Under the Dome

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.***

UPDATED: TODAY AT THE STATEHOUSE: At 5 p.m., the seventh Moral Monday demonstration begins on Halifax Mall. Another large crowd and more arrests are expected. The Program Evaluation Committee will meet at 4 p.m. to consider which reviews to tackle next. Two favorites of Democrats are being considered: the UNC system and the Department of Public Instruction. The reviews are often the first step toward justifying a major overhaul. State Auditor Beth Wood is also expected to speak. The House Rules Committee will meet immediately after session on the House floor.

The House will vote on HB951 eliminating taxpayer checkoff money for political parties -- a provision that will seriously hurt the party out of power, Democrats. In the Senate, lawmakers will reject the House budget plan, setting up a conference committee and take a final vote on the governor's transportation plan. Gov. Pat McCrory will meet with freshman in the House GOP caucus at 1:30 p.m. behind closed doors at the mansion. The lawmakers are considered more conservative in their politics than some of its leadership and the governor.

MORE ON HOW GOP FUNDRAISING SPEED DATING: Tracy Colvard is not connected to the sweepstakes industry but was one of six McGuireWoods clients to attend the event. The lobbyist said it was an opportunity to educate the speaker on issues affecting his group, the Association for Home and Hospice Care of North Carolina. Colvard said he and his organization’s CEO, Tim Rogers, spent about 30 minutes with Tillis in a McGuireWoods conference room. They explained how their industry could benefit taxpayers by reducing Medicaid and Medicare expenses, and afterward he handed a $1,000 political action committee contribution to a Tillis campaign aide, Colvard said.

Other big days for sweepstakes contributions were Sept. 2, 2011, when Tillis brought in $27,200; March 3, 2012, when the McCrory campaign recorded $34,000; and Oct. 10, 2012, when (Senate leader) Phil Berger tallied $18,000. Those dates all followed McGuireWoods events.

McCrory requested that no contributions be made at a McGuireWoods event held Feb. 23, 2012, but some clients sent checks afterward, Kaplan said. Payne said he attended the event but did not talk to McCrory about fundraising or legislation. Full story.

SWEEPSTAKES GAVE MORE THAN PREVIOUSLY KNOWN: Sweepstakes operators, seeking legislation that would legalize their outlawed industry, have flexed their political muscle over the past three years, contributing as much money to N.C. candidates as large utilities. More than $700,000 in campaign contributions flooded the coffers of N.C. candidates since the beginning of 2010, according to data compiled by the watchdog group Democracy North Carolina. The most powerful players topped the list, with House Speaker Thom Tillis receiving the most money – about $127,000 – followed by Gov. Pat McCrory and Senate President Pro Tem Phil Berger, according to an analysis of the data by the Charlotte Observer and the News & Observer.

The biggest batch of (sweepstakes) contributions – about $60,000 – were recorded by the Tillis campaign on May 16, 2012, less than a week after McGuireWoods Consulting hosted a fundraiser for the speaker in Raleigh. McCrory and Berger also reported clusters of contributions after other McGuireWoods events. Full story.

POWERFUL LAWMAKERS, OFFICIALS GET RURAL CENTER CASH BOOST: Officially, the nonprofit N.C. Rural Economic Development Center awards “job generating” grants, funded by state taxpayers, to nondescript government agencies. … From the center’s files, other stories emerge: Legislators influencing where the money goes. People and businesses from across the political landscape getting in on the deals. Political money men benefiting from taxpayer cash, spent with little notice or scrutiny.

WHO GETS IT?: One of the biggest names: Discount store business Variety Wholesalers, whose CEO, Art Pope, is a well-known supporter of nonprofit groups that criticize taxpayer subsidies for businesses. A former Republican legislator, he’s now Gov. Pat McCrory’s budget director. One of the best connected: Bob Jordan, the former Democratic lieutenant governor who helped start the Rural Center and was a longtime board member. His company was recently part of a grant, but then backed out. One of the state’s new leaders: State Sen. Tommy Tucker, who pushed for $300,000 in Rural Center money to help develop a 14-screen movie theater complex in his district – 5 miles from where Interstate 485 loops around Charlotte. Tucker, a Republican from Union County, asked Rural Center leaders to ignore legislation that restricts the center’s spending, according to interviews and documents reviewed by The News & Observer.

