C a R O L I N a on Overhead Receipts Rain Tax Falls on Towns All the President’S Children
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• Doing a Number • Colleges Overboard on N.C. Schools C A R O L I N A On Overhead Receipts Rain Tax Falls on Towns All the President’s Children Volume 12, Number 6 A Monthly Journal of News, June 2003 Analysis, and Opinion from JOURNAL the John Locke Foundation www.CarolinaJournal.com www.JohnLocke.org Basnight Faction Orchestrated Pipeline Project, Bonds Senate leader drove Ethanol entrepreneur legislation that favored was considered a threat nonprofit over companies to Basnight’s pet project By PAUL CHESSER By PAUL CHESSER Associate Editor Associate Editor RALEIGH RALEIGH taxpayer-funded natural-gas pipe- n his pursuit to build ethanol plants in line project for eastern North Caro- eastern North Carolina, DFI Group Alina, at the center of a government IPresident William Horton says he un- conspiracy alleged by a Raleigh business- wittingly got on the wrong side of the most man, was facilitated through legislation powerful politician in the state. pushed by State Sen. President Pro Tem Economic developers’ enthusiasm over Marc Basnight and steered to the control of Horton’s promise to bring jobs and a mar- his friends. ket for locally grown farm products was William Horton, president of The DFI tempered by his deals with outsiders to Group, has sought unsuccessfully to build deliver natural gas to his proposed plants. ethanol plants in eastern North Carolina for Horton attempted to work with South more than 20 years. He claims that since Carolina-based gas company SCANA Cor- 2000, associates of Basnight have obstructed poration and Texas-based El Paso Merchant his plans to build plants in Martin and Energy Corp. to deliver liquefied natural Beaufort counties because Horton was per- gas to the plants. Meanwhile, Senate Presi- ceived as an obstacle to the Basnight faction’s dent Pro Tem Marc Basnight promoted pipeline project. friends at the Albermarle Pamlico Economic In 1998 voters approved, by a 51 per- Development Corporation in their effort to cent to 49 percent ratio, $200 million in get up to $200 million in taxpayer-funded bonds to extend natural-gas pipelines to 22 bond money to build a pipeline in the east. unserved counties in the state. However, the weight of Basnight’s in- Horton explores ethanol in the east fluence apparently enabled political allies in eastern North Carolina to manage $188.3 In early 2000, APEC and partner CP&L million of the available funds. None of the requested $44.2 million in bond funds for money is likely to be paid back because the the beginning phase of their project in north- bond legislation doesn’t require it, and be- Workers install the natural-gas pipeline along U.S. 64 east of Williamston. eastern counties. At the same time, Horton cause the pipeline project isn’t expected to was planning the first of three proposed be economically feasible for decades, if ever. rided the move as political patronage be- North Carolina Natural Gas Inc. Still, the ethanol plants at a site near Williamston in cause Basnight waged a “blatant campaign” company did not provide natural gas to 17 Martin County. During the process, Horton Utilities Commission’s influence to get Owens on the commission. Owens of those counties because they lacked a was introduced to Rick Watson, president added fuel to the fire by saying, “I have sufficient number of potential, mainly in- of North Carolina’s Northeast Partnership, Political groundwork for the pipeline earned my right to the trough.” dustrial, customers. which shared its offices and staff with APEC. was laid in 1995, when Basnight sought to But Owens’s name resurfaced for the In the early 1990s, state legislators cre- Horton discussed with Watson road and get his own choices appointed to the seven- position again two years later, and his nomi- ated financing incentives for local natural- infrastructure improvements to the site of member Utilities Commission. The gover- nation won legislative approval despite gas companies to extend service into un- the proposed plant. nor officially nominates board candidates. more criticism. The salary for the job was served areas. The legislature also passed Access to natural gas was crucial to One nominee was Basnight’s brother- $97,388 a year. “use it or lose it” legislation in 1995, the Horton’s plans. Horton had reached a pre- in-law, Bobby Owens, a power in state poli- Another Basnight ally, former state Sen. same year Basnight tried to get Owens on liminary agreement with SCANA to ex- tics. Owens had been the chairman of the Richard Conder of Rockingham, won an the commission. The bill, sponsored by Rep. plore the extension of a pipeline into east- Dare County (Basnight’s home) Board of appointment to the commission in 1997 as Bill