The Charlotte Observer

January 18, 1996

The jobs gambit
How many new jobs have N.C. taxpayers financed? (Editorial)

Copyright © 1996, The Charlotte Observer

For decades, North Carolina governors - Democrats and Republicans - have enjoyed making annual boasts of how many new jobs they've brought to the state. But none has spent much time counting how many of those jobs ultimately were created.

Ten years ago, the N.C. Center for Public Policy Research and N.C. State University researchers, in separate reports, recommended that the state adopt a policy of tracking job announcements and whether all those jobs had developed. Had such a system been in place, the N.C. Commerce Department would have been in a better position to assess the number of jobs created - and judge the efficiency of a multimillion-dollar industrial recruiting fund it uses to lure new jobs with taxpayers' money.

Regrettably, that never happened. As The Observer reported last week, and Deputy Secretary of Commerce Bob Goodale points out in his letter below, the department did not have a system to monitor job creation by companies that got public funds through the so-called Competitive Fund from its inception in 1993 through mid-1995. That year, guidelines for new grants were changed after the Task Force on Business Incentives recommended new controls. The department belatedly is putting a system into effect to monitor the earlier grants.

Mr. Goodale points out that Quaker Oats Company did create the jobs promised and that, contrary to the lead of our story, the Commerce Department was not the sole source of the incentives. He's right on those points, as we noted in corrections Saturday and Wednesday. Those funds came from a variety of government agencies in recruitment deals essentially brokered by the Commerce Department and its economic development staff.

Apparently no one knows for sure how much state and local governments have spent on efforts to attract companies or entice existing industries to expand. That's particularly appalling in a time when the public is rightly demanding more accountability from government.

The point of our story was not that none of the companies created the promised jobs - we reported that some had - but that the Commerce Department had no system to monitor job creation and expenditures for the grants made before the guidelines were changed last year. What's especially troubling is that the Employment Security Commission data, while available to Commerce, isn't available to the public because of a state law mandating confidentiality.

Why that data should be unavailable to a public that is required to pay taxes to recruit these companies is the sort of maddening Catch-22 that only entrenched bureaucrats would regard as defensible public policy. Companies getting public funds should agree that such data will be made public, or they should be ineligible for those funds. Either way, the law needs changing.

Mr. Goodale says the new guidelines were not due to legislative pressure. The fact remains that the incentive program has met substantial legislative skepticism from the beginning and its survival depends on the tightest accounting of money and results. If the department had not adopted the guidelines, the legislature likely would have.

The larger point is that the whole idea of governmental incentives and subsidies is under attack. Some of these questions have been raised in a lawsuit challenging the constitutionality of using public funds for the benefit of private corporations. That suit will be argued before the N.C. Supreme Court on Feb. 16. But even if the court upholds the legality of incentives, the state ought to take a fresh look at the wisdom and the effectiveness of providing special benefits for private interests - and to be sure that the public interest is, in fact, served.

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Copyright © 1996, The Charlotte Observer.

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