The House Oversight Committee will continue its series of hearings asking fundamental questions of agency secretaries and directors March 13 at 9 a.m.
The committee will hear first from Department of Information Technology Secretary-designee Teena Piccione, Office of State Human Resources Director Staci Meyer, and Department of Administration Secretary-designee Gabriel Esparza.
State Controller Nels Roseland, rescheduled from February 26, will testify in the afternoon.
“We learned a lot during our first Oversight hearing. As we drill down to the one primary mission of each agency, we want to hear how that makes a difference for our citizens,” Co-Chair Jake Johnson (R-Polk) said.
Members of the Joint Legislative Commission on Governmental Operations Subcommittee on Hurricane Response and Recovery will resume questioning Department of Commerce Deputy Secretary Stephanie McGarrah of the Division of Community Revitalization and Governor Stein’s Recovery Advisor Jonathan Krebs on Hurricane Helene recovery in a hearing Thursday, March 6 at 9 a.m.
This will be a follow-up hearing from January when McGarrah and Krebs had their testimony cut short due to time constraints. They will be expected to provide further details on what they have learned from the failings of the North Carolina Office of Recovery and Resiliency and outline GROW NC’s plans for Helene recovery.
“We have to make sure that the new agency in charge of Helene recovery does not repeat the mistakes of its predecessor. We want to set the GROW NC staff up for success from the get-go. We want to work together, but we want them to know that we’re paying attention.” said Co-Chair Rep. Brenden Jones (R-Columbus). “To those in Western North Carolina who have lost homes, businesses, or loved ones, we haven’t forgotten you, and we want the area to come back even better and stronger than before Helene.”
With a new gubernatorial administration comes the opportunity to take a fresh look at state agencies, why they exist, and what they do. Over the coming months, the House Oversight Committee will call on agency secretaries and directors to answer the question: “Does the agency make life in North Carolina better?”
The committee will hold a set of hearings in its February 27 meeting. At 10:30 a.m., Secretary-designee of Revenue McKinley Wooten, Jr., State Controller Nels Roseland, State Budget Director Kristin Walker, and Treasurer Brad Briner will explain what their agencies do and how they can help with accountability measures for others.
Department of Transportation Secretary Joey Hopkins and DMV Commissioner Wayne Goodwin will begin their testimony at 1:00 p.m.
“Government efficiency starts with defining the job of government in practical terms,” Co-Chair Brenden Jones (R-Columbus) said.
Co-Chair Jake Johnson (R-Polk) added, “It’s a fair question to ask every agency: How do we know our spending on an agency has any impact, good or bad, on the people of North Carolina?”
“Government should exist for the people,” Co-Chair Harry Warren (R-Rowan) said. “Our committee members want to assess where things stand and what can be accomplished.”
Hurricane Helene destroyed many a town’s buildings, infrastructure, homes, and normal way of life in Western North Carolina, but it couldn’t wash away the community spirit of the people who make up those towns. That spirit was on display as business owners gathered to describe the storm’s impact on their communities at a recent event in Swannanoa sponsored by local chambers of commerce.
“Business is the heartbeat of a community,” Meredith Ellison told attendees. “It is what is makes people come and go.” As co-owner of Swannanoa-based Quility.
When Ellison graduated from the University of Alabama in 2001, she and her boyfriend Brandon were “two kids who didn’t know what to do with themselves.” They landed in Asheville because it was a city that combined the unique cultures of the mountains and the South.
Meredith finished graduate school, and she and Brandon started a family. Securing their roots to the place, in 2009, they launched the company that eventually became Quility with born-and-bred Asheville native Casey Watkins.
Quility, which provides technology to support insurance agents, is just steps away from the former church turned community center that hosted the event. In the immediate aftermath of Helene, the facility had served as a community hub for food distribution and communication.
Ellison believes that Quility’s culture can change the world and create a ripple effect. That ripple effect was evident in Swannanoa before Hurricane Helene and in its aftermath. “We understand that we’re part of a community, and we ask, ‘What is our responsibility in the world?’” Ellison said.
