Heard on the Street Posted: Thursday, December 3rd, 2009 Rand problems surfacing
There was plenty of speculation that the reason Senate Majority Leader Tony Rand stepped down from his post was because he was under investigation. “Hogwash,” Rand said. Maybe not. The accusation of insider trading by Rand from the former CEO of a company in which Rand is chairman of the board may be the first hint of future problems. This one comes from an obviously disgruntled former employee but at least one other employee appears to substantiate the charges.
The Carolina Journal, in a separate article, links Rand with questionable real estate transactions on Bald Head Island involving former Governor Mike Easley. According to Don Carrington`s report Rand purchased beachfront property from Mike Easley then transferred it to another owner, a company that had built a house for Easley. Easley had just been elected Attorney General and helped broker exclusions for beach erosions laws for homeowners of Baldhead. The story gets complicated but is worth reading. Bottom line: Easley is further implicated in conflict-of-interest insinuations and Rand plays a questionable role in the transactions. Read the story.
Memo to Governor Perdue: Get ready for another letter from Joe Sinsheimer requesting that you withhold your nomination of Rand to chair the Parole Commission until after these and other charges are cleared.
Who will succeed Rand?
We reported to you that Senator Rand and other heavyweight Cumberland Democrats were in favor of elevating Representative Margaret Dickson to Rand`s Senate seat. Now we hear serious discussion about the wisdom of this move. Dickson has some seniority and is widely respected among House members. If she leaves the House, that clout vanishes. She would be another freshman in the Senate and would be replaced by a freshman in the House. Cumberland County will not likely enjoy the prominence in the near future they have enjoyed in the past, but more Democrats are beginning to see they could get a double whammy if Dickson gets the Senate seat. If Dickson doesn`t get the seat we hear Coy Brewer, power in the Cumberland Democratic Party, favors David Boliek, Jr.
Traffic snarl
Until now Governor Perdue`s leadership has not been marred by serious missteps, but seasoned observers are describing her administrations` handling of the Charlotte I-485 loop as the “amateur hour.” Perdue had promised Charlotte she would expedite the long-delayed finalization of the loop around the city. To fulfill that political promise Perdue was desperate to find a solution. But her desire to play to the Charlotte crowd superseded the need for due diligence.
Borrowing $250 million using Garvee bonds is a practice North Carolina has been reluctant to employ. Essentially you are getting money today that must be repaid through the reduction of future federal funds. Some might call it “borrowing from Peter to pay Paul.”
But the project would require some $50 million in funding from the contractor who wins the bid to build the road. This is where the wheels come off this buggy. In her haste, Perdue didn`t vet this properly with her State Treasurer and Attorney General. Her office and DOT went so far as to say that both had signed off on the concept. Now we know it isn`t true.
Treasurer Janet Cowell`s office had trouble with the concept from the get-go. Further, Attorney General Roy Cooper`s office says there`s no way they approved the idea. There are Constitutional considerations to address in addition to determining whether this is even good public policy.
Now Perdue may be hung out to dry. One fact is inescapable. This project is going to get delayed yet again, despite what the Governor says. She would be very foolish to push ahead on a project in which her Treasurer and Attorney General are not 100 percent in agreement. Further, Perdue would be wise to get approval from the legislature and the Council of State if she wants to make sure this doesn`t come back to bite her.
Look for more discussion on this topic on week`s NC SPIN.
Hoyle not running
We keep hearing the Senator David Hoyle is saying he won`t run again next year. The Senate could face some interesting changes next session. Rand is gone. Jenkins will be getting a serious challenge in the primary. R.C. Soles is in trouble. Wilmington`s Boseman isn`t running. Senator David Weinstein (Roberson and Hoke Counties) has resigned to become Highway Safety Program Administrator. Republican Senator Jim Jacumin is retiring from his seat representing Burke and Caldwell Counties. Don Davis, former Mayor of Snow Hill, will face another stiff challenge from former Representative Louis Pate. These are just the ones we can rattle off the top of our heads. There will be others who decide to retire or get serious challenges. Bottom line: The Senate is likely to see more new faces than normal in January 2011.
Escheats fund in danger
When property goes unclaimed it is placed in the Escheats Fund administered by the State Treasurer. Our Constitution says money from this fund can be used to provide scholarships for needy and worthy residents for higher education. But this fund is being drained rapidly and is in jeopardy of drying up. Action is needed to halt the outflow.
Read more in My Spin “Going to the Escheats Well Too Often.”
Unemployment debts grow staggering
On top of the other crises in our state, claims on unemployment are forcing the state to borrow as much as $20 million per day from the federal government. Employers pay into the fund, but unemployment rates have not been raised in proportion to the claims and North Carolina currently owes $1.4 billion it has borrowed from the federal government. That number is expected to reach $2 billion by year`s end and the hole could get even deeper. There is no evidence of a surge in employment that will stop the drain of borrowings. North Carolina has no clue how to repay these debts but is hoping that the feds will forgive some or all of it.
