JOHN HOOD COLUMN: Taxpayers deserve better – The Stanly News & Press

RALEIGH – In 2021, the North Carolina General Assembly passed a budget that funded key state functions, encouraged critical repairs and renovations of state facilities, built savings reserves and lowered tax rates on personal and corporate income.

John Hood

Overall, it was a prudent and balanced plan. In a column published in mid-November 2021, I called it an example of “constructive conservatism” in action, although I noted that I was “not convinced by all the investment projects funded by the new budget.”
I was referring to a long list of one-time grants to municipalities, universities and private organizations included in the budget proposal and the accompanying committee report. Such “buyout requests” are nothing new. And each project has passionate supporters. But the further lawmakers move away from state funding of state institutions – or from approving capital pots allocated to municipalities according to a set key – the less defensible their actions become.
That, at least, is the theoretical argument against election giveaways. I’ve made it many times before. Thanks to the intrepid reporting of the Raleigh News & Observer and the Assembly, we now know that the 2021-22 budget contained a particularly egregious example.
Hidden on page H-54 of the committee report was a two-year, $25 million grant for “the U.S. Performance Center in Kannapolis to meet capital needs.” That’s all the provision says.
Founded by sports enthusiasts Ike Belk and David Koerner, the US Performance Center is not a charity but a private company. It operates the Human Performance Research Institute on the campus of the University of North Carolina at Charlotte, where it trains athletes and conducts research.
The Assembly says the founders’ medium-term goal is to convince dozens of Olympic sports bodies to locate their activities in Charlotte. Their long-term goal is for the Carolinas to host the Summer Olympics in the future.
You may think that’s a bold, exciting goal. You may think that’s a pipe dream. Let’s put that aside for the moment and consider a simpler, more immediate question: Should North Carolina taxpayers be forced to fund the operation of a private company?
Yes, I know the budget provision limited the use of state funds to “capital needs.” But that didn’t happen. According to N&O, the U.S. Performance Center spent $67,000 of the money on hotel bills (including $1,300 at the Ritz Carlton), $55,000 on car loans, $34,000 on meals and entertainment, and more than $13,000 paying late taxes and penalties to the Internal Revenue Service.
And the folks behind the U.S. Performance Center didn’t settle for $25 million. They also created a nonprofit, the North Carolina Sports Legacy Foundation, and secured another $30 million in state funds in the 2023-25 ​​budget passed last year. The nonprofit had previously attracted only a small portion of private donations (up to $167,500 a year) before raking in that $30 million. Of that amount, The Assembly reported, the nonprofit paid the U.S. Performance Center $9.8 million for “consulting services” and spent $2.9 million on salaries and benefits.
Like the much larger NCInnovation, which is also funded almost entirely by taxpayers’ money due to a special arrangement and is rarely discussed in public, these two interlinked companies have essentially become creatures of the state, albeit with even less accountability.
The state budget office is reportedly reviewing the U.S. Performance Center’s spending on its “capital grants,” and while no Olympic sport has yet moved its headquarters to Charlotte, anything is possible in the future.
However, it’s not premature to ask whether state lawmakers should have funded these projects in this way. Was there really no better use for the $55 million in taxpayer money? Was there no public facility, building or infrastructure that needed to be renovated? For example, an estimated $20 billion maintenance backlog on our local water and sewer systems appears to have knocked North Carolina out of first place in CNBC’s rankings of the best states for business.
The General Assembly has screwed up on this issue. Taxpayers deserve better stewardship of their hard-earned money.

John Hood is a board member of the John Locke Foundation.