A proposal to resume funding to a restructured North Carolina Technological Development Authority has the backing of legislative leaders, but officials say it likely will fall apart unless Gov. Mike Easley supports the plan.

And failure of the proposal, they say, would signal the death knell for the state-supported agency that supports a network of small business incubators statewide and has provided seed funding to technology startups.

“We can make it through the fiscal year, but we’ve got to get something done this session,” TDA President Dave Emmett says. “We’ve got enough runway left so, if the General Assembly is late in passing the budget this year, we can hang on. But it won’t be by much.”

The TDA has gone about a year and a half without any state backing after Easley froze the agency’s appropriation in response to an audit criticized the agency for excessive spending on lobbying and board of directors functions and for questionable hiring practices.

The agency has trimmed expenses to the bone and has almost drained its cash reserves since then to remain in business while trying to find a new source of revenue.

That source appears to be in the General Assembly, where a bipartisan group of lawmakers is behind an effort to provide the TDA with about $1.5 million to fund its operations for the 2003-04 fiscal year.

But the funding comes with some strings attached: The agency needs to replace its board of directors and managers to make a clean break from its checkered past. TDA officials already have changed their policies and procedures to prevent future problems like those cited in the audit.

Golden LEAF backs away

“The money will put us in more of a sustainment mode; we won’t be able to do anything new,” Emmett says. “What’s important is that the (TDA’s) public benefit mission continues.”

Although published reports have said that the TDA board voted to dissolve the entire agency, Emmett and TDA Chairman Randy Overton say that was never the plan. They say the board agreed to dissolve itself so that new leadership could be brought in, including appointments from the Governor’s Office, the Speaker of the House and the Senate President Pro Tem.

“It would be a heck of a loss to the state if this were totally dissolved,” Overton says. “If we got the right people running the mission, (the agency) would do a great job.”

But Easley’s support for the legislative plan is the main hurdle. His lack of an endorsement for the TDA already appears to have scuttled attempts to use money from Golden LEAF to fund the agency, according to correspondence between Overton and John Merritt, a senior assistant on Easley’s staff.

Golden LEAF is charged with distributing a portion of the state’s proceeds from the national tobacco litigation settlement. The Rocky Mount-based foundation has made investment in biotechnology efforts and biomanufacturing plants a key area for its financial support to help create jobs in rural counties that have been dependent on tobacco farming.

Many of TDA’s incubators are in rural areas of the state. The agency recently helped arrange a federal loan for a new incubator in Bladen County, for example.

But Overton wrote Merritt in March that the foundation turned down TDA’s request for support because Easley had expressed opposition to the agency.

“It would be our hope that, if you support our mandate and achievements but cannot fund us, you might at least issue a public endorsement so groups like Golden LEAF and others feel unshackled to participate,” he wrote.

Fearing political payback

Now, lawmakers fear political payback if they support the TDA against Easley’s wishes.

“My feeling is … that the Governor is not going to go along with this,” says Rep. Stan Fox, D-Oxford, who is helping assemble a House coalition to support renewed funding to the agency. “I don’t think people are going to buck the Governor, and the General Assembly is probably not going to do this without his blessing.”

Cari Boyce, Easley’s communications director, declines to comment on the legislative proposal, saying she isn’t familiar with it. The Governor would like to see the entire agency dissolved and its assets turned over to the state Commerce Department, where its mission could be integrated with other economic development programs, she says.

Overton says that move would be a huge mistake, noting that Commerce staffers are more familiar with recruiting and assisting large companies, not startup enterprises. And he can’t understand why there is continuing opposition to the TDA even after the agency has undertaken the reforms asked of it.

“No one else does what we do,” he says. “Yeah, we made a mistake three years ago. … I don’t know why we’re still paying for it.”

N.C. Technological Development Authority: www.nctda.org