(LONG-TERM ECONOMIC ADVANCEMENT FOUNDATION)
WILLIAM CLARKE DAN GERLACH
CHAIRMAN OF THE BOARD PRESIDENT
Update on Effect of Governor's Budget Proposal on Golden LEAF
Dear Friends of Golden LEAF:
Yesterday, the Governor released his state budget plan for the next two fiscal years. I regret to inform you that the plan would divert all of the funds that the Golden LEAF Foundation would normally receive beginning in April 2014 and thereafter. The Governor's budget recommendation is only the beginning of the process that now begins in earnest in the General Assembly. Here are some of the points that I will be making to our policymakers:
- The pressing public policy goal for all is to facilitate the creation of jobs and private investment. Golden LEAF recently reported to the General Assembly that our grants have helped create or retain almost 48,000 jobs, resulted in private investment of $2.9 billion, added almost $300 million in new payroll per year, and directly assisted over 1.1 million North Carolinians. Those statistics are based on reports of what has happened, not merely what is hoped for. Why divert funds away from results?
The Golden LEAF work is relevant and responsive to the State's current priorities. For example, in every economic speech, there is discussion of the need to help businesses that cannot find qualified workers and to ensure that education and business communicate more effectively. The Foundation provided $8 million in support in the last year alone, and will do more in the next year, to community colleges that have shown the willingness and the evidence from businesses themselves that they have solid strategies to train workers to fill those vacancies. Diverting funds would limit Golden LEAF's ability to help grow the economy, and a growing economy is the cure to what ails our State.
- The diverted funds are not the only ones lost. Golden LEAF receives funds from the Master Settlement Agreement with cigarette manufacturers (not tax dollars) and invests them. Over time, Golden LEAF has earned almost $300 million in investment income used to support the majority of our grantsmaking. $300 million - and not one dime from taxes or fees or anything else.
This is not about the leverage and multiplier of private or even public-sector dollars that economic development agencies all talk about. This is actual new money that Golden LEAF brings to the table to help meet the needs of our rural, tobacco-dependent and economically distressed communities. If the proposal to divert all incoming funds is successful, over the next 10 years, the Foundation would be denied not only the $650 million in payments, but the opportunity to earn $250 million more in investment earnings - a total loss of almost $900 million in proceeds to serve the needs of the communities that need the most help with economic transition.
- Other states who have used their funds to balance the budget cannot describe how it is used. This move would have North Carolina join the ranks of states that have used their Master Settlement Agreement funds to patch budget holes, and that have little to show for that move. Golden LEAF can show how every dollar of the Master Settlement Payments have been used. Every grant that we have awarded can be found on our website, and we will remain focused on the mission of long-term economic advancement of our rural, economically distressed, and tobacco-dependent communities.
- The budget is in better shape than it was two years ago. Even during the recession of 2001 and the dramatic challenges of 2008-09, the Foundation invested more to help with economic recovery. Two years ago, North Carolina faced a $2.5 billion shortfall comparing revenues and expenditures. Given tough choices, the General Assembly acted to divert some, but not all, of the incoming Golden LEAF payments to help bridge that gap, and the Golden LEAF Board voted to provide these funds given the fiscal emergency.
Times are better now. While there are still challenges and the Governor understandably wants to be fiscally disciplined, it is difficult to understand why the Master Settlement Agreement payments from cigarette manufacturers - which are not tax dollars - should be taken away from their original intended purpose.
While Golden LEAF still has its endowment to help, the communities that we serve have limited resources, have higher unemployment, and face declining populations. The needs are great, and the vision to help use these funds for economic transition in the short and long-term remains righteous.
This is not a mere numbers game. This is about filling the gaps to help companies to grow and locate in North Carolina in the near term, to find ways for farmers to diversify and for their land to be more productive, and to build the future workforce and the modern infrastructure to lead to long-term economic advancement.
I thank you for whatever support you can offer in sharing how Golden LEAF has helped your community, and how there is much more to do together.
Dan Gerlach, President