Owens, D-Elizabeth City, another ern North Carolina to serve the ethanol Commissioners. He also ran former Gov. well. Members of the commission serve Basnight ally, required all franchisees to plants. Little did he realize, however, that Jim Hunt’s eastern N.C. office. eight-year terms. provide natural gas to at least part of the the SCANA project would pose a threat to Basnight wanted Hunt to appoint unserved counties by July 1, 1998, or else the fledgling APEC-CP&L venture. Owens to the Utilities Commission in 1995, North Carolina Natural Gas they would lose their rights to the territo- DFI’s efforts to connect a SCANA pipe- but Owens withdrew from consideration ries. line to its plants repeatedly faced obstacles. after an uproar ensued over of his lack of Over time since the 1960s, the commis- experience. Critics, including editorial writ- sion was gradually awarded exclusive fran- ers of The News & Observer of Raleigh, de- chise rights for northeastern counties to Continued as “NCNG Forced Out,” Page 3 Continued as “Horton,” Page 3 NC Should Spend Gas, Car Taxes On. The John Locke Foundation NONPROFIT ORG. Contents 200 W. Morgan St., # 200 U.S. POSTAGE Only Roads 52% Raleigh, NC 27601 PAID Other Items, Too 42% RALEIGH NC PERMIT NO. 1766 Not Sure 6% Calendar 2 State Government 3 Education 6 Higher Education 10 Local Government 14 Books & the Arts 18 Opinion 20 % of N.C. Respondents in Oct. 2002 JLF Poll Parting Shot 24 C A R O L I N A Contents ON THE COVER lic school lands or tax funds from being di- have become yet another excuse for cities JOURNAL vided between religious sects or denomi- and towns to raise taxes. Page 14 • A taxpayer-funded natural-gas pipeline nations. The amendment failed, but today project for eastern North Carolina, at the such provisions exist in 37 state-level con- • N.C. Department of Transportation offi- center of a government conspiracy alleged stitutions. Page 8 cials are examining the possibility of re- by a Raleigh businessman, was facilitated building Interstate 95 through toll collec- by State Sen. President Pro Tem Marc • As North Carolina heads into the compli- tions under a federal pilot program, but it Richard Wagner Basnight and steered to the control of ance phase of the No Child Left Behind edu- will be several years before anyone pays to Editor friends under his direct influence. Page 1 cation law, accountability experts must de- drive on the interstate. Page 15 cide which students can legitimately be ex- cluded from testing. Page 9 • An interview with Fern Shubert, state Paul Chesser, Michael Lowrey NORTH CAROLINA senator from Union County. Page 17 Donna Martinez, Associate Editors HIGHER EDUCATION • U.S. Rep. Frank Ballance, D-1st, has come THE LEARNING CURVE under scrutiny because hundreds of thou- • Last year schools in the University of Karen Palasek, Jon Sanders sands of taxpayer dollars went to a non- North Carolina system received $123.6 mil- • Reviews of All the President’s Children: Tri- Assistant Editors profit counseling center he started, but the lion in “overhead receipts” from federal re- umph and Tragedy in the Lives of America’s organization has failed to file reports re- search grants, which state legislators would First Families by Doug Wead, and The New quired by state and federal law. Page 5 like to see go to the general budget. Page 10 White Nationalism in America: Its Challenge Andrew Cline, Roy Cordato, To Integration by Carol M. Swain. Page 18 Charles Davenport, Ian Drake, EDUCATION • The latest case championed by the North Tom Fetzer, Nat Fullwood, John Gizzi, David Hartgen, Carolina Chapter of the Institute for Justice • A review of Bountiful Harvest by Thomas Summer Hood, Lindalyn Kakadelis, • For a man whose passion is statistics, Dr. involves two cherished traditions in the R. DeGregori, and a look back at Ayn Rand’s George Leef, Kathryn Parker, William Sanders has devoted much of his state, freedom and sports. It also concerns The Fountainhead. Page 19 Marc Rotterman, R.E. Smith Jr., career to education, and now has spent the a rapidly evolving form of journalism: Jack Sommer, John Staddon, last 21 years putting both together with his online news media. Page 11 OPINION George Stephens, Jeff Taylor, unique student evaluation method. Page 6 Michael Walden, Karen Welsh • Unethical behavior is rampant on college • An editorial on the record of Mike Easley Contributing Editors •The success in the Supreme Court for campuses and in society today, the director as governor. Page 20 voucher advocates hinged in large part on of the Kenan Institute for Ethics at Duke Jenna Ashley, Nathan Clark, the legal concept of true private choice. University said at an luncheon sponsored • Michael Walden tells how North Caro- Hans Hurd, Paul Messino Now that the federal question has been an- by the John Locke Foundation on April 28.