Politics permeate the Rural Center, which a report in Saturday’s N&O showed has claimed to have created jobs that don’t exist and used millions to support big-box retailers, golf developments and restaurants. Full story.

Day 1 of the series -- RURAL CENTER JOBS CLAIMS EXAGGERATED: The N.C. Rural Economic Development Center … has used millions in taxpayer money to help build fast-food restaurants, golf resorts, discount stores and big-box retail outlets that include a Kohl’s in Southern Pines and a dozen Walmarts, records and interviews show. It spent $85,000 to help an electronic sweepstakes software company outfit a building in Greenville after lawmakers tried to shut the sweepstakes industry down.

It granted $350,000 for water wells in La Grange, about an hour southeast of Raleigh, saying the infrastructure would generate 35 full-time jobs at a new restaurant. The restaurant was a Bojangles’ that had already hired workers and opened its doors the next week; the wells were drilled six years later to solve a major water-capacity problem in the town.

Numerous Rural Center grants have led to claims of jobs being created – but where no or far fewer jobs exist, The News & Observer found after reviewing a sampling of dozens of projects. Bob Luddy, a Raleigh businessman appointed to the center’s board of directors two years ago by Republican Senate leader Phil Berger, said he has grown concerned and thinks the organization should be stopped from handling taxpayer money. “This is state money and should be administered by some state organization or state agency that the government or governor takes responsibility for and the General Assembly provides oversight of,” Luddy said. “Here’s what they do in a board meeting. They spend an hour and 15 minutes praising each other for the amazing work they’re doing. And they spend 10 minutes to just ram these grant resolutions through, maybe five minutes. There’s no discussion.” Full story.

LEADER'S SALARY IN QUESTION: Beginning last July, lawmakers put a restriction on a wide range of state-funded nonprofits, including the N.C. Rural Economic Development Center. They limited state money for the salary of nonprofit employees to $120,000. The Rural Center’s president, Billy Ray Hall, is paid a salary of $214,000, according to a report to the legislature. Tax filings, which include benefits such as health and dental insurance and a retirement plan, show his annual compensation is about $283,000. Full story.

HARSH WORDS: Senate leader Phil Berger’s chief of staff, Jim Blaine, received a message afterward from Dan Gerlach, Golden Leaf’s director. Gerlach wrote that he wished Golden Leaf had not been caught up in the final budget talks. Blaine responded that both the Rural Center and Golden Leaf are “engaged in gross pork-barreling, boondoggle ‘economic development,’ and political patronage.” Blaine wrote he is convinced Hall prays five times daily “as providence (and a few House members) seemingly deliver him in the final hour of each of his tribulations.” Hall disputed Blaine’s comments, calling them “false words.” Full story.

CENTER-FUNDED SHELBY PROJECT DEAD: The Villages of Hallelujah Acres was supposed to be a large mixed-use development on the outskirts of Shelby, with cottages, a chlorine-free pool, 1,000-seat amphitheater, organic orchards and the headquarters of a healthy living catalog and retail business run by the Rev. George Malkmus. Today, more than five years after the N.C. Rural Economic Development Center put $149,000 toward a sewer line to help make the project happen, its mostly grassy fields are dotted with hay bales, sliced up by roads that lead to dead ends. The Rural Center says it has created 20 jobs at Hallelujah Acres, though none exist there. The center doesn’t want the taxpayer money back.

