INSIDE THIS ISSUE: DEPARTMENTS Conflicts North Carolina 2 C A R O L I N A Education 10 arise in SECU Higher Education 13 Family House Local Government 16 Books & the Arts 20 fundraising Opinion 24 Parting Shot 28 effort /6 A MONTHLY JOURNAL OF NEWS, ANALYSIS AND OPINION JOURNALFROM THE JOHN LOCKE FOUNDATION October 2009 Vol. 18. No. 10 STATEWIDE EDITION Check us out online at carolinajournal.com and johnlocke.org Justice Department overrules Kinston Biotech Incentives Bill Called Wasteful voters on elections Measure also raises BY LEE RAYNOR Contributor concerns about KINSTON ity leaders appear unwilling to constitutionality challenge a U.S. Department of BY DAVID N. BASS Justice ruling that overturned a Associate Editor Ccitizen vote changing municipal elec- tions from RALEIGH partisan to n economic incentives bill eli- nonpartisan. gible for consideration in the The DOJ General Assembly’s short ses- vetoed the Asion next year would waste taxpayer change, say- dollars on risky investments and run afoul of the state constitution, lawmak- Under the proposed legislation, the president of the N.C. Biotechnology Center, Nor- ing its effect ris Tolson, would serve as chair of the board of directors for a nonprofit responsible would be ers and constitu- for administering the incentives. (CJ photo by David N. Bass) “strictly ra- tional experts say. cial.” Even some proceeds of the state’s tobacco settle- public-private partnership is nothing Acting legislators who ment, would bankroll the project ini- but a giveaway to venture capitalists Assistant Attorney General Loretta normally support tially. … and taxpayers are going to get stuck King wrote in a letter to Kinston offi- economic incen- To fund the loans, the company with the bill,” said Rep. George Cleve- cials that, “Removing the partisan cue tives to businesses would sell equity certificates (similar land, an Onslow County Republican, in municipal elections will, in all like- are leery of the proposal. to shares of ownership) to investors. during debate Aug. 10 on the House lihood, eliminate the single factor that The measure, known as the Life The goal: spur economic growth and floor. allows black candidates to be elected Sciences Development Act, would es- create jobs in a down economy. “The bottom line is we’d be bet- to office.” She is the same DOJ official tablish a private company to make But critics say the bill gives tax- ter off spending that money on other who recommended that the federal taxpayer-funded loans of up to $30 payers the short end of the stick by us- things, such as reducing taxes for busi- government “drop voter intimidation million apiece to biotechnology and ing public money to offer wealthy ven- nesses and individuals as opposed to charges against members of the mili- pharmacy startups in North Carolina. ture capitalists a risk-free outlay with a giving breaks to various sundry indus- The Golden LEAF Foundation, a non- hefty upside. Continued as “Justice,” Page 3 profit created in 1999 to distribute the “I really think that this so-called Continued as “Biotech,“ Page 2 AARP Losing Members Over Health Care Debate PAID BY KAREN MCMAHAN When asked what reasons seniors Contributor are giving for leaving AARP, Garner RALEIGH, NC U.S. POSTAGE PERMIT NO. 1766 NONPROFIT ORG. RALEIGH said he personally reads and answers he debate over health care re- the e-mails and that “the only issue is form has had an unexpected con- health care.” sequence for the nation’s largest Garner summarized the respons- Tmembership lobbying organization for es as ranging “from polite to obscene. seniors, AARP. People are quitting, be- Most of the drops are coming more from the very conservative side, the ul- lieving the group has embraced a par- the president’s health care reform pro- traconservative membership. They are tisan, left-wing agenda. Officials with posals. racist. It seems to me they are mostly the organization deny AARP has taken “I don’t have any specific num- sides. But those officials appear uncon- the ones who are sore that the election bers for North Carolina,” Garner said, didn’t turn out their way.” cerned about the defections. “but with 40 million members in the In a recent phone interview with “A lot of these people [drop- organization, the number of people ping out] just aren’t very sophisticated Carolina Journal, Bill Garner, commu- leaving isn’t that many. I don’t mean about what they understand,” Garner nications director for the North Caro- to downplay it because we don’t want added. “They just sound like what lina office of AARP, confirmed recent to lose anyone, but I can tell you that they hear on talk radio.” reports that 60,000 to 70,000 seniors the number of renewals is outpacing nationally had canceled their member- people