Look for more discussion on this issue next week on NC SPIN.
ABC System needs changing
Face it, our ABC system of controlling alcohol is antiquated and in need of reform. Further proof came when the Wilmington Star-News reported that the Administrator of the New Hanover County ABC system earned $232,000 last year, considerably more than the Governor, Council of State members and Supreme Court Justices. Reluctant to provide the salary information it was quickly determined that salaries across the state varied widely, calling some to say that a uniform salary structure needs to be implemented. A growing number, however, are calling for privatization of the system. One of the latest was the editorial in the Jacksonville Daily News.
Look for us to discuss this more fully on this week`s NC SPIN.
New DA appointed
President Obama agreed to nominate Senator Kay Hagan`s recommended candidate to become U.S. Attorney. He is Charlotte attorney Thomas G. Walker. Before Walker can take office he must be confirmed by the Senate, a process that could get complicated because the nomination can be blocked by one or both of our U.S. Senators.
At question is whether current U.S. Attorney George Holding will be allowed to conclude investigations he has conducted concerning former Governor Mike Easley and former U.S. Senator John Edwards. Hagan has made it clear she wants Holding to conclude his work on these cases but so far there`s no assurance this will happen. Today`s Charlotte O has good comment on the issue. Could be interesting to see if one or both our Senators block the nomination because of this matter.
Tax reform not going anywhere
People who have been attending the joint legislative hearings regarding reform of North Carolina`s tax code are becoming more convinced little significant action will be taken anytime soon. Pity.
Banks want to pay back the feds
Bank of America announced today they want to repay the $45 billion the feds gave them, supposedly so that they can hike executive compensation without interference.
But Raleigh`s Capital Bank has a much different message. CEO Grant Yarber made a very impressive presentation to several groups in the Triangle over the past several days to announce that the homegrown community bank is planning a public offering of $55 million in stock.
Yarber says now is the time to raise money so as to take advantage of great new opportunities. The money could be used to pay back federal TARP funds, could be employed to take advantage of new opportunities from troubled financial institutions or to expand services and grow in existing markets.
Capital believes this economy provides great opportunity for them to expand and they are convinced that the North Carolina market has a bright future ahead. Yarber listed, in compelling fashion, all the reasons why community banks were good investments and good neighbors. The spirit of optimism and sound business acumen displayed in these presentations was impressive to seasoned investors who liked what they heard.
We must disclose (and do so proudly) that Capital Bank is an advertising underwriter for NC SPIN, helping to provide closed captioning for viewers.
Polls show support for video poker taxing
A new poll by Public Policy Polling showed that 87 percent of those surveyed would support taxing video poker over increased sales or personal income tax increases. More than two-thirds said it was unfair to grant video gaming rights to the Cherokee Indians and not to citizens of all counties.
William Thevaos, president of Entertainment Group of North Carolina said, “Video gaming is here in North Carolina, and if you want accountability and transparency, then you need to regulate it and tax it.
The poll showed 77 percent supported regulating and taxing the video gaming industry.
People don`t trust politicians
Speaking of polls, the Elon Poll basically told us what we suspected; people don`t trust politicians. 61 percent said they believe corruption in North Carolina politics is more widespread than it was 10 years ago and two-thirds believe corrupt behavior is becoming more common. While they didn`t trust politicians they generally supported their own Senator or Representative.
When asked about taxes, here is what the poll reported:
How fair is our current tax system at the state level?
Not at all fair: 21 percent
Not too fair: 27 percent
Fair: 41 percent
Very fair: 2 percent
How fair is our current tax system at the local level?
Not at all fair: 18 percent
Not too fair: 24 percent
Fair: 48 percent
Very fair: 3 percent
On the fairness of specific taxes:
Gas tax: 64 percent say “not fair” or “not at all fair”
Tobacco tax: 33 percent say “not fair” or “not at all fair”
Retails sales tax: 29 percent say “not fair” or “not at all fair”
Alcoholic beverage tax: 24 percent say “not fair” or “not at all fair”
Hear more about the poll on this week`s NC SPIN.
Investigate Blue Cross?
19 Democrat and 1 Republican legislators have signed a letter asking that Blue Cross and Blue Shield of North Carolina be investigated because of a campaign the company conducted to defeat the proposed public option in health care reform.
The letter suggests that the company is engaging in blatant political campaigning, perhaps violating statutes for nonprofits in attempting to sway legislation. The letter asserts that insurance premiums were used to pay for a political campaign.
So far there is no word whether such an investigation will be undertaken. ");
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