GOP lawmakers use upgrades to help their charter school: It says it will allow a planned charter school to substitute for the jobs that were promised by Malkmus. Pinnacle Classical Academy is now rehabbing a vacant Hallelujah building, and it has plans to build a campus on the land that was once part of the “villages” project. The jobs switch came at the request of a state senator, Wes Westmoreland, a Republican. On General Assembly letterhead, he asked Rural Center President Billy Ray Hall to transfer the Hallelujah grant’s responsibility to Pinnacle. Westmoreland serves as vice chairman of the charter school. The letter was written in September, before he left the Senate. Full story.

JUST HOW MUCH CHANGE IS THE GOP MAKING -- Here's a glimpse: Since the 1940s, public school teachers who earn a master’s degree have earned more money as an incentive to teachers to become more expert in their fields. That is now on the legislature’s chopping block. Since 1985, North Carolina has banned the construction of jetties and terminal groins in an effort to prevent the New Jerseyfication of the state’s coastline. Now that is likely to change. In 1951, Gov. Kerr Scott helped push through a law extending unemployment benefits to 26 weeks. That will change this year, when a new law goes into effect, passed by the Republican legislature, that reduces benefits to a sliding scale of between 12 and 20 weeks.

Numerous programs, laws and initiatives started by Democratic governors and Democratic legislatures are now on political life support as the first unified Republican government in Raleigh in more than a century gives new scrutiny to what has gone before. Generations of programs involving education, the environment, health care, election laws and economic development are being eliminated or gutted in the budgets proposed by either Gov. Pat McCrory, the Senate or the House. Full story.

TRASH POLITICS: In 2007, the General Assembly passed tougher rules for new landfills, giving eastern North Carolina community activists worried about out-of-state trash getting shipped to their counties a victory over the waste industry. Now … rural activists and environmental groups are organizing again quickly after a bill moving in the Republican-controlled Senate could scale back many restrictions contained in the 2007 law. The law was passed when the legislature was led by Democrats.

DEJA VU: Changing the 2007 law would be politically sensitive for McCrory. His views on the legislation became the subject of an effective - McCrory would say extremely misleading - television ad against him during his first run for governor in 2008. Then-Lt. Gov. Beverly Perdue, the Democratic candidate for governor, ran a commercial that showed images of garbage bags and trash barges and a narrator saying McCrory wanted to let "New York and New Jersey dump their garbage in North Carolina." Perdue's campaign cited McCrory's comment that the 2007 law was an example of the kind of bill he would veto as governor. McCrory, then Charlotte's mayor, said the ad was untruthful. Full story.

WILL TAX BREAK LEAD TO TAX HIKE? Municipal leaders say the tax overhaul tentatively approved in the Senate last week would cut so much local government revenue that, to balance their budgets, they’d ultimately have to raise property taxes. Full story.

TAX HOLIDAYS ONE POINT OF HOUSE-SENATE DIVIDE: This could be the last year to take advantage of the state’s back-to-school sales tax holiday. A provision in the latest version of the Senate’s tax proposal eliminates the tax holiday and the state’s Energy Star tax holiday – effective next year. Full story.

TIM TYSON ON MORAL MONDAYS: Duke University researcher and author Tim Tyson responds to the governor about the Moral Monday protests. Tyson was arrested at one of civil disobedience events. From his guest column in the Winston-Salem Journal: "Gov. Pat McCrory dismisses his own constituents as “outsiders,” pleads for “peaceful demonstrations” and recently hid from children bearing public-education petitions as though they were a lynch mob. These homegrown “Moral Mondays” are about as edgy as Vacation Bible School, where many of us learned to sing “This Little Light of Mine.” The only way to make us more peaceful would be to send out Graham crackers, Hi-C and mats and declare naptime." Full op-ed.

EDUCATION PROFESSOR on teacher supplement: Op-ed in Sunday's N&O from Darrell Morris, professor of Reading Education at Appalachian State University: "Eliminating the salary supplement for teachers who earn master’s degrees in their areas of teaching will be disastrous for the state’s educational system – kindergarten through graduate school." Full op-ed.


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