New Messenger
Delivering Some
Familiar Themes

The following is the condensed transcript of an interview conducted Dec. 4 by Editor Steve Tuttle in the attorney general's conference room:

Congratulations on your election.
Thank you. I'm glad it's over and I'm happy that we have six weeks to put together an administration, counting Thanksgiving and Christmas. It's been pretty hectic.

Why do you think you won?
I believe the electorate in North Carolina was focused on local issues and let the national race take on a life of its own. The critical issue to North Carolinians was education. They understand that we have to improve public education in order to improve the economy and the quality of life of the state. And I think they felt like I was more committed to fixing public education than my opponent.

How are you prioritizing the tasks of putting together an administration?
The first order of business is to put together the governor's office itself, your administrative staff and budget, communications and legislative pieces. And that's what we're all working on right now. After that you begin looking at the different agencies and determining who will be the Cabinet secretaries, who will (head) the boards and commissions. But you have to get that good nucleus of those 30 to 40 people in the governor's office in place first.

You have expressed some reluctance about moving your family into the Governor's Mansion. Why?
Actually, the question came up the day after the election. When I was asked, “are you moving into the Governor's Mansion,” the first thing I thought was I haven't discussed this with my son, who is 15. And I just tried to deflect the question until I could have an opportunity to discuss it with him. I found out that he had already pulled up (information about the Mansion) on the Internet, and his comment to me was he didn't see a bedroom that looked like his stereo would match it. We plan to make the move. Right now, though, they are assessing the amount of renovation they will have to do. They think it may take 10 months. I understand there is a problem with the HVAC system.

What is your philosophy about the state's role in economic development?
The state definitely has a role, and that was the position I took when I argued the Maready case, that government is involved whether intentionally or not in the loss of many North Carolina jobs with NAFTA and GATT, and the government has a role in helping businesses expand to fill that void. So I do believe in smart and targeted investments to recruit and expand industry. I think that we do have to focus more on the future and less on trying to retain the jobs we've had in the past or even the present. I want to see us investing more in information technology, not only in recruiting new industry but also in preparing our workforce. Our education system is going to have to perform better, our standards will have to be higher and we're going to have to use the community college system more in the future to make certain that every citizen can participate in the new economy. If we do that we can build a high-tech economy for North Carolina, but we have to make that commitment first.

Do you think the Bill Lee Act, the state's centerpiece economic development law, needs to be changed to accomplish those goals?
I believe the act does or can do what it was intended to do, if we can get resolved different interpretations by the Department of Revenue and the Department of Commerce on what the rules are. There is simply no valid reason for there to be a dispute between those two agencies, and I will make sure they work together. But beyond the Bill Lee Act, North Carolina must be more innovative and we have to have more flexibility in other areas in order to compete with even our neighboring states. So I don't look at it so much as a replacement of or an amendment to the Bill Lee Act as much as I do a new interpretation, with more flexibility options. There are a lot of ways to create incentives without dealing with taxes. My first preference always is investing in the workforce. We have the system in place — the community college system is a fantastic benefit to the state and is a great economic development tool. So (my priorities are) first, invest in your workforce; and second, invest in your infrastructure. There are a lot of businesses and industries that will do more here or will come here if we're willing to do something about infrastructure — roads, natural gas expansion, Internet access. (I also believe that economic development policy should be) performance-based rather than promise-based. We should set up an economic development model based on what we think the company can do and set targets for them to hit. That way you know the state is getting it's money worth.

Would you clarify what you mean about the disagreements between Commerce and Revenue on the Bill Lee Act?
It's an SIC code issue. Commerce takes the position that if you put a Family Dollar Store in Hyde County, for example, the jobs are created there, but Revenue takes the position the jobs are created in Charlotte, where the company is based. It's a disincentive to go into the rural areas where it really should be an incentive. It's a more restrictive interpretation by Revenue, and it's just a matter of getting the two departments together.

What other practical steps can the state take to boost economic development in our rural counties?
The first thing we must do is to recognize that our urban centers still have great potential to grow and that they are the economic engine that fuels economic growth across North Carolina. From there you can extrapolate that we have to grow as one state, not as two economies, otherwise the rural economies will continue to lag and will be a drag on the urban areas. Then you have to look at putting into place Internet access for the entire state, a better system of roads, equity in education. Education is the key, especially in these rural areas that don't have the tax base. They are in a downward spiral right now. Natural gas is important; 40 percent of the businesses we talk to won't locate where there's not natural gas. Water and sewer will be critical to a lot of the rural counties. We have to recognize that we have only one driver, and that's the I-85 corridor. Most of the new jobs created in the state have been in the Triangle and Charlotte and they have been high-tech, information technology jobs. It's been an investment in the future that's brought these urban centers these successes. But we don't have any driver in the east or west, and the state can't continue to rely on just one driver to develop the economy of the entire state. Our neighbor to the south has recognized that and they're moving (to create three economic development zones) — along the Piedmont, along the coast as well as the traditional (interstate corridors). You're seeing a lot of that in other states and we need to get moving on that here in North Carolina.

