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State auditor questions future of little-known agricultural loan program

State Auditor Beth Wood is questioning whether an obscure agricultural loan program run by the state should continue, saying it's operating at a loss and issuing few new loans.

The N.C. Agriculture Finance Authority issued four new loans totaling $622,670 in 2012 and one new loan for $590,000 through the end of February. All told, the agency administers 47 loans with seven staffer, down from 169 loans at its peak in 2004, state auditors found.

It has operated at a loss for four straight years at about $270,000 a year.

Auditors questioned whether the authority was "cost effectively meeting its legislative mandate, saying if the authority is abolished by the legislature, it could return $1 million to the state's bank account.

Les Merritt submits letter of resignation from Ethics Commission

State Ethics Commission member Les Merritt submitted his letter of resignation Friday, addressing concerns about a conflict with his work as a N.C. Department of Health and Human Services contractor.

"I have certainly enjoyed my tenure and consider serving on the Ethics Commission a privilege," he wrote. "The work of the commission is very important and I know all the commission members and staff are honorable people, serving the state of North Carolina for the right reasons.

"In that regard, I do not want even the 'appearance of a conflict of interest' to cast a shadow on the integrity of the commission," he concluded.

Merritt Resignation Ltr 9-27-13.pdf

Audit finds lack of verification in JDIG grants

The state Department of Commerce issued $20 million in job-creation grants in 2010 without performing audits or onsite visits to confirm that the companies met the requirements of the grants, according to a state audit released Monday.

The department instead relied on withholding records from the Department of Revenue to confirm the accuracy of the wage and tax information being reported by companies, while also requiring companies to submit and certify annual reports.

“Relying on a company that is receiving grant payments to confirm that the company is in compliance with the grant requirements does not meet the definition of an objective and independent process,” the auditor’s report concluded.

State Audit: Rural Center lacks oversight, pays president 'unreasonable' salary

The taxpayer-funded N.C. Rural Economic Development Center has failed to provide proper oversight of millions in state money and pays its longtime president an “unreasonable” salary of $221,000, state auditors say in a report released Wednesday.

Auditors also found that leaders of the nonprofit Rural Center have put nearly a quarter million dollars into a special account to pay president Billy Ray Hall, 65, a severance when he leaves the rural agency, which emphasizes its efforts to help poor and struggling pockets of the state.

The severance account for Hall was started in 2003 and board members have put $10,000 to $40,000 a year in it since, according to the audit. The severance account held $241,856 on June 30, 2012.

That money for Hall is above and beyond regular retirement account contributions that he also has received, according to the audit. The auditors did not comment on the severance account, but mentioned it in a footnote.

Morning Memo: GOP fundraising, Rural Center face major questions

GOP ABANDONS PLEDGE FOR TAX REFORM: From Rob Christensen's column: Tax reform in North Carolina died last week. RIP. …The House has rolled out its plan, and the Senate has rolled out an alternative plan. Those plans focus almost exclusively on cutting corporate and personal income taxes, rather than revamping the 1930s tax code. So tax reform is dead. In its place, we have large tax cuts, the size and shape of which will be worked out in a House-Senate conference committee. Cutting taxes is in the Republican comfort zone. Reforming the tax code is not. Full story.

LOBBYING FIRM ACTED AS TILLIS, McCRORY FUNDRAISING CONDUIT: The giving by the sweepstakes industry also puts a spotlight on fundraising efforts organized by McGuireWoods. Multiple contributions from sweepstakes operators were often recorded on the same days, with the largest group coming on May 16, 2012, when the Tillis campaign tallied a total of $60,002 from 19 individuals. Days earlier, on May 10, McGuireWoods held a fundraiser at its Raleigh office attended by Payne and lobbyists from other organizations. Harry Kaplan, a McGuireWoods lobbyist, said he invited clients who were interested in meeting with Tillis to talk about the issues they represented. They could also make campaign contributions, which some did, he said.

***More on Tillis, McCrory campaign fundraising, the sweepstakes industry and questions clouding the N.C. Rural Center and top Republicans below in the Dome Morning Memo.***

Civitas requests investigations of state elections agency

UPDATED: The Civitas Institute is requesting the North Carolina attorney general, state auditor, secretary of state and State Board of Elections investigate state election staffers for engaging in political activity, alleging possible criminal violations, in sweeping complaints filed Tuesday.

The conservative think tank also wants inquiries into the conduct of Bob Hall, the director and lobbyist for Democracy North Carolina, an advocacy organization that often butts heads with Civitas.

In the four letters, Civitas President Francis De Luca identifies three areas for investigation that it uncovered in more than 5,000 emails obtained through public records requests. (Read them below.)

