- [Announcer] Candidates for statewide office release new fundraising totals, and we'll discuss the North Carolina Innovation Fund and why budget writers may boost it by over a billion dollars.

This is State Lines.

[upbeat music] - [Announcer] Quality public television is made possible through the financial contributions of viewers like you who invite you to join them in supporting PBS NC.

[upbeat music] ♪ - Welcome back to State Lines.

I'm Kelly McCullen.

Joining me today, great panel, John Locke Foundation's Mitch Kokai, public relations consultant, Pat Ryan, and Mike McElroy makes his debut from Cardinal and Pine on State Lines.

Mike, good to have you on the show.

- I'm so happy to be here, thank you very much.

- Put up your dukes, be ready to talk for a half-hour.

Lot of topics.

Let's start with the gubernatorial race.

Fundraising totals are out.

I mean, candidates release their totals generally, but Democratic gubernatorial candidate, Josh Stein's campaign, announced it's holding just over $8 million already as of July, 2023.

On the Republican side, gubernatorial front runner, Mark Robinson's reporting nearly $2.3 million in campaign funds.

State Treasurer Dale Folwell reported that he loaned his gubernatorial campaign 1 million bucks.

He has about $1.19 million in the bank.

Former US representative, Mark Walker's gubernatorial campaign has nearly a half-million dollars banked, somewhere around $554,000, Mitch.

You know, they say these are record breaking, at least for Mark Robinson as a Republican and Josh Stein as a Democrat.

Record breaking numbers, this early.

- Yeah, it's interesting to see the three takeaways that I get from this are on the Democratic side, it's really good news for Josh Stein.

If Supreme Court Justice, Michael Morgan, or anyone else, decided to jump in on the Democratic side, they would really have a major obstacle to try to overcome Josh Stein and the money that he has.

On the Republican side, it's good news for Mark Robinson.

It shows that he's able to pull in a lot of money even though he does have a competitive primary with people who would normally be seen as top competition.

And then the third thing I'd say is, there's not a great opportunity at this point to make a good inter-party comparison.

You don't look at it and say, "Oh, Stein's got a major advantage because he has so much more than Robinson."

Really, we know that this is going to be such a hotly contested race in 2024.

Both major parties are gonna throw a ton of money at whoever the candidates are.

So I would say, good news for Stein, good news for Robinson, Don't make much about comparing the two.

- Well, Josh Stein is sitting over there by himself, so let's just assume for now $8 million goes toward the general election run against the GOP nominee.

However, in that GOP primary, Robinson $2.2, Dale Folwell has a million dollars of his own money, $1.2 million.

Does a million dollars make a difference this fall?

- I don't think so.

I think it's tough to run any statewide campaign even with a million dollars.

And let's not forget, speaking about the Stein fundraising, the Robinson fundraising, there's still the Democratic Governors Association, the Republican Governors Association, national money is probably gonna be pouring in to what's really the most competitive gubernatorial race in the country for 2024.

I would just like to ask if anybody at this table can tell me what exactly they think Mark Walker is doing.

I mean, he just got absolutely embarrassed the last time he ran a statewide primary, which was 18 months ago, and he didn't even hit 10%.

So, I'm interested in people's opinions on what exactly he's doing in the race.

- Well, I wonder, I mean, I try not never to get into someone's head, but his record has been pretty clear, at least his success in running.

But, I mean, maybe once you're in a business, and you've devoted this long amount of time in the business, what else is there to do?

I tend to work with good faith and I think that people, he's in the race because he thinks he is the best person for the job, and that he thinks he represents his party better than the other candidates.

And that might be completely wrong, but that's what I think.

- And one thing that we know that he is doing that's outside of the money context is he has decided to go into attack mode.

We saw that one of the pieces of this puzzle on campaign finance, is that it came out that the Josh Stein campaign, fairly early on, got scammed out of $50,000.

That came out in the campaign finance reports, Stein campaign admitted it, Robinson responded, as you might expect, as a Republican who's going to be running against the Democrat saying, "Well, you know, the person who's responsible for stopping scammers gets scammed himself.

What do you think about that?"

And then Walker jumped in and responded to Robinson and said, "Hey, after 25 years," and listed out a number of possible misdeeds by Robinson, he says, "Lieutenant Governor knows a good scam when he sees one."

I mentioned this to one of my colleagues who said, "Shots fired in this race."

Mark Walker may not have a lot of money, but right now he's certainly decided he's gonna be the attack dog in that Republican primary.