How could we create such an economic driver for Eastern North Carolina?
Part of it is goes back to the items we mentioned (earlier). Why is it that business won't go to the east or the west or any of our 89 rural counties? Every time (the answer) is going to be not just infrastructure problems but a prepared workforce. I chair the Commission on Business Laws and the Economy, something that I created, What we found is we need to remove impediments (to business growth). (That's why we created) the Business Court so it's easier for businesses to get quick, predictable answers to legal questions. That's going to become more and more important. I have been in the board rooms and talked to leaders about expanding here, even in textiles. And we talk about what the state might be able to do to encourage them and every time it comes back to a prepared workforce. If you don't have a prepared workforce you don't have enough incentive dollars in the state to attract industry here. That's why I think education will be the key not only on the K-12 level but also in preparing the workforce after they're out of school. We're going to have to do more of that, and that's why it's so important that the (higher education) bonds passed. Over the past several years the state has channeled a great deal of its business growth efforts through the seven regional economic development commissions. What do you think of that approach? I think it's important for the regions to come together, to work for a particular region rather than its own county or city interest. We've seen a lot of turf battles that didn't need to exist where you couldn't even conduct a meeting in one city because people in another city wouldn't come. So promoting regionalism is good in that sense. Having said that, I think it's important for every region to recognize that they are a part of the same state and every region has to work together with the others. The Corporation for Economic Development rated us “A” in 1997, “A” in 1998 and “C” in 1999. In 1999 they cited our lagging rural economies. So Charlotte, Raleigh, Greensboro are all getting hurt when Madison County and Edgecombe are underperforming. So the state has a role to play. Sometimes that role is just to get out of the way.

Given the emphasis on regionalism, does the state need to have a strong Department of Commerce?
I want the state to have a very aggressive Department of Commerce that is focused on the future, that's focused more on research and development. We lag behind most of the country in research and development. I do think that, especially now after Hurricane Floyd (and the other natural disasters that have hit the state), it's going to take a central authority to make certain that we bring those counties together and to make certain we don't rebuild on the mistakes of the past.

What's your view on the range of issues collectively known as “smart growth”?
I think it's about creating choices for people in areas where they have problems with urban sprawl. It's going to take a commitment on the part of the local governing authorities to control the growth. It's not something that we can do out of Raleigh. That doesn't mean the state can't work with the urban areas on transportation and other infrastructure items. But it does mean the state can't impose its will on the people in an urban area unless they're willing participants. We've seen that example in mass transit when it was floated in the Triangle. The first group that didn't want to participate was the airport, which pretty much shut it down. There are still opportunities out there but you have to have Morrisville talking to Cary and participating with Apex and Chapel Hill and Durham and Raleigh.

Where does education rank in your list of priorities?
It ranks No. 1, 2 and 3. We are very fortunate in North Carolina that the business community has always supported public education as strongly as it has. We have been committed to it for years and the last eight years we have made improvement every year. But to make dramatic improvement we will have to take some bold steps. We need to reduce class size in K-3 to 18 and below and try to put together a program for at-risk 4-year-olds. We know from all the data that (if you do that) those students will perform better, not only in K-3 but also throughout their career. That's something they recognized out in California. They started losing businesses in Silicon Valley and they started reducing class sizes and they held on to those businesses. That is the one way we know we can improve public education dramatically. I think the people are ahead of the politicians on this issue. I think the people will commit to a plan that has a proven track record across the county, of reducing class sizes, because they know that it is an investment with a great benefit not only to the quality of life of people but also to the economy.

