Forum editorial: More light on PACE subsidies
North Dakota lawmakers are sticklers when it comes to accountability regarding expenditures of public money. They want to know how it's spent, where it's spent and whether the spending has produced the intended results. Just this month le...
North Dakota lawmakers are sticklers when it comes to accountability regarding expenditures of public money. They want to know how it's spent, where it's spent and whether the spending has produced the intended results. Just this month leaders of the Legislature's Republican majority asked state agency heads to complete assessments of their budgets, with an eye on saving money and more efficiencies. Good idea.
Yet, when it comes to spending nearly $33.6 million in public money for loans and grants to private businesses, some legislators (and executive branch officials) seem a tad casual about accountability and results. That $33.6 million is the total of state subsidies for low-interest business loans given since 1991 by the Partnership in Assisting Community Expansion program, or PACE. The total of the loans from the state-owned Bank of North Dakota was $148.7 million.
That's not chump change. It's an expenditure of public dollars via an interest subsidy that was established to help businesses expand and create jobs. The state claims the program generated 9,735 jobs during the life of PACE, but the state has no mechanism for tracking wages and benefits or other standards for jobs created by PACE loans. There is no adequate measure to determine if jobs created under PACE a decade ago are still there. The state does not talk much about default rates or, for that matter, successes.
Moreover, the state bank operates under rules that make it almost impossible for the public to know where the jobs are, the caliber of new jobs or even the addresses of the companies that received taxpayer-funded interest subsidies.
State bank officials say their hands are tied regarding information about recipients of the PACE interest subsidies. They are operating by the bank's disclosure and confidentiality regulations. Fair enough.
But no one is talking about disclosure of real proprietary information, such as trade secrets, sensitive import-export arrangements, specific wage levels or the private financial records of companies. Rather, what should be disclosed after a company is approved for a PACE (or other public) loan and then signs on the dotted line, are accountability and performance. Has the loan been repaid? Has the business grown? Have the job-creation requirements of the subsidy been achieved? What is the average wage level for PACE loan-created jobs in general categories for different industries?
That is not too much to ask when millions of public dollars have been loaned or granted to private sector companies and individuals.
Don't misunderstand. PACE loans have been a great help to many firms, large and small. We have no doubt they have created jobs and that some business would not be operating in the state without the subsidies. The program works, and no one is suggesting tossing out the baby with the bathwater.
But reasonable accountability and a sensible degree of transparency should be seen as safeguards of the public purse. North Dakota lawmakers have always been excruciatingly careful with taxpayers' dollars when it comes to funding state agencies, universities and public schools. They should extend that instinct for accountability to public subsidies for private businesses.
Forum editorials represent the opinion of Forum management and the newspaper's Editorial Board