A chance to rethink Golden Leaf

A chance to rethink Golden Leaf

- in Fitzsimon File

It looks like that regardless of who is elected Governor this November, significant changes are in store for the Golden Leaf Foundation. The General Assembly set up the Foundation almost ten years ago to distribute half of North Carolina's share of the 1998 tobacco settlement to help local economies that were heavily dependent on tobacco and related industries. 

The governor and legislative leaders appoint the Foundation's 15-member board that makes grants to local governments, schools and nonprofits across the state. Golden Leaf has given away almost $240 million since 2001. It receives roughly $70 million a year from the settlement with cigarette companies in payments that are scheduled to continue until 2025.

Last year, the Foundation gave away $34 million and made more than $100 million in investment income. The 2007 financial audit reported that Golden Leaf assets came to $720 million.

The Foundation has been attacked from all sides in recent years. The conservative think tanks and politicians say it's a political slush fund controlled by the state's Democratic leadership that appoints the board.

Last year, a number Democratic Senators from Eastern North Carolina introduced legislation to abolish Golden Leaf and let the Rural Economic Development Center allocate the tobacco settlement money. The Senators were upset that many grants were given to counties not traditionally considered part of the state's tobacco belt.

The legislation did not pass, but the Foundation responded to the threat by guaranteeing that each of the state's 41 poorest counties will receive a grant every other year and that the county officials will have more authority to choose which projects in their area receive the money.

In recent years, Golden Leaf has also functioned as extension of the State Commerce Department, issuing "Economic Catalyst Grants," which are actually incentives for businesses funneled through local economic development agencies.  The Foundation gave away almost $8 million in the catalyst program in 2007.

The Republican candidates for Governor routinely criticize Golden Leaf and most think it should be abolished and the money routed to the state's general fund.

Senator Fred Smith supports that plan and said recently that the money was "intended to be used for the tobacco farmers in the state."  Whatever you think of the Foundation, Smith is wrong about its purpose. The General Assembly clearly set it up to help communities struggling with the decline in the tobacco industry.

Lawmakers set up the Tobacco Trust Fund to help farmers and it receives 25 percent of the state's tobacco settlement funds, though legislators have redirected that money several times. The remaining 25 percent of the settlement payments goes to the Health and Wellness Trust Fund.

The leading Democratic candidates for governor aren't advocating abolishing Golden Leaf, but both State Treasurer Richard Moore and Lieutenant Governor Beverly Perdue want to shift the grants to pay for their higher education proposals.

Perdue wants Golden Leaf to spend $100 million a year to expand state community college scholarships to more families.  Moore wants $50 million a year to waive community college tuition for high school graduates.

Both proposals cost more than Golden Leaf currently gives away every year, which could mean an end to the current grant program or that the Foundation would simply spend more each year.

There are plenty of other vital needs that could use some help, $50 million a year in the Housing Trust Fund and eliminating the waiting list for child care subsidies would be good places to start.

The Golden Leaf Foundation has funded important projects in its ten year history. But the economy and needs of state have changed and the ten-year mark is a good time to take another look.  

Golden Leaf is going through an internal shift already, looking for a new president. Valeria Lee is stepping down after running the foundation since it began.

Smith and his fellow Republican candidates have significantly different ideas about the future of Golden Leaf than Moore and Perdue, but they all seem to agree that at least some changes are in order.

That's a pretty strong signal, one that the 2009 General Assembly shouldn't ignore.  

About the author

Chris Fitzsimon, Founder and Executive Director of N.C. Policy Watch, writes the Fitzsimon File, delivers a radio commentary broadcast on WRAL-FM and hosts "News and Views," a weekly radio news magazine that airs on multiple stations across North Carolina.
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