Opinion: Taxpayers Deserve Better Than This

By John Hood

RALEIGH — In 2021, the North Carolina General Assembly enacted a budget that funded core state responsibilities, instigated critical repairs and renovations of government facilities, built up savings reserves, and slashed tax rates on personal and corporate income.

Overall, it was a prudent and balanced plan. In a column published in mid-November 2021, I called it an example of “constructive conservatism” in action, although I did note I was “not sold on all the capital projects funded by the new budget.”

I was referring to a long list of nonrecurring grants to localities, campuses, and private organizations tucked into the budget bill and the accompanying committee report. Such “pork barrel” spending is hardly novel. And every project has passionate advocates. Still, the farther legislators stumble away from state funding for state-owned facilities — or from approving pots of capital funds to be awarded to local governments by specified formula — the less defensible their handiwork becomes.

That is, at least, the theoretical argument against pork-barrel spending. I’ve made it many times. Now, thanks to intrepid reporting by the Raleigh News & Observer and The Assembly, we know that the 2021-22 budget contained an especially egregious example.

Buried on page H-54 of the committee report was a two-year, $25 million grant to “the US Performance Center in Kannapolis for capital needs.” That’s all the provision states.

Created by sports enthusiasts Ike Belk and David Koerner, the US Performance Center is a private company, not a charity. It operates the Human Performance Research Institute on the campus of the University of North Carolina at Charlotte, where it trains athletes and conducts research. The founders’ medium-term goal, reported The Assembly, is to convince dozens of the boards governing Olympic sports to base their operations in Charlotte. Their longtime goal is for the Carolinas to host a future Summer Olympics.

You may think this a bold, exciting goal. You may think this a pipe dream. For now, set that aside and consider a simpler, more-immediate question: should the taxpayers of North Carolina be compelled to fund the operations of a private company?

Yes, I know the budget provision confined the use of state funds to “capital needs.” That’s not what happened, however. The N&O reported that the US Performance Center spent $67,000 of the money on hotel bills (including $1,300 at a Ritz Carlton), $55,000 on vehicle loans, $34,000 on meals and entertainment, and more than $13,000 to pay late taxes and penalties to the Internal Revenue Service.

Moreover, the folks behind the US Performance Center didn’t stop at $25 million. They also created a nonprofit entity, the North Carolina Sports Legacy Foundation, and secured another $30 million in state money in the 2023-25 budget passed last year. The nonprofit had previously attracted only a trickle of private contributions (topping out at $167,500 a year) before snagging that $30 million. Of that amount, reported The Assembly, the nonprofit paid US Performance Center $9.8 million for “consulting services” and spent $2.9 million on salaries and benefits.

Like the much-larger NCInnovation — also funded almost entirely by taxpayers through a special provision, with little public discussion — these two related entities have essentially become creatures of the state, though with even less accountability.

The state budget office is reportedly scrutinizing the US Performance Center’s expenditure of its “capital” grant. And while no Olympic sport has yet moved its headquarters to Charlotte, I suppose anything is possible in the future.

It’s hardly premature, however, to question whether state lawmakers ought to have funded these projects the way they did. Was there truly no better use of $55 million in taxpayer money? No public facility, building, or infrastructure that needed refurbishing? For example, an estimated $20 billion maintenance backlog in our local water and sewer systems appears to have knocked North Carolina out of the top spot on CNBC’s ranking of best states to do business.

On this matter, the General Assembly blew it. The taxpayers deserve better stewardship of their hard-earned dollars.

John Hood is a John Locke Foundation board member. His latest books, Mountain Folk and Forest Folk, combine epic fantasy with early American history (FolkloreCycle.com).