Morning Memo: A new Dix deal, fallout from Brawley letter

A NEW DIX DEAL: Gov. Pat McCrory and Raleigh Mayor Nancy McFarlane will hold a joint news conference this morning to discuss the Dorothea Dix lease. A state House committee approved a new version of a bill Wednesday that would revoke Raleigh’s disputed lease on the Dorothea Dix property near downtown. The compromise bill comes with a sweetener that has the support of city leaders and the governor’s office.

But the question is whether the Senate will go along. Sen. Ralph Hise, a Spruce Pine Republican, said the Senate remains committed to its version of the bill. "As we've clearly seen, the lease was entered into by the state illegally, it is substantially different than what even the Council of State had approved, and it's in the bad interest of the state," he said. "If they need to start, we'll start from scratch. But you can't begin on a foundation that's that weak."

GOP LAWMAKERS REACT TO BRAWLEY LETTER: “If you have a disagreement, that's not how one handles it and I'm saddened," said Rep. Craig Horn, a Weddington Republican. "We don't need distractions." Other Republican lawmakers refused to talk about it. "I don't have anything to say," said House Majority Leader Edgar Starnes. Rep. Ruth Samuelson, a Charlotte Republican and top GOP leader, said she was surprised by the letter read on the floor. "I thought it was an inappropriate use of the floor by Rep. Brawley." If anything, Samuelson said, "I think it will help bring us together more because it doesn't represent the majority of the caucus."

***Thanks for reading the Dome Morning Memo -- congrats to the NCGA team on the big win against South Carolina last night. More North Carolina political news below. ***

State audit investigation leads to firing

A state auditor's investigation into a Durham Technical Community College employee working a private business on the state's dime led to the employee's firing, a report released Wednesday revealed.

The investigation began with a call to the auditor's fraud hotline describing an assistant registrar at the college's Center of the Global Learner who ran a bird supply store and sold Amway products during business hours.

Morning Memo: Art Pope lecture protested; major bills moving at legislature

STUDENTS TO PROTEST ART POPE LECTURE: UNC-Chapel Hill students are plannning a "teach out" demonstration Tuesday outside a campus building where Art Pope, the governor's state budget director is a guest lecturer. Pope will speak to Faculty Chairwoman Jan Boxhill's 12:30 p.m. philosophy course, according to The Daily Tar Heel. Pope is a major donor to the university but also to ttea party groups and others that aim to elect Republican candidates. Students are upset about the proposed cuts to the university in tthe budget Pope drafted. Interestingly, Gov. Pat McCrory earlier this year questioned the use of state money for liberal arts courses such as gender students and philosophy.

TODAY AT THE STATEHOUSE: House and Senate lawmakers will consider a corporate income tax cut and school safety measure Tuesday with major legislation begins making progress as the legislalture nears crunch time. The House Education Committee will meet at 10 a.m. and the Senate  Finance Committee will meet at 1 p.m. Both chambers convene at 2 p.m. The House is still waiting to vote on a measure to background check many receiptients of public assitance and prohibit some from getting federal aid. Two major groups will hold rallies at the legislature to push back against the Republican majority.

McCrory hosted a breakfast this morning with advocates for the state's historically black universities and colleges -- the groups most fearing any potential study of consolidation of UNC system campuses. Later in the day, the governor will meet with the Legislative Black Caucus, a group that has been very critical of his agenda.

***Thanks for reading the Dome Morning Memo. Much more North Carolina politics below.***

Morning Memo: McCrory, Foxx square off as legislature takes fast track

UPDATED: IS IT MAYOR PAT OR GOVERNOR PAT? Gov. Pat McCrory told two city of Charlotte staff members this week that state money for the light-rail extension to UNC Charlotte could be at risk if the city builds a controversial streetcar, according to a memo sent Thursday. Without the N.C. Department of Transportation’s $250 million grant, the $1.1 billion Lynx Blue Line extension can’t be built. As Charlotte mayor, McCrory, a Republican, championed light rail, which was one of his signature accomplishments. But he vehemently disagrees with using city property tax dollars to build a streetcar, and used the meeting in Raleigh to relay a message to City Council, according to the memo.

FOXX 'OUTRAGED' OVER WHAT HE CALLS A THREAT: “It’s particularly alarming that he would choose to deliver messages to city staff, particularly messages that contain threats," said Charlotte Mayor Anthony Foxx, a Democrat and potential challenger to McCrory in 2016. “He is governor of the state, and there are a host of issues – tax reform, health care. Why the governor would choose to place focus on a transit project, particularly one contained in a transit plan that he voted to implement makes no sense,” Foxx said.

***This is the Dome Morning Memo a tipsheet on N.C. politics. Click "Read More" for other headlines and news.***

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