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Transition to Privatize Economic Development Outlined in NC Budget

May 29, 2014

Building on a bare bones structure for privatizing economic development established last session, Gov. Pat McCrory outlined a plan for transitioning the state’s Department of Commerce to a public-private partnership, effective July 1. The move, according to the governor, will allow for more flexibility to support businesses and achieve savings for the state. Several innovation-focused investments also were presented as part of the recommended state budget adjustments for FY15, including matching and incentive funds for early stage, high-tech companies and funding to assist campuses in commercializing technology.  

During the short session, to last nearly two months, lawmakers will be asked to approve legislation that addresses transparency and funding issues for the public-private partnership left out of a bill enacted last session. That bill granted Commerce authority to reorganize the department toward a privatized model focused around seven regionally focused “prosperity zones,” and to contract with a nonprofit corporation for advisory, research and recruiting recommendations.

A modified bill introduced this year requires the partnership to raise at least $10 million in private funds. Meanwhile, the state would contribute $17.5 million in recurring funds and $155,000 in one-time funds for startup costs in the upcoming year. Budget documents indicate a 5 percent annual savings achieved through the transition. Transparency measures include online disclosure of projects completed with listings of contributions, gifts or services related to projects and a listing of incentive payments to corporations.

The Commerce budget also proposes $2.5 million in non-recurring funding to support high-tech, early stage companies seeking SBIR/STTR matching funds and incentive funds through the One North Carolina Small Business program. Budget documents indicate the program last received funding of $1.5 million in FY11.

To assist University of North Carolina (UNC) campuses with the transition from laboratory research to the marketplace, the governor is requesting $3 million annually in competitive funding for proof-of-concept work and commercialization costs. The UNC budget also includes $2 million annually for five years to meet the state’s obligation for establishing the Next Generation Power Electronics Innovation Institute. North Carolina was named the first winner in a national competition to launch three new hubs that will bring together private sector employers and universities for cooperative research and risk sharing.

In support of his “Closing the Skills Gap” initiative outlined earlier this year, Gov. McCrory recommends $16.8 million in funding for programs within the community college system that would develop skills needed to fill in-demand jobs. To allocate the funds, the State Board of Community Colleges would create a fourth tier in their enrollment funding formula that would be funded 15 percent higher than the current top tier. The new tier would include health care and technical education programs that pay higher wages.


North Carolinastate budget, state tbed