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RALEIGH — The N.C. Banking Commission paid $478,081 in bonuses to 72 employees last year and wants to set aside money 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 leads 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 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, Pearce said.

The Office of the Commissioner of Banks, overseen by the Banking Commission, regulates state-chartered banks and 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 tax money. 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 benchmarks. In one example, a division receiving more than 80 percent positive feedback from people it was regulating would be eligible. In another, workers responding quickly to consumer complaints 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 forcing agencies to cut back.

Those woes are prompting 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.

The commission did not make a scheduled round of bonus payments in February, Pearce said, in response to the ongoing crisis. It has asked that $200,000 of its budget be set aside next year for potential bonuses, 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 then-President George W. 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.

Harrison said budget writers plan to enact provisions that would prohibit agencies 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 good reputation.

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

“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