North Carolina

NC lawmakers weigh big swing on economic development, using $1.43 billion from taxpayers

Published

2 years ago

July 16, 2023

NC lawmakers weigh big swing on economic development, using .43 billion from taxpayers

A state budget proposal with bipartisan support would give more than $1.4 billion to a nonprofit organization with high-powered leadership that says it wants to boost North Carolina’s economy by ramping up innovation.

If approved it would be the largest infusion of taxpayer money into a non-state entity in North Carolina history.

It’s a big bet on the state’s future. Supporters see it as a way to spur economic growth through high-tech companies. Opponents see it as a money-suck and argue that the proposed funding could be used for other priorities.

The debate has heated up as top state leaders negotiate a state budget already two weeks overdue.

The funding would help university researchers turn ideas and discoveries into companies that would have to stay in North Carolina at least five years, potentially bringing more jobs and tax revenue to the state.

The cash infusions would flow as grants. NCInnovation would also help researchers through the process of building a business. Neither NCInnovation nor taxpayers wouldn’t get an equity stake in return, though state universities typically get a slice of the profits their researchers see. That would stay in place, though those percentages vary.

Without this sort of help, supporters say, too many ideas whither in what’s known as the “valley of death” in investment circles — the space between the laboratory and venture capital markets looking for polished ideas to invest in.

“If you think of this as a relay race, we’re trying to fill the second or third leg,” said Bennet Waters, the chief executive of NCInnovation.

The state Senate earmarked $1.425 billion for the project in its budget proposal, which cleared the chamber on a bipartisan vote. The House of Representatives and Gov. Roy Cooper have blessed the idea as well, albeit with far less money, calling for $50 million to start.

Waters said $1.425 billion is the “minimally acceptable amount” because it will create an estimated $106 million a year to spend on grants. With a smaller investment, he said, the program would go bankrupt in about a decade.

“It does not grow over time,” Waters said. “… You’re forced to spend significantly out of the corpus.” The full $1.425 billion, he said, “funds the endowment in perpetuity.”

The Senate’s plan would dip into the state’s well-stocked reserves for a one-time transfer that NCInnovation would invest. It would turn profits into grants for future start-ups. The group expects the endowment to grow over the years and produce more than $100 million a year to help researchers establish job-creating companies, with a focus on parts of North Carolina that don’t have the Triangle’s strong economic engines.

But the big number and questions about whether this model can really fuel economic growth in rural counties have some lawmakers questioning the plan.

“It feels like typical sales stuff to me,” said Sen. Jim Perry, R-Lenoir and one of the more vocal critics. “They mention they’re going to improve the economy in all 100 counties. I mean, wow, that’s amazing. Almost snake-oil like.”

The John Locke Foundation, a conservative think tank with sway among members of the General Assembly’s Republican majority, has blasted the proposal, comparing it to setting money on fire and noting that NCInnovation would not be subject to the state’s open records act.

“Government not only should not be in the business of picking winners and losers in the marketplace with taxpayer dollars, it has a very poor track record of doing so,” Brian Balfour, a senior vice president of research for the foundation, wrote of the effort.

The proposal is one of several major issues holding up passage of the annual state budget.

“Lot of questions that members have,” Speaker of the House Tim Moore said last week. “It’s a large number. … There is support in the House for the concept. The question is how much money do we put into it.”

Big-name backers

NCInnovation’s board of directors is full of movers and shakers.

Kelly King, the retired CEO of Truist Financial, chairs a board made up of business leaders, four university chancellors and UNC System President Peter Hans. Jamie Dimon, the chief executive of JPMorgan Chase, one of the world’s largest banks, has blessed the group’s plan along with a host of other bankers, investors and industry titans.

The group has nine lobbyists registered for this legislative session, including some of the General Assembly’s better known power brokers.

Waters, a long-time businessman with a track record in startups, established corporations and consultancies, has also spent 20 years as an assistant professor at UNC-Chapel Hill. He said some of the state’s top business leaders have been working on this concept for seven years.

Legislation to fund the group says it has to raise $25 million in private donations. Waters said NCInnovation already has $23 million in hand or committed from major banks, Duke Energy, Blue Cross Blue Shield of North Carolina and other businesses. Capitol Broadcasting Company, the parent company of WRAL, is among those that have donated.

Waters said the group plans to raise more money from individual donors to go beyond the $25 million requirement, with the goal of funding administrative costs.

The state’s money would be used to generate profits, though Moore said there is some discussion of letting NCInnovation spend the endowment itself.

Entities that get grants would need to have their headquarters in North Carolina and operate in the state for at least five years “to ensure that the benefit to the state outweighs the cost of support,” the budget proposal states. NCInnovation would help these groups develop university research out of at least four hubs, with the initial locations centered around Western Carolina University, East Carolina University, North Carolina A&T and UNC Charlotte.

The state’s top research universities, UNC-Chapel Hill, Duke University and N.C. State, already have internal programs dedicated to turning applied research into commercial successes.

Waters said the plan is to require grant recipients to keep their businesses in the region around these four universities and others that are added to the plan, but the regional boundaries would be drawn later by NCInnovation’s board.