leaving by 40-to-1, and new The John Locke Foundation 200 W. Morgan St., #200 Raleigh, NC 27601 ship since July 1 over concerns about memberships are 8-to-1.” Continued as “AARP,” Page 4 PAGE 2 OCTOBER 2009 | CAROLINA JOURNAL C A R O L I N A Biotech Incentives Bill Called Wasteful, Risky Continued from Page 1 JOURNAL tries,” said Sen. Neal Hunt, R-Wake, in a telephone interview. Hunt was one of Rick Henderson only six lawmakers to vote against the Managing Editor measure in the Senate. The provision that has stoked the Don Carrington ire of opponents would give private Executive Editor investors a taxpayer-funded credit if their investment in a biotech startup David N. Bass, Mitch Kokai didn’t perform as well as expected. Michael Lowrey Foes of the proposal say the credits Associate Editors would have taxpayers assume at least part of the venture capitalists’ risk. Jana Benscoter, Kristen Blair “We’re pretending to be the cred- Roy Cordato, Becki Gray it default swap agency, and it’s bad Paige Holland Hamp, David Hartgen Sam A. Hieb, Lindalyn Kakadelis business,” said House Minority Leader George Leef, Karen McMahan Paul Stam, a Wake County Republican. Donna Martinez, Sarah Okeson He compared the legislation to federal Karen Palasek, Lee Raynor bailouts of the auto industry. The N.C. Biotechnology Center (above), headquartered in Durham, has received $200 Marc Rotterman, Jim Stegall Supporters, however, say biotech million from taxpayers since 1984. (CJ photo by David N. Bass) George Stephens, Jeff Taylor incentives are a good way to stimulate Michael Walden, Karen Welsh North Carolina’s economy, create new requested by a bipartisan group of leg- Biotech performance Hal Young, John Calvin Young islators. employment, and expand the tax base During debate, several legislators Contributors — and that the bill would do all three. “It says explicitly in the consti- tution that the power of taxation will touted the track record of biotech in- “This bill is exactly what we need centives, pointing to the N.C. Biotech- Laura Barringer, Jacob Burgdorf to be doing in this time when we so never be contracted away, but they’ve Adrienne Dunn, Marissa Farell nology Center, which is headquartered badly need jobs across this state,” said empowered this company to issue tax Ben Goldhaber, Hans Kist in Durham but has offices across the House Majority Leader Hugh Holli- credits in a way that’s binding on the Caitlin McLean, Alex Pitsinos, state, as evidence of state funding pay- man, a Davidson County Democrat. state,” Kay told CJ. Sara Riggins, Andrew Schreiber ing off. Sponsors saw any chance of pass- Kay also said the constitution Editorial Interns “I think the track record of our ing the bill this year evaporate in the “flatly prohibits” lawmakers from Biotechnology Center is one that we Published by waning hours of the General Assem- granting legislative power to a private The John Locke Foundation bly’s session. The House passed an entity, and that it requires a vote of the should be proud of,” Holliman said. 200 W. Morgan St., # 200 earlier version of the measure in April people if the General Assembly tries to The Biotechnology Center, creat- Raleigh, N.C. 27601 overwhelmingly; the Senate altered the grant its credit to private entities. ed in 1984, is a nonprofit organization (919) 828-3876 • Fax: 821-5117 bill and followed suit in early August. Sponsors tried to bypass that that’s received more than $200 million www.JohnLocke.org But lawmakers, washed out from snag by inserting a provision specify- from taxpayers to fund biotech projects six weeks of tough budget negotiations ing that neither the private company in the state. Jon Ham nor a qualifying biotech startup “has The center claims to have created Vice President & Publisher and tense negotiations with Gov. Bev- erly Perdue over spending priorities, any power to pledge the credit or tax- 55,000 jobs at 500 companies, but Tri- ing power” of the state. But that addi- angle Business Journal reported in 2005 John Hood couldn’t reach a compromise on the Chairman & President House and Senate versions, and opted tion is meaningless since it contradicts that the center’s biotech investment to put off a vote until next year. “the whole purpose of the bill,” which portfolio had lost 41 percent of its val- Bruce Babcock, Herb Berkowitz A recurring theme during a half- is to lend the credit of the state, Kay ue over the previous two years. The Charlie Carter, Jim Fulghum hour of debate in the House Aug. 10 said. value of its investments had fallen by Chuck Fuller, Bill Graham was whether the bill infringed on the Transparency is another problem $11.23 million since 2002, the newspa- Robert Luddy, Assad Meymandi state constitution. That question has for critics.