Audit critical of Easley, commerce department

BYLINE: Pat Hogan

Both North Carolina Gov. Mike Easley and the state Department of Commerce need to do more to fulfill their roles in promoting economic development across the state, according to a performance audit conducted by the office of State Auditor Les Merritt.

The Department of Commerce responded to the audit by agreeing with some findings and strongly disagreeing with others.

Released Wednesday, the audit attempts to gauge whether North Carolina's economic development operations have successfully implemented operational recommendations stemming from four studies conducted by separate agencies between 1999 and 2005.

Following a review of the recommendations of the studies and interviews with members of the General Assembly, personnel from the governor's staff, economic development agencies, the Department of Commerce and the author of one of the studies, investigators in Merritt's office identified a number of areas where substantial improvement has yet to take place.

Among the audit's criticisms of the state's system was a characterization of Easley's role in economic development as behind the scenes and ineffective.

"The governor plays a key role in determining the economic development landscape for North Carolina, although our survey results suggest local visibility is missing," the audit reads.

Merritt's office anonymously quoted survey respondents as saying the governor "does not show up for important economic development events and key meetings."

Merritt's report was equally critical of the state's Department of Commerce, indicating the department neither functions as the lead player in statewide economic development initiatives as it is supposed to nor has it set up a clear economic development agenda among the state's regional economic development partnerships. Also, the report says, the commerce department needs to do a better job overseeing the regional economic partnerships.

Merritt's report recommended that the General Assembly clarify the Department of Commerce's role as the lead agency regarding economic development initiatives in the state. Likewise, the Department of Commerce should develop a statewide marketing plan that would coordinate economic development efforts among regional entities and the department itself, the report said.

In a response to the auditor's report, the North Carolina Department of Commerce agreed that "the economic development system, as it has evolved, is a fragmented one," but it resisted the auditor's implication that the department was not firmly in place as the lead economic development player.

"Commerce unquestionably functions as the lead agency for economic development in North Carolina ... " the department said in its response. "The audit's assertion that the department does not function as the lead agency for economic development activities in North Carolina is puzzling and ... incorrect."

The department's response also called into question Merritt's findings regarding Easley's role in economic development.

"It is not the highest and best use of the governor's time, nor the proper role of the office, to perform the tasks of local economic developers and to engage in meetings that are not strategic and not directly focused on job creation," the department's response reads. "The suggestion that the governor, rather than focus on building the best statewide business climate as possible, should instead use his energy and resources to be a 'cheerleader' defies reason."

The commerce department also disputed Merritt's findings regarding its oversight of regional economic development partnerships.