The Senate budget bill lays out a 13-member board, with eight of those members appointed by the General Assembly. Board members wouldn’t be paid, but they could have their expenses reimbursed. State employees and elected officials wouldn’t be eligible.

The budget language requires routine reports to the legislature detailing how the money is invested, the number of jobs the group creates, overhead and administrative costs and a number of other metrics that must be tracked.

NCInnovation would contract with an independent investment manager to invest the state’s money for compensation that “may not exceed a commercially reasonable amount,” the budget proposal states. Board members would decide where the money is deposited and who manages it.

Board members and NCInnovation employees would have to abide by a to-be-written conflict-of-interest policy that would forbid them from holding equity in businesses supported by the fund.

If NCInnovation dissolves it would have to pay the remaining state money back at 1.5% interest, the budget states.

Other states

NCInnovation points to other states that have spent hundreds of millions of dollars on similar commercialization efforts and warns North Carolina is falling behind.

The group says North Carolina is second, behind Massachusetts, among U.S. states when it comes to academic research and development, though 87% of that money gets spent at UNC Chapel HIll, Duke University and N.C. State.

NCInnovation wants to focus on other universities by building infrastructure around them to shepherd discoveries into companies, and says The state is well below the U.S. average when it comes to venture capital funding to turn research into jobs.

“How can we be so good at bringing research money in and just middle of the pack in commercializing that?” Waters said.

According to a December 2021 report from the state Department of Commerce, North Carolina ranks 20th nationwide in “innovation,” a measurement of 39 metrics, including commercialization activities that the report said “remain below average and must be stronger to realize the full economic and social benefits of that intellectual property.”

“Even with NC State, Duke, UNC, we’re 20th,” Waters said. “Even with Research Triangle Park, we’re 20th. … We are punching below our weight class.”

Similar NC efforts

The state has funded several entities over the years with goals similar to NCInnovations, albeit at far lower funding levels.

During former Gov. Pat McCrory’s administration the state started its Venture Capital Multiplier Fund, tapping unclaimed property for funding. It was a $60 million fund overseen by the Treasurer’s Office, but it’s fully invested, meaning there’s no money for new investments.

It’s managed by a consulting firm called Hatteras Venture Partners, where Bob Ingram, a well known North Carolina businessman who died in March, was a general partner for more than 15 years. Ingram was also a founding board member for NCInnovation.

The Treasurer’s Office also oversees the pension plan for state employees, which has almost $114 billion in it. Within that there is a $500 million innovation fund targeting companies with connections to North Carolina, but it is also fully invested. It’s also managed by an outside firm, GCM Grosvenor.

The state also created a nonprofit organization in the 1990s called NC IDEA, which was seeded by a $29 million return on a start up the state invested in previously. That fund targets rural and underserved businesses with an annual budget of about $4.5 million, according to president and chief executive Thom Ruhe.

Ruhe supports NCInnovation’s plan and said it would keep North Carolina “on par” with a half dozen states “doing things at similar scale and greater.”

“The opportunity and the need is far greater than the capacity that we have right now,” Ruhe said. “We turn away so much opportunity with every grant cycle.”

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North Carolina

Former North Carolina, Arkansas QB Jacolby Criswell signs with surprising school

Published

6 hours ago

January 21, 2025

Press Room

Former North Carolina, Arkansas QB Jacolby Criswell signs with surprising school

North Carolina transfer quarterback Jacolby Criswell has signed to play for East Tennessee State in 2025, On3’s Pete Nakos confirmed. He spent four total seasons in Chapel Hill and will have one year of eligibility remaining.

Criswell played the first three seasons of his college career with the Tar Heels before transferring to Arkansas ahead of 2023. He played one year in Fayetteville before deciding to come back to North Carolina ahead of this season.

Criswell didn’t begin as the starter this past season but took over after Max Johnson went down with injury. He finished the year with 2,459 yards and 15 touchdowns to six interceptions.

This story will be updated.

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North Carolina

North Carolina among 18 states suing to stop Trump’s order blocking birthright citizenship

Published

14 hours ago

January 21, 2025

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North Carolina among 18 states suing to stop Trump’s order blocking birthright citizenship

WASHINGTON, D.C. (WITN) – Attorneys general from 18 states sued Tuesday to block President Donald Trump’s move to end a decades-old immigration policy known as birthright citizenship guaranteeing that U.S.-born children are citizens regardless of their parents’ status.

Trump’s roughly 700-word executive order, issued late Monday, amounts to a fulfillment of something he’s talked about during the presidential campaign. But whether it succeeds is far from certain amid what is likely to be a lengthy legal battle over the president’s immigration policies.

North Carolina is one of the 18 states challenging the executive order. Attorney General Jeff Jackson is asking the court to invalidate the executive order and stop it from being implemented.

“This executive order is a straightforward violation of the Fourteenth Amendment, which guarantees citizenship to all people born on U.S. soil. For over a century, this principle has been upheld by the Supreme Court and remains a bedrock of our constitutional framework,” said Jackson.

Attorney General Jackson says the Constitution leaves no room for reinterpreting this matter.

