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RALEIGH — The North Carolina Banking Commission paid $478,081 in bonuses to 72 employees last year and wants to set aside funds for another round this year.

The bonuses and potential bonuses have drawn the attention of legislators, who are trying to bridge a $4 billion budget shortfall.

“It’s hard to justify when we’re cutting salaries for some state employees and furloughing others,” said Rep. Pricey Harrison, a Greensboro Democrat who heads the House Appropriations subcommittee that oversees the commission.

Most state workers are subject to tightly drawn wage rules, but in 2005 the General Assembly exempted the Commissioner of Banks and his employees from the State Personnel Act.

“The banking commission has been involved in a project over the past several years to find and attract people to do the important work of banking regulation,” said Mark Pearce, the state’s Deputy Banking Commissioner.

The nearly $500,000 in bonuses were issued in August and were the first for the agency, Pearce said. Pearce received a $12,088 bonus under the program. His boss, Banking Commissioner Joseph Smith, did not receive a bonus and is not eligible for one, Pearce said.

The Office of the Commissioner of Banks, which is overseen by the North Carolina Banking Commission, is responsible for regulating state-chartered banks as well as other kinds of financial institutions such as mortgage brokers and check-cashing businesses.

The agency is funded with fees paid by banks and other institutions that are regulated, not by taxpayer dollars. The money collected is public money, and its employees are state workers.

Pearce said the commission competes for employees with private-sector employers and federal regulators, who pay more. The bonus program, he said, was a way to keep talented workers and give those workers an incentive to meet and exceed goals.

Bonuses could be issued, Pearce said, based on certain benchmarks. In one example he gave, a division that received more than 80 percent positive feedback from the people it was regulating would be eligible. In another, workers responding to consumer complaints more quickly than the time typically allotted would be rewarded.

Pearce said that it wasn’t clear in August, when the first round of bonuses was paid, that the state would face the kind of crisis that has forced agencies to cut back. Those woes are forcing Gov. Bev Perdue to cut salaries for state workers by way of furlough and budget writers to consider ways to shrink the size of state government, including use of layoffs.

The commission was scheduled to issue another round of bonuses in February, Pearce said, but did not make those payments in response to the ongoing crisis. And it has asked that $200,000 of its budget be set aside next year for potential bonus payments, although Pearce said it was possible those payments wouldn’t be made.

Harrison noted that by August financial giant Bear Stearns had collapsed and the banking sector was facing huge challenges. In July, Indymac bank became the fourth-largest bank failure in U.S. history and President Bush had signed a law to provide $300 billion in backing to mortgage giants Fannie Mae and Freddie Mac.

“Folks who were involved in the financial sector were well aware of the problems,” Harrison said. “Given the talent they have over there (at the banking commission) they should have been aware of this impending crisis.”

Harrison said that budget writers plan to enact provisions that would prohibit agencies like the banking commission from issuing bonuses during the next two fiscal years, which begin July 1.

Sen. Phil Berger, an Eden Republican, said the commission and its leadership had a fairly good reputation.

“I have not heard any complaints by the regulated community or the community at large that Joe Smith or the commission is not going a good job,” Berger said. “The perception I have is that (they are) well-regarded all around.”

Still, he said, the idea of issuing bonuses during such trying economic times doesn’t look good, he said.

“Those agencies that are part of the state government but have independent funding sources ... should be sensitive to the perception that a bonus plan would create,” Berger said.

Contact Mark Binker at (919) 832-5549 or mark.binker@news-record.com