- Pat, you've worked with Senate republican leaders, you know, in this state recently.

Why look at Mark Walker and why say that?

Why not give him as much of a chance as Dale Folwell or Mark Robinson?

- Well, I just look at the most recent, I mean, he just ran an a statewide primary, right?

And it was less than two years ago, and he couldn't break into double-digits, So I'm just looking at this and wondering, and he has the least amount of money on hand, right?

I'm just wondering what, sort of, the end game is here.

- All right, There's bipartisan consensus out there that the expected 2024 state budget will contain funding for an organization called NC Innovation.

NC Innovation is a non-profit organization, it's backed and led by business executives in North Carolina that aims to help UNC system researchers convert their research that they're conducting into sustainable businesses.

The group has asked for $2 billion over 10 years from state legislative leaders.

That is public funding.

The Senate's budget proposal would give $1.4 billion in this upcoming budget as an endowment.

The State House and Governor Roy Cooper have supported $50 million in funding that would be recurring.

Pat, in fairness to you, thank you, sir, for notifying us.

I picked this topic before I had booked you, and you said, "Hey, I work for NC Innovation, they're one of my clients."

I won't ask you to analyze the topic because we know what you'll say about them.

However, what is NC innovation?

Because a billion dollars funds, what, half the university budget?

But the Senate says it's worth $1.4 billion to give to this group.

Who are they?

What do they do?

- Yeah, so I think it's important at the outset to, sort of understand what that funding mechanism is.

So, the Senate proposed $1.4 billion, essentially moving it from one state surplus reserve to another state surplus reserve.

And the organization wouldn't draw down money from that principle year over year, rather, the organization would live off the interest proceeds that that endowment would create just like any other endowment or pension fund.

Right?

So average would be about maybe a hundred million dollars a year.

And in that way it's really not costing taxpayer money.

It's using taxpayer money to create interest reserves that are then spent on these grants.

And so it's pretty complex enterprise, but I'll try to be very brief.

So NCInnovation would provide grant funding and other services to university researchers, especially in rural areas to complete the final leg of the university R&D sequence.

So there's a gap in the university R&D sequence that starts after federal funding stops but before private capital usually gets in and sort of takes over the commercialization process.

That's called... - They call those death valley or something.

- It's called the valley of death in finance.

It's a term of art, right?

- So Pat, hold on.

So Pat, they would say cure a disease in the laboratory and then the money runs out after they do that but there's not enough money anywhere for them to launch a business to make the medicine that helps me and my family.

Is that right?

- Partially, that's right.

So in the case of pharmaceuticals it would be, and we spoke to, CNBC actually spoke to an ECU researcher who's working on a cancer therapy.

She's at the point where she needs to approach the FDA for some analyses and potentially trials, but to do that she needs to scale up production of that molecule.

So she's shown that it works in a lab but it costs quite a bit of money, maybe over a million dollars to scale up production such that there can be proper FDA analyses done.

Private capital isn't gonna enter at that stage 'cause it's still too risky but there is a funding gap there that could result in a promising sort of commercialization enterprise, right?

And so that's where NCInnovation will focus its grants is on that valley of death.

And remember, universities retain about 40% of the intellectual property that's generated on their campuses.

And so there's a return here for the university system in that money is already spent on R&D but if it dies in that valley of death, there's no return on it, right?

- All right, Mike, there's a billion dollars in state funding.

Every school district wants a slice of it.

People are gonna pile on a $1.425 billion endowment if it happens.

Likely there's a compromise there.

What is the take on NCInnovation out there from people you interview and see and what you're reading out there among the journalists?

- Well, we cover a lot of people who aren't necessarily in the same circles as the folks fighting for this particular money.

And so when we talk about budgets, even if it's a complicated calculus of how the taxpayer's role in that money, when we talk to people they talk about schools and the money that isn't in the budget going to schools.

And we talk about a lot of things that isn't really connected to this.

So I'm happy to talk about funding gaps because there's a million essential things, central services where there are funding gaps and we're gonna talk about them in a minute.

But to this, we haven't been covering it as much because these aren't the things that people are worried about.

- Yeah, Mitch, people don't know much about NCInnovation but if they hear it, you know, in fairness to them they'll say that's a billion dollars coming from somewhere.

Pat says, it's not to be set aside.

Well, they'll live off the interest.

The free market is not at play here.

This is state funding to help businesses get off the ground.

