State's plan to privatize economic development comes with risks

Editorial by Winston-Salem Journal, November 3, 2013.

Gov. Pat McCrory wants to privatize the state’s economic development efforts and is likely to get his way. The legislature has provided initial funding for the change.

But, as the Journal’s Richard Carver reported, the nonpartisan Washington research center Good Jobs First says such a change is risky. Privatization has created huge problems in several states.

If North Carolina is to avoid trouble, the governor and legislators must establish and abide by rigorous standards of ethical behavior, accountability and public transparency.

The state once relied on a well-trained workforce, low taxes and expenses, the absence of unions and a good standard of living to draw new companies here. Now, financial incentives are also used to help start-up companies and to both draw and retain industry.

Leaving it to a government agency to decide who gets those incentives, and who does not, does not guarantee that the program will be run scrupulously. But government agencies, at the least, are subject to our laws on public records and public meetings. A state ethics law also governs those who decide where incentives go.

McCrory and officials under him say that his privatized program will have a tough ethics code and rigorous accountability and transparency standards. Good Jobs First said N.C. partnership proposal has more potential oversight safeguards that most of the other states included in its report.

But there are enormous conflict of interest possibilities when a private board, using both state and private money, is deciding how both are spent.

There are certain to be questions of inside influence when a company that is represented on the board, or that has contributed to the privatized effort in other ways, is also a candidate for an incentive of some sort. Other conflicts could arise when a member of the board works for a company that will benefit from the recruitment of a specific business to the state. Transparency will be crucial.

McCrory had better have his eyes wide open as he undertakes this new era of economic development. There are risks involved.