How can the state afford to reduce class size with the budget is as tight as it is?
The state budget not only is tight, we know we have a shortfall coming. The question is how big the shortfall will be. There are several options. One is that now that South Carolina has passed a lottery, we now are the only state in the country that plays the lottery and gives away the proceeds. We're leaving three or four hundred million dollars a year on the table that could be invested in education, reducing class sizes, for pre-kindergarten programs for at-risk 4-year-olds. With all these lottery states surrounding us, we're the hole in the doughnut. Reducing class size can be done in a number of ways. It's not just automatically reducing every K-3 class to 18 or below. You can prioritize within that system and either reduce (class size) in low-performing schools or reduce (class size) in core subjects. We have 40,000 teachers currently certified who are not teaching. Many of them just wanted to have a family but would love to teach two or three periods a day. Bringing them back (would allow you to take) two classes of 27 and make it three classes of 18 in reading, math and science. By recruiting back those teachers (for such part-time duties), the cost would be much less. If you just got the teachers and not the aides you could reduce the class size for somewhere around $120 million. If you funded the entire project (to hire enough full-time teachers to reduce K-3 class size to 18), it would run around $200 million. I think that's especially important with the removal of social promotion, that we make certain that we give every child an opportunity to pass. Failing them does not make us successful. We know achievement goes up with lower class sizes. We have a $7.5 billion budget in education and within that budget there has to be some funds available for this project, even if it's just for (some additional teachers working part-time teaching reading, math and science) to begin with.

Should Smart Start be the vehicle for delivering the intervention services for at-risk 4-year-olds that Judge Manning required in his ruling in the Leandro case?
The Leandro case isn't yet complete, and one question that hasn't yet been answered is: who pays? We have to wait and see. “At-risk” hasn't been defined, and I would rather wait until we get the entire ruling. But we have to recognize is that Smart Start and pre-kindergarten academic programs are two different things. What we have come to appreciate is that early childhood development is critical, not only to education but to reducing crime and other worthy social causes. I don't think you can replace one program with the other and feel in good conscience that you have done justice to the state's future.

So you believe that it's just not practical or workable for Smart Start to provide these services to at-risk 4-year-olds.
Smart Start does that in some places. It gives some money to Bright Beginnings in Charlotte and it certainly could be used as a tool. What I would like to see the state move toward is a different program for at-risk 4-years-olds that would be in addition to (Smart Start). There could be some overlap and those savings would come to the state to help run both. I believe they are two different programs focused on two different things. I would rather see the state policymakers, legislators, State Board of Education, making these decisions rather than judges. Judge Manning is a good judge, a good friend, but the judiciary in general is not trained or equipped to manage the school system any more than the prison system.

How do you think serving as governor will change you as a person?
I hope it doesn't. I've been able to see myself mature throughout my adult career and I think the most important thing is to see how so many things are inextricably intertwined. If you want lower crime, educate. I learned that at the DA's office. If you want economic development, educate. If you want a higher quality of life, educate. At the end of the day there's not any single silver bullet that solves all our problems. That's the challenge. And it will be the challenge in good budget years and bad budget years. We will have to find ways to be innovative and creative in the tough years. I hope at the end of four years I can look back and see that we were aggressive, that we improved education, that we reduced class size and that we were able to develop economically in a smart way for the future rather than replacing the jobs we're losing with the jobs we know we're going to lose in three or four years. If that happens I will be satisfied with where I am.

COPYRIGHTED MATERIAL. This article first appeared in the January 2001 issue of the North Carolina magazine.

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IN HIS
OWN WORDS


“I think that we do have to focus more on the future and less on trying to retain the jobs we've had in the past or even the present. I want to see us investing more in information technology, not only in recruiting new industry but also in preparing our workforce. Our education system is going to have to perform better, our standards will have to be higher and we're going to have to use the community college system more in the future to make certain that every citizen can participate in the new economy.”

When I was asked, “are you moving into the Governor's Mansion,” the first thing I thought was I haven't discussed this with my son, who is 15. And I just tried to deflect the question until I could have an opportunity to discuss it with him."

There are a lot of businesses and industries that will do more here or will come here if we're willing to do something about infrastructure — roads, natural gas expansion, Internet access.

We have to recognize that we have only one driver, and that's the I-85 corridor. Most of the new jobs created in the state have been in the Triangle and Charlotte and they have been high-tech, information technology jobs. It's been an investment in the future that's brought these urban centers these successes. But we don't have any driver in the east or west, and the state can't continue to rely on just one driver to develop the economy of the entire state.

I have been in the board rooms and talked to leaders about expanding here, even in textiles. And we talk about what the state might be able to do to encourage them and every time it comes back to a prepared workforce. If you don't have a prepared workforce you don't have enough incentive dollars in the state to attract industry here.

Now that South Carolina has passed a lottery, we now are the only state in the country that plays the lottery and gives away the proceeds. We're leaving three or four hundred million dollars a year on the table that could be invested in education.







We will have to find ways to be innovative and creative in the tough years. I hope at the end of four years I can look back and see that we were aggressive, that we improved education, that we reduced class size and that we were able to develop economically in a smart way for the future rather than replacing the jobs we're losing with the jobs we know we're going to lose in three or four years.