But then again, the Chinese seem to be beating us over the head with state supported enterprises.

John Locke, you're sitting there.

What do you say?

Well, it's definitely not free market, and I can tell you that we really weren't paying a whole lot of attention to this until the 1.4 billion ended up in the senate budget.

Because you have to remember, the general fund budget for North Carolina is around $30 billion.

That's a huge chunk to go to one group that we had never heard about ever before.

And the explanation as Pat mentioned is that the organization had asked for a certain amount of money, both the governor and the house were willing to give them a little piece of that.

And the Senate said in its budget plan, no, let's just give them one chunk.

We'll give 'em the money.

They'll have to live off the interest.

And I've heard the estimates of maybe a hundred million dollars a year or more that they could use just from the interest without having to go back and then ask for any more capital to go into the, the principle of the fund.

But the problem that we've had at the Locke Foundation with this is not just the big chunk of money, but also the fact that the Senate built into its plan this idea that a lot of this money, that a lot of this organization's work, which is built on taxpayer money, would take place without some of the safeguards of open meetings, public records.

They made some tweaks to the group's board.

The board now has some business people but also some university chancellors.

And the new board under the Senate's plan would have no people employed by the state anywhere near that board.

The fact that this seems to be setting up something that's gonna be operating kind of beyond the public's view, but using a substantial chunk of the public's money has us raising some concerns.

- Yeah, and I think that there's certainly room to discuss and perhaps legislators are doing so now, the balance between protect and competitive sort of research operations at universities that you don't want other universities really to know about.

And perhaps disclosing after the fact sort of what NCInnovation was involved with.

I think there's certainly a reasonable case and there's probably a balance to be struck there, right?

But in general, on the question of the model, you know, really it's a rural economic development opportunity because NCInnovation will be focusing its grants on universities outside the triangle, right?

Right now, 87% of all R&D activity happens in the triangle.

NCInnovation is sort of looking at the rest of the UNC system and saying, well, if we can help some of those researchers get through that valley of death, they can start businesses and licensing opportunities in those areas.

And in that way start to grow some jobs clusters in sort of the less fortunate parts of the state right now.

- We'll see how it plays out.

North Carolina's Council of State leaders say they cannot fill vacant jobs, especially in the Secretary of State's office and over at the Department of Agriculture.

Secretary of State Elaine Marshall says her team simply can't keep up with all the paperwork being filed by new business creation in the state.

And she says her staff generates about a million dollars per employee in state revenue.

Agricultural Commissioner Steve Troxler says it's impossible to hire employees who might have a competing offer from the private sector.

It's reported that state job applications are down 43% since 2019.

Mike, some people see that as a problem and some people would say they finally have made it.

We have created a situation where government can shrink.

- Well, sure.

On one way of looking at things I guess that's true.

But what it means when government shrink is lines are longer at the DMV.

What it means when the government shrinks is that rabies testing, there are delays and rabies testing and you don't want there to be delays in rabies testing.

That virus moves quick.

[fingers snapping] The elevator inspectors are understaffed and aren't being able to do their jobs.

And as many officials have pointed out, that crack in the Carowinds roller coaster, that's the elevator inspector's job to go inspect it and make sure that roller coaster will stand.

So in this case, the idea of it being good because government is shrinking, there are a lot of things out there that are going to topple if this continues.

- Mitch, I was speaking a bit cavalierly about government being shrinking, but there are people out there to say, "you know, enough of this.

Government's big enough, well this is it."

They can't fill the jobs, that does shrink the matter of how much business is coming in.

However, does a state agency have a claim when they go, "if you hire one of my employees, we'll do enough paperwork to create $1 million worth of revenue for you because of new business."

- It's certainly an argument to make and it's a an argument that would be useful to people who are trying to make sure that the state is not having to overspend on some areas.

If you have a department saying, "look, you give me the money for this person, we're gonna bring in this amount of revenue for the state."

That is a compelling argument for them to make.

I think that one of the main problems here, with this entire issue, is that these are jobs that are filled that just don't attract as much attention as other parts of the state budget.

We're always gonna hear talk about, "let's fund education."

You're always gonna hear, at least from the republican side and to some extent from the democratic side, "let's make sure we put in enough money for prisons and public safety.

Let's make sure we spend enough for the parts of health and human services that are pretty popular."

But a lot of these other daily tasks that are taken care of by state government just aren't as sexy and so they don't get as much attention during the budget debates, even though, in some cases, they are important jobs that need to be filled and if they aren't filled, they can cause some problems for the way government operates.

