Summary:
- A proposed legislative committee on NC government efficiency would be a welcome development
- Many of North Carolina’s state budgets have been crammed with waste, political cronyism, and fraud
- Voters should be doubtful that lawmakers will go after their own pet projects
The new Republican Speaker of the North Carolina State House, Rep. Destin Hall, recently announced the formation of a new select legislative committee focused on government efficiency. Cast as a sort of state-level analogue to Elon Musk’s “Department of Government Efficiency” in the Trump White House, this new state committee will be tasked with identifying and eliminating waste and fraud in state government spending.
Almost any observer would agree that such an effort is exactly the kind of oversight North Carolina needs right now. But this new committee will have its work cut out for them. After 14 years of uninterrupted Republican control of all state budgeting and spending choices, confronting the significant amount of fraud and waste in the state budget will call for enormous courage to push back on partisan loyalty. The committee must start by examining some of the legislature’s own recent spending decisions that cry out for public scrutiny. With billions in taxpayer dollars at stake, the success or failure of this committee could have long-lasting implications for North Carolina’s fiscal health.
Badly needed oversight
The North Carolina legislature currently already has more than 15 domain-specific oversight committees spanning everything from transportation to agriculture to public safety. There is also the highly controversial joint legislative committee on government operations, known as “GovOps,” which Republican lawmakers empowered with sweeping and invasive investigatory powers just last year. No explanation has been offered about why government efficiency is presumably not a focus of these existing committees’ time.
Nevertheless, the creation of yet another new committee focused on government efficiency could be a great idea to meaningfully improve how North Carolina spends its taxpayers’ money. Every dollar lost to waste or fraud is a dollar taken from taxpayers’ pockets that is not spent on the essential services like public schools, healthcare, or infrastructure that people need. With the state facing serious fiscal challenges in the coming years, rooting out wasteful spending should be a top priority for lawmakers of both parties.
But for this committee to succeed, it needs to look at some obvious answers staring lawmakers in the face. Waste and fraud is simple to find and even well-documented in the spending choices of North Carolina’s legislative majority. Will lawmakers looking for “efficiency” have the courage to name it?
NCInnovation: A $500 million black hole of taxpayer money
An obvious candidate for scrutiny by the new efficiency committee should be NCInnovation, an early-stage venture capital fund that received roughly $500 million in direct funding from taxpayers in the 2024 state budget. (If $500 million sounds large, bear in mind that was a greatly scaled-back figure from the $2.5 billion over 10 years the group’s lobbyists initially requested.) The initiative, organized by a group of large bank and pharmaceutical corporation CEOs, plans to make early-stage investments in startups that are too risky for corporations to make themselves.
The group operates with minimal transparency, and despite the massive public investment, the fund’s operations and finances remain largely secret from the public. Taxpayers do not receive any equity in the startups their dollars fund. The secrecy surrounding NCInnovation makes it mostly impossible to evaluate whether taxpayers are getting good value for their investment. For a program funded entirely with public money, this lack of transparency is deeply problematic, and smacks more of a slush fund.
There are many obvious questions swirling around such a program. How much influence do prominent politicians in the legislature have over what projects get funded? Do they, or their affiliates, have connections to programs NCInnovation invests in?
Private School Vouchers: A Case Study in Weak Oversight
One opportunity for immediate impact by the new efficiency committee would be the state’s massive expansion last year of the private school voucher scheme. This program, which will funnel nearly half a billion taxpayer dollars to tuition subsidies at private schools, launched with almost no oversight mechanisms in place.
It has been well-documented how North Carolina’s private school voucher program is crammed with waste and fraud. “Ghost students,” and even whole “ghost schools,” claim millions more in taxpayer funds than they actually deserve under state law. NCSEAA, the state agency charged with administering the program, appears to provide little or no accountability over the schools they send money. The agency itself even admits it has no ability to gauge educational benefit. By design, the program itself actively resists meaningful oversight, making it nearly impossible to verify that taxpayer money is being spent as intended.
North Carolina’s private school voucher program essentially invites fraud, and fraudsters have come knocking. The “cockroach principle” applies here – where fraud is so easily identified with publicly available data, much more serious and widespread fraud is almost certainly below the covers. A serious commitment to government efficiency must include strengthening oversight of such a massive new spending program.
Wolves guarding the henhouse?
Speaker Hall has tapped fellow Republican State Reps. John Torbett (Gaston county) and Keith Kidwell (Caldwell county) as chairs of the new efficiency committee. These are curious additions. John Torbett himself has been at the center of multiple controversies for giving away millions of dollars in no-bid contracts to politically connected firms with no clear taxpayer benefit: both $1.5 million to the MyScholar company in 2023, and $6.3 million to Plasma Games through 2024.
North Carolina faces significant fiscal challenges in the next two years. Nonpartisan budget analysts forecast a looming deficit, while scheduled tax cuts will further reduce state revenues. At a time when lawmakers claim budgets are too tight to raise teacher salaries and the State Health Plan is teetering on collapse, the efficiency committee should demand greater visibility into how over a billion dollars of taxpayer funds are being spent – or even if venture capital investing and private school subsidies are appropriate roles for taxpayer dollars at all.
North Carolina taxpayers rightly expect that their hard-earned dollars are spent wisely, with proper oversight, and without obvious political corruption. The new “efficiency committee” has an opportunity prove its seriousness by starting with these clear examples that violate that principle. Will Speaker Hall and Reps. Torbett and Kidwell have the courage to do so? Voters will soon find out.