“As Attorney General, my role is straightforward as well: to defend the Constitution. That’s why I’ve joined this lawsuit, to uphold the rule of law and preserve the rights that have defined our nation for generations,” said Jackson.

Here’s a closer look at birthright citizenship, Trump’s executive order and reaction to it:

What is birthright citizenship?

Birthright citizenship means anyone born in the U.S. is a citizen, regardless of their parents’ immigration status. People, for instance, in the United States on a tourist or other visa or in the country illegally can become the parents of a citizen if their child is born here.

It’s been in place for decades and enshrined in the 14th Amendment to the Constitution, supporters say. But Trump and allies dispute the reading of the amendment and say there need to be tougher standards on becoming a citizen.

What does Trump’s order say?

The order questions that the 14th Amendment extends citizenship automatically to anyone born in the United States.

The 14th Amendment was born in the aftermath of the Civil War and ratified in 1868. It says: “All persons born or naturalized in the United States and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside.”

Trump’s order excludes the following people from automatic citizenship: those whose mothers were not legally in the United States and whose fathers were not U.S. citizens or lawful permanent residents; people whose mothers were in the country legally but on a temporary basis and whose fathers were not citizens or legal permanent residents.

It goes on to bar federal agencies from recognizing the citizenship of people in those categories. It takes effect 30 days from Tuesday, on Feb. 19.

What is the history of the issue?

The 14th Amendment did not always guarantee birthright citizenship to all U.S.-born people. Congress did not authorize citizenship for all Native Americans born in the United States, for instance, until 1924.

In 1898 an important birthright citizenship case unfolded in the U.S. Supreme Court. The court held that Wong Kim Ark, who was born in San Francisco to Chinese immigrants, was a U.S. citizen because he was born in the country. After a trip abroad, he had faced denied reentry by the federal government on the grounds that he wasn’t a citizen under the Chinese Exclusion Act.

But some advocates of immigration restrictions have argued that while the case clearly applied to children born to parents who are both legal immigrants, it’s less clear whether it applies to children born to parents without legal status.

What has the reaction to Trump’s order been?

Eighteen states, plus the District of Columbia and San Francisco sued in federal court to block Trump’s order.

New Jersey Democratic Attorney General Matt Platkin said Tuesday that presidents might have broad authority but they are not kings.

“The president cannot, with a stroke of a pen, write the 14th Amendment out of existence, period,” he said.

Connecticut Attorney General William Tong, a U.S. citizen by birthright and the nation’s first Chinese American elected attorney general, said the lawsuit was personal for him.

“The 14th Amendment says what it means, and it means what it says —- if you are born on American soil, you are an American. Period. Full stop,” he said. “There is no legitimate legal debate on this question. But the fact that Trump is dead wrong will not prevent him from inflicting serious harm right now on American families like my own.”

Not long after Trump signed the order, immigrant rights groups filed suit to stop it.

Chapters of the American Civil Liberties Union in New Hampshire, Maine and Massachusetts along with other immigrant rights advocates filed a suit in New Hampshire federal court.

The suit asks the court to find the order to be unconstitutional. It highlights the case of a woman identified as “Carmen,” who is pregnant but is not a citizen. The lawsuit says she has lived in the United States for more than 15 years and has a pending visa application that could lead to permanent status. She has no other immigration status, and the father of her expected child has no immigration status either, the suit says.

“Stripping children of the ‘priceless treasure’ of citizenship is a grave injury,” the suit said. “It denies them the full membership in U.S. society to which they are entitled.”

In addition to North Carolina, New Jersey and the two cities, California, Massachusetts, Colorado, Connecticut, Delaware, Hawaii, Maine, Maryland, Michigan, Minnesota, Nevada, New Mexico, New York, Rhode Island, Vermont, and Wisconsin joined the lawsuit to stop the order.

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North Carolina

Tropical Storm Helene destroyed nearly 1,000 homes in NC, FEMA maps show

Published

22 hours ago

January 21, 2025

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Tropical Storm Helene destroyed nearly 1,000 homes in NC, FEMA maps show

Tropical Storm Helene destroyed nearly 1,000 homes when it tore through Western North Carolina Sept. 27, maps from the Federal Emergency Management Agency show.

The maps, which show verified damage to homes as of Jan. 7, were presented to the Buncombe County Board of Commissioners at its Jan. 16 budget retreat.

In Buncombe County, Helene destroyed 340 homes, according to the maps. More than 170 were owner-occupied, while the remaining were rental properties.

The maps also show how many homes across the state sustained major damage and how many require repairs so residents can move back in.

According to the maps, 2,360 homes suffered major damage. Nearly one-third were rentals. Additionally, nearly 30,000 homes require habitability repairs, according to the maps. More than 6,000 of those homes were occupied by renters.

The number of damaged homes verified by FEMA is significantly lower than initial estimates from the state. According to a Dec. 13 damage needs assessment compiled by the N.C. Office of State Budget and Management, more than 73,000 homes were projected to be damaged, the majority of which were expected to be single-family and manufactured homes, and duplexes. In total, the state is estimating nearly $13 billion in residential damage alone.

The Citizen Times requested updated damage maps from FEMA on Jan. 17.