- Pat, is this an issue of just bureaucracy saying they don't have enough and they have enough?

Or is there a real issue here that the marketplace and inflation, all the other things that go along with trying to keep up with state spending, is now starting to have a buy into legitimate government operations?

- Yeah, I think like most things it's probably somewhere in the middle.

I mean, there's certainly a dynamic in that everything that goes wrong in state government finds its way to roll downhill and people will blame the legislature rightly or wrongly.

There's a rabies outbreak, I'm sure people are gonna blame the legislature.

But it certainly is true that there's a labor shortage in both the private and public sectors, right?

Legislative leaders are working on a budget right now.

We'll see what they come out with.

But, remember it was just a few years ago that North Carolina was the first state in the entire country to provide a $15 minimum wage for state employees.

And so there certainly is, I think, historically a recognition that state employees are valued by the legislature and we'll just have to see where they end up this time.

- And one of the other things that is pointed out by this story, is the fact that legislators hear every year, from state employees and departments saying, "we need more money, we need more staffing."

And sometimes it's because the people are paid to lobby and tell them that, and sometimes it's because they actually do need more staffing and more money.

And so it's hard sometimes to discern, well, do they actually mean it this time or not?

I think the evidence is showing that they probably really do mean it this time.

- You know, sometimes when you cry "wolf," there really is a wolf.

- That's right.

- Out in the backyard.

- But sometimes there are are lots and lots and lots of wolves and the number of wolves have been growing over the years.

This is not a new problem, there's no question about that.

But the severity of the problem is new and all these heads of these agencies are shouting it.

They came to a press conference together to say that the problem, capacity is way down, and it's absolutely, smaller staff means more work for the people there and this isn't really a partisan issue.

It is a issue of consequences and people aren't gonna blame the legislator for the rabies outbreak, but if there aren't enough officials to do the testing to discern the severity of that outbreak, that is a problem.

And those kinds of things are getting worse.

- All right, well we'll have to say the press conference would be telling, they all came together and there's something to be said for that.

It got our attention.

State election officials say, "voters, you can obtain a free legal voter identification card at a county board of election office."

Free ID cards are also available at local DMV offices.

Speaking of the last conversation, North Carolina Supreme Court has reauthorized the use of photo voter ID, but there are dozens of ID cards you can use when voting in the upcoming elections.

If you have one of those and you can look them up, you don't need a voter ID card.

Those are for people who are almost off the grid.

Those without valid ID can still vote.

They will cast what's called a provisional ballot.

Mitch, nice gesture, free photo ID if you need one to cast a ballot in a voter ID state.

- And it's not just a nice gesture.

This was actually part of the law.

- It's still a nice gesture.

- Yeah, but one of the things that the General Assembly did when it passed its last version of the voter ID law was say, "okay, well let's look at what the criticisms were about the previous law."

The one that was passed in 2013 but got thrown out by federal courts after the 2016 primary.

And they said, "look, we want people to have an ID and we know that most people who are gonna vote are gonna use their driver's license or some other common form of ID.

But there are some people who don't have IDs, or they'll have some other form of ID.

Let's make it as easy as possible."

The State Board of elections just approved, I think it was 99 different additional IDs from schools and other outfits.

And then, as part of the law, if you don't have any one of those other IDs you can go to the County Board of Elections and get an ID.

And as you mentioned at the end, if you show up on election day and you still don't have an ID, you can tell the folks at the elections board, "I have a reasonable impediment that blocked me from getting an ID," and still cast a ballot.

The law, although it is prompting people to bring their ID and use it, is not going to stop anyone who is registered from being able to vote.

- Yeah, it's probably the most lenient photo voter ID law in the entire country.

And it still invited litigation and attacks about untoward motives.

I mean, one question's, the value of actually creating a more liberal voter ID law, it's gonna result in the same type of litigation anyway.

And it's created this sort of bizarre environment where the litigants against voter ID are arguing to make it harder for people to get photo IDs in this case, and they've also argued and voted against a free mobile voter ID unit that would go to people's homes and take their picture and print out an ID for them.

The anti-voter ID crowd has said, "no, no, no, we don't want that to happen because it's better for their litigation strategy to have it be harder for people to get photo IDs at this point."

- Mike?

- Well, I think there are two things, and one, I will say that this voter ID law is much different than the one that was initially challenged, because there are a lot of things that we talk about now that are in the law now that weren't there.

