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NC Loophole Rewards Stalled Grants

8:19 AM, Aug 2, 2013   |    comments
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2 Wants To Know is keeping an eye on millions of your tax dollars. This time it's state grants set aside to help people in North Carolina find jobs. And get this: those millions of dollars sat unused for years. So no use. No job creation. And if that doesn't catch your attention -  the organization responsible for carrying out those programs - The North Carolina Rural Economic Development Center - actually made extra money. You see they earned interest --- because they didn't spend the grant dollars.

It's all because of a state law which 2 Wants To Know first told you about last week. North Carolina allows non-profits receiving state grants to keep the interest generated off of those funds. But cities, counties and school districts that get state grants have to hand over every penny of interest to the state.

REDC board member Bob Luddy shared an internal document with 2 Wants To Know. It's a spreadsheet showing the status of every grant the Center committed to giving. The largely state-funded non-profit aims to sponsor projects which create jobs.

"What we found out is that money that was allegedly granted as far back as 2002 had not gone out yet," Luddy said.

The document details at least 29 projects and potential jobs that never saw the light of day.The grants included $800,000 for a renewable energy plant in Montgomery County, $20,000 for a storm water pond in the City of Trinity, and almost $30,000 for a new gas station in the small town of Marion. All together, the REDC never handed out more than $3 million as planned. That's $3 million mostly made up of your money.

"They absolutely did not happen, and the details on the spread sheet are very sketchy so no rational person could figure out what happened. There's no real explanation," Luddy said.

The REDC declined an on-camera interview. They said over the phone the money earmarked for the failed projects in the past will be reassigned to similar grants in the future. But here's the kicker. As those funds were carried over from year to year - they were earning interest. Interest the REDC can now spend any way it wants. The longer the money sits, the more the REDC makes in interest.

"It upsets me as a taxpayer, as a resident of North Carolina and someone that's very interested in the rural counties and their economic growth," Luddy said.

Of course there are many Rural Center grants that have made a difference. Last week we showed you the one funding a company's expansion in Randolph County help create 25 additional positions.
So the take away here is not whether the Center is doing a good or bad job. Rather it's about the way North Carolina law is set up right now.
The current law rewards non-profits holding onto state grant money because they can keep any interest they make.

The law applies to more than just the Rural Center. The Department of Commerce also gave grants to 77 other non-profits this year. We don't know if the same thing is happening at each of those charities. But unless the current law gets changed, we can't even begin to add up how much others might make off your tax dollars.

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