She gave a number of examples. She used to drop her car off on the way to work to get an oil change. One co-worker would walk to the gas station to grab candy for the office then go to the barber shop for a haircut. Another could easily take her pet to the vet. And everyone could walk to lunch from their office.
All that is gone now. All those businesses were damaged or destroyed during the storm. The veterinarian was able to open an office 20 minutes down the road, but his business is down 50 percent, Ellison said.
Ellison is confident that the town will recover stronger and Quility will do its part. “We want to do this for the future of Swannanoa. We’re inspired to build back here.”
That same ripple effect is especially true in the tourism industry.
Sandi Boyer, executive director of the North Carolina Youth Camp Association discussed the far reaches of tourism into the area’s economies during the panel. North Carolina is home to more than 200 overnight camps—160 of those in the mountains.
Every camp in Western North Carolina was touched by the storm in some way, Boyer said. But the impact of a camp extends beyond its grounds. Nearby towns with their restaurants, hotels, shops, and activities play host to parents. Teachers work summers at camps. College students come to work and return to live after graduation. Campers also grow up and choose to raise their own families in North Carolina.
Boyer worries there may not be anything to return to: “We’re losing a whole generation of people that love and take care of Western North Carolina.”
But she believes most of the camps should reopen this summer. “There are camps in the mountains that have been open for more than 100 years,” she said. “This industry is resilient.”
Boone Area Chamber of Commerce President and CEO David Jackson reflected on the complexity of the recovery and how everything is tied together.
“It’s not just a black and white issue. It’s not, a business is closed; a business is open. It’s not, a community is closed or open. It’s all about the little details that matter when one disruption occurs in a community, let alone when an entire region is disrupted,” he said. “There is an interconnectedness amongst this entire region that has been pushed to the test here in these last several months.”.
In 2019, Ellison and her fellow Quility co-founders purchased the site of the former Beacon Blanket Mill to build a bike park and outdoor space for the community. The land is central to town history. The mill employed thousands of residents in its twentieth century heyday, but it has been a vacant lot since a fire destroyed the factory in 2003.
Ellison wants to invest back in the community so that people want to “move here, bring jobs, eat, play, feel inspired here.”
She recognizes that rebuilding the town won’t be done in a day, a week, a month. It will take years. “This is long-term recovery,” Ellison said. “How can we take ground today? You keep your head down and keep working. Then you pick your head up, and there you are.”
The North Carolina Office of Recovery and Resiliency (NCORR) expects it will take $220 million in additional state funds to complete work by the end of 2025 on 1,150 homes damaged by hurricanes Matthew and Florence. Another 39 homes might not be completed due to “atypical” circumstances.
NCORR Director Pryor Gibson testified before the Joint Commission on Governmental Operations Subcommittee on Hurricane Response and Recovery for nearly two and a half hours on January 30. Jonathan Krebs, advisor to Gov. Josh Stein on western North Carolina recovery, and Stephanie McGarrah, deputy secretary in the Division of Community Revitalization at the Department of Commerce, followed Gibson. They have been invited back before the committee to provide more details March 6.
The Subcommittee held its first hearing with NCORR in September 2022 when the agency was completing fewer than 10 homes per month. The federal government provided nearly $1 billion in three grants for NCORR to assist with the Eastern North Carolina storms. In October 2024, however, Gibson alerted legislators that NCORR had overcommitted funds by $175 million and would need state money to complete its work.
A more thorough accounting by the Office of State Budget and Management before the November 18, 2024, hearing showed NCORR had unmet needs of $320 million, which Gibson circuitously confirmed at the time. Legislators appropriated $30 million in November and another $50 million in December to get NCORR into February. Gibson said contractors may abandon the program without a firm commitment from the General Assembly before the end of February.
Co-chair Rep. Brenden Jones (R-Columbus) set an expectation for clear answers at the beginning of the hearing.
