officials for the Community Development Academy held at the UNC School of Government. The other category, Infrastructure, is further defined in the Modifications Billas being “limited to critical public water and wastewater projects.” The Modifications Bill also clarifies that Infrastructure funding is limited only by federal law and HUD regulations, not by state laws and rules. Presumably this divorces the Infrastructure category from the rules set forth in Title 4, Subchapter 19L of the North Carolina Administrative Code.

New Rural Economic Development Organization at NC Department of Commerce

Section 15.10 of the Appropriations Act established a new Rural Economic Development Division within the Department of Commerce to administer grants and loans to local government units, and the Modifications Bill clarifies that priority is to be given to units located in Tier 1 and Tier 2 counties. Tier designations for 2013 are displayed in the map below.

While the Rural Economic Development Division is tasked with administering grant and loan programs, it will not make award decisions. Rather, applications for grants and loans are reviewed by a separate “Rural Infrastructure Authority,” which then awards the funds. The Rural Infrastructure Authority is a board comprised of the following political appointees: the Secretary of Commerce (nonvoting) and 15 other members appointed in equal shares by the Governor, the Speaker of the House, and the President Pro Tempore of the Senate. The appointed Rural Infrastructure Authority is also tasked with formulating policies and priorities for grant and loan programs administered by the Rural Economic Development Division.

The conference report on the budget devotes more than $11 million to this new division in fiscal year 2013-2014 and over $13 million in fiscal year 2014-2015. This can be compared with over $16 million eliminated from the budget in each of those periods for the Rural Economic Development Center (Rural Center). The Rural Center was cut out of the budget following a damaging report by the State Auditor.

The programs to be offered by the new division are codified at G.S. 143B-472.127 and are similar to some of the programs that have been offered by the Rural Center.

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The Rural Infrastructure Authority, in addition to making awards for programs described above, also makes awards through a new “Industrial Development Fund Utility Account” (formerly the Industrial Development Fund underG.S. 143B-437.01) and for “economic development projects from community development block grant [CDBG] funds.” Presumably, “economic development projects” include only those projects that are eligible for CDBG funds within the category of Economic Development, described previously in the section on CDBG allocations.

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Appointments to the Rural Infrastructure Authority board got announced last week and this week.  Lots of politically-connected names on that list. 

So. We’re responding to corruption and cronyism in a “public-private partnership” — where politicos got to hand out money to certain folks in the hinterlands — by setting up another agency dominated by politicos handing out money to folks in the hinterlands?

Even the guys at the School of Government are having a hard time seeing the difference between the Rural Center scheme and this one.  It’s rearranging the deck chairs on the Titanic.  It’s lipstick on a pig.  You’re trying to make things look prettier, but it’s still gonna be ugly in the long run.

Here’s a neat idea:  How about establishing economic policies that revolve less around handing out cash to politically-connected developers and cronies, and more around tax cuts and deregulation that will spur economic growth from Murphy to Manteo?