Student IDs was one of them.

And so to have argued against that one, there were and even a state judge said, that one was racially targeted.

And so this is a different one though.

And the most voting rights advocates we talked to, and we do talk to a lot of voting right groups, they say we still don't love this.

But the most important thing now is to educate the public on what to do.

And I think the State Board of elections has done a very, very good job of making it clear, if they don't have the IDs, and the requirements for the ones they do.

And Princeton Bell talked about in all the press releases about these voter ID laws to say, to make a point to the news media to absolutely make it clear about these exceptions that you were talking about.

The one thing that I would say is there is an extra step if you don't have your ID on an election day, you cast the provisional ballot, but to have it counted, you would then have to go to the County Board of Elections to show your ID.

So you would still need that ID.

There is the photo, the ID exception form, which is a separate thing.

But if you just don't have your ID that day in order to have your vote counted, you still have to bring it in and to show it to the county board.

So there are a couple of extra steps, but there are a lot of, there are a lot of options.

The only one little thing I would say is that for the free voter ID, most county boards of elections will be able to give you that ID right then, right there.

There are some that won't and that you'll have the option to be able to have it mailed to you or they'll tell you when it's ready.

You can come back and pick it up.

And so the one thing I would tell voters is if you, the longer you wait, then you've got the mail for your ID to wait on.

And then, especially if you're casting an absentee ballot then you've got the mail on the other side.

And so it's important to get the word out that if you need this voter ID, you've got time, but you won't have a lot of time once we get closer to the election.

And the County Elections Board won't offer the free ID in that very brief period between the end of early voting and election day.

So don't wait 'til the last minute.

- Yeah, don't do that.

Well, we don't normally talk about local issues, but Wake County schools has launched a new policy that will limit challenges against library books.

You might've been hearing about.

Wake County is North Carolina's largest school district.

It's leaders say any future decision on removing or setting aside library books will last two years and the decision will be binding.

The Wake County group called Moms for Liberty filed 200 challenges targeting 20 books.

School leaders decided to keep all 20 books on the shelf after review.

Some State House Republicans, Pat, have filed a bill to place some books in an age restricted area of the library.

House leaders say that bill's not going anywhere.

So local leaders are making a decision whether you like it or not, they say two years, don't come back, don't challenge another book.

Or at least that book.

720, 30 days.

- Yeah, I mean, it seems designed to realize some administrative efficiencies and not have to deal with making the same decision over and over again.

My friends who are watching this will probably roll their eyes because I talk about 'em all the time, but journalist Andrew Sullivan I thought had a great column last week about the need for more "Yes, but," in political discourse and I think this is a great example of that.

Yes, school libraries should offer students a diverse array of books relevant to growing up.

But books with graphic sexual content probably shouldn't be in a building full of minors, right?

Yes, there's a case to be made that including graphic sexual content in a school library is inappropriate, but administrators probably aren't trying to "groom kids," right?

I mean, there's a reasonable sort of middle ground here.

And it seems like to me at least both sides are at fairly extreme ends.

I mean, when can we just sort of agree on these things about school libraries?

I don't.

- Mike got 90 seconds left in this entire television show, it's out there.

So this is a local decision that's quite interesting to see an approach to addressing book challenges.

- Well, I think that, there's not two monoliths in my view.

The Moms for Liberty Wake County is its own thing and they challenge these specific books, but the Moms for Liberty, a parent group, they're in Florida especially, they challenged a lot of other books across things including "Beloved" from Toni Morrison.

And so the thing that I always like to think about is that graphic sexual, there are a lot of people that would think one mention of it is graphic and inappropriate.

I like the idea of the book by book thing and that it's not this group doesn't get to challenge anything.

It's this book doesn't get to be challenged, again, because we've made a decision on the books.

So it's keeping the conversation open.

But the last thing I will say is we talked to, last year we talked to a teenager who Queer stuff, and she said, these things aren't about sex or about acceptance.

- Alright, Mike, thank you so much.

Mitch, we're outta time.

I wanna get your words, but you know you'll be back soon enough.

Thanks to our panelists.

Email your thoughts and opinions to statelines@pbsnc.org.

I'm Kelly McCullen.

Thank you so much for watching and I hope to see you next time.

[dramatic music] ♪ - [Narrator] Quality public television is made possible through the financial contributions of viewers like you who invite you to join them in supporting PBS NC.