“No more excuses, no more delays, no more vague estimates, no more NCORR kicking the can down the road,” Rep. Jones said. “Today, as we go through this, we’re going to ask you how much money is actually needed to finish the operation. I’m going to ask you why we should believe you.”
Inconsistencies in the Gibson’s presentation over the number of employees, specific costs, and NCORR’s communication to general contractors further eroded subcommittee members’ trust and increased their frustration.
NCORR completed 143 homes in December and its latest report to Gov Ops staff showed 116 homes completed in the 30 days through January 29. In contrast, NCORR only issued 19 notices to proceed (NTPs) in that time and had not issued a contract since December 19 (see graph).
NCInnovation provided its 2024 audit to General Assembly on November 21. You can find the audit here and an Excel spreadsheet of the financials here. Of note in the cover letter from independent auditor BDO is the acknowledgement that NCInnovation did not have an independent audit before receiving its first $250 million in state funds:
The 2023 financial statements of the Organization were reviewed by other auditors, whose report dated January 10, 2024[,] stated that they were not aware of any material modifications that should be made to those statements for them to be in accordance with accounting principles generally accepted in the United States of America. A review is substantially less in scope than an audit and does not provide a basis for the expression of an opinion on the financial statements as a whole. [emphasis added]
NC Gen. Stat. 143-728(d)(9) requires NCI to “maintain separate accounting records for and separate accounts [for State and private funds] and shall not commingle [the two],” but the audited financial statements do not make clear the separation of public and private funds. Despite this, it appears that grants are the only thing currently being paid from state funds. This is the largest expense for NCI as projects in the pilot round of grants qualify for their second tranche of funding and as NCI completes its first statewide round of grantmaking in early 2025. The Request for Proposals page states, “The deadline for the fall 2024 pre-application is Friday, December 13, 2024. Applicants can anticipate hearing a response from NCI within one to two months from the application deadline.”
The second largest expense for NCI is salaries and benefits, totaling $2.6 million for the fiscal year. Because the regional hub personnel did not start until November, the annualized expense is more than $3.0 million.
NCInnovation FY2024 Audited Financial Statements and Report [PDF]
Annotated NCInnovation FY2024 Audited Financial Statements [Excel]
Leadership of the North Carolina Office of Recovery and Resiliency (NCORR) gave incomplete responses to pointed questions from members of the Joint Legislative Commission on Governmental Operations Subcommittee on Hurricane Response and Recovery during the November 18 hearing.
On the agency’s funding need, which her presentation and press reports inaccurately pegged at $221 million, (now former) NCORR Director Laura Hogshead said, “Worst case scenario is the $264 million number… if there’s no attrition or not able to use any other sources of funding.” But that figure did not include any contingency for higher construction costs for any of the roughly 1,400 homes still to be completed. From a spreadsheet NCORR provided to the subcommittee, building in a contingency would bring the remaining unmet need to $289 million, on top of $30 million appropriated by the General Assembly in October.
Governor Roy Cooper’s Deputy Legislative Counsel Pryor Gibson, who appeared before the subcommittee with Hogshead, first told legislative leadership about NCORR’s $289 million need on October 21, two days before the chambers were to vote on assistance to the western counties devastated by Hurricane Helene.
By 2021, NCORR budgeted $534 million of $982 million in federal funds for hurricanes Matthew and Florence to repair and rebuild homes in its Homeowner Recovery Program (HRP.) Since then, NCORR has transferred $148 million in additional funds from other purposes in that federal pot to bring the total for repairs and reconstruction to $683 million. The latest estimate for HRP is $980 million, which leaves, along with NCORR’s other spending on Matthew and Florence, a deficit of $319 million.
Hogshead acknowledged to Rep. Brenden Jones (R-Columbus, Robeson) that she did not raise flags as the program took on more than it could cover because, while staff were monitoring individual line items, no one was monitoring at the overall budget. Although she took the blame for it, Hogshead refused to resign.
While NCORR’s financial problems prompted the hearing, much of the time was spent looking back at the agency’s other problems and looking ahead to potential responses to Hurricane Helene. Gibson promised better financial reporting to the legislature, and members remained skeptical about providing more money to NCORR. Rep. Jones closed with a touching personal note about the people he and other members see every day who are counting on state government to fulfill its promises without delay.
House Oversight and Reform Co-chair Jake Johnson’s op-ed on the State Board of Elections party-line vote against the Justice For All Party ran in the Raleigh News & Observer, Charlotte Observer, and Durham Herald-Sun on July 31, 2024. A federal judge later ruled in favor of the Justice For All Party and the State Board of Elections then voted unanimously to allow Cornell West to appear on the November ballot.
Rep. Johnson explained how members misused the unrepresentative results of a non-random survey to justify their party-line vote.
“The board’s decision on the Justice for All party also was a methodological mess. First, Board staff pulled a random sample of 250 people from this non-random and potentially skewed population for follow-up phone calls, according to board staff. Such a random sample can be unrepresentative, however, and staff did not take any steps to ensure its sample reflected the larger population of those who provided phone numbers, let alone the entire population of petition signers. Although the State Board of Elections has a statistician on staff, that person was not consulted about the validity of this survey methodology.
“Biased sample in hand, staff made one call to each phone number on the list from State Board of Elections phone numbers during business hours between July 9 and 11. Only 49 of the 250 people responded. Again, staff did not consider how those 49 people differed from the 201 people who did not answer or the 5,040 not in the sample or the 11,951 who provided no phone number at all.
“Despite this, board chairman Alan Hirsch and board member Jeff Carmon both said the survey of 49 people was key to their votes against the Justice for All Party.”
Read the whole op-ed:
The House Oversight and Reform Select Committee has called elections officials and an expert to testify before the committee on Tuesday, July 23, at 9 a.m. in the Legislative Building’s Blue Ridge Auditorium.
North Carolina State Board of Elections Executive Director Karen Brinson Bell, Chairman Alan Hirsch, and Andy Jackson, director of the Civitas Center for Public Integrity at the John Locke Foundation, are expected to address the board’s decisions on whether to allow three parties’ petitions to be placed on the November ballot. The board ultimately voted to recognize the Constitution Party and the We The People Party but denied the Justice For All Party. The decisions, mostly along party lines, raised questions about how the board made its determinations, any third-party communication related to the issues, and potential political motivation driving the ruling.
“We question the actions of the Board of Elections,” Rep. Jake Johnson (R-Polk) said. “We need answers as to why three parties that had seemingly met the requirements to be on the ballot, were rejected. If this ruling was politically motivated, as is perceived, we owe it to the citizens of North Carolina to bring that to light.”
“How do we trust the board and its staff when their actions seem to be designed to limit ballot access for new parties?” Rep. Harry Warren (R-Rowan) said. “People need to trust the election system. The process to approve new parties this year has done little to foster that trust.”
The House Oversight and Reform Select Committee has called NCInnovation (NCI) CEO Bennet Waters to testify before the committee Tuesday, July 9, at 9 a.m. in the Legislative Building’s Blue Ridge Auditorium.
NCI is a public-private partnership intended to speed commercialization of university research. After proposals to fund NCI from the earnings of a $1.425 billion endowment, the final 2023 budget bill (HB 259, SL 2023-134) included two appropriations to the endowment of $250 million each.
“The General Assembly made a big bet on NCInnovation. If it succeeds in bringing university research to market, the state will reap significant returns,” said co-chair Rep. Harry Warren (R-Rowan). “NCI leadership has not publicly addressed its funding assumptions or its operations. This hearing can be a step to increase our comfort with putting so much faith in one organization’s ability to pick winning technologies.”
Committee members have questions on NCI’s legislative reporting, receipt and use of state funds, its operations and grantmaking, its funding assumptions, and its long-term plans.
Co-chair Rep. Jake Johnson (R-Polk) noted, “NCInnovation intentionally chose two projects from each region, which does raise concerns of how much it is making decisions on merit and how much on political considerations.”