03/18/07 — Business incentives get look from state

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Business incentives get look from state

By Matthew Whittle
Published in News on March 18, 2007 2:10 AM

State Sen. John Kerr, D-Wayne, doesn't like them. Wayne County Development Alliance President Joanna Thompson and Wayne County Board of Commissioners Chairman John Bell aren't fans either. Even Harrell Everette, a Goldsboro lawyer and member of Gov. Mike Easley's Economic Investment Committee would prefer they not be so prevalent.

But everybody admits that economic incentives for business and industry recruitment and retention are necessary and that they're likely to remain so for quite some time.

In light of the recent blockbuster packages -- more than $250 million each -- awarded to Dell Computers and Google, however, some people are beginning to step back and take another look how those incentives are given.

Currently that process is still in its early stages, but Kerr is one of 22 House and Senate members serving on the special joint Economic Development Incentive Committee examining the matter.

"I don't personally like it, but it's a war and you've got to be a player. It's a fact of life," he said. "The thing we're concerned about is there have been a lot of deals that were for too much money. What we're trying to do is just get the facts."

Fortunately for North Carolina, Kerr added, there's a lot of other atributes helping to attract business -- the state's workforce, education and quality of life being among the top draws.

"But what we really need is for Congress to say they (incentives) are illegal," he said.

Among the incentive programs available to the state, there are three that are used most often.

One is tax credits for job creation, investment, research and development, worker training and central administrative offices. The second is the One North Carolina Fund, which is a pot of money used at the governor's discretion on projects deemed vital to a healthy and growing economy. The third is the Job Development Invest-ment Grant Program, which is another discretionary pot of money directed by the governor's Economic Investment Committee.

All the incentives are given only if the company meets the necessary job creation and investment requirements, and in many cases, they often are targeted toward specific needs such as infrastructure.

"They're well-monitored programs," Everette said. "There's no money just given up front. That's a common misconception.

"It's incumbent upon them meeting specific goals. They get the money only if they meet certain economic goals. If they don't, the program is terminated."

It is, he continued, a practical way of doing business.

"The way North Carolina does it, you have to earn it. You have to hire the employees. You have to make the investment," Everette said. "It's the best we can do."

Many of those state projects, though, also require local participation -- often through matching grants whether with cash or in-kind contributions.

And in Wayne County, Ms. Thompson said, that's often the extent of the local contributions.

For example, when AAR Corp. came, Wayne County matched the state's grant by reducing the cost of the company's shell building. Another example, is when Turkington bought the local APV baking division, the county and city split the local $300,000 match, 50/50.

There also are occasions when the county will offer a small incentive without help from the state, as it did when it lowered the cost of the property for Andy's Cheesesteaks and Cheeseburgers' corporate headquarters in Mount Olive, but those cases are rarer and on much smaller scales.

But in all cases, Ms. Thompson said, local government participates only if there is a definite investment, jobs are created and there is a legitimate threat of the company choosing another location.

"You're trying to incent the company to choose you. We make investments to get investments, but I think we've been very frugal in Wayne County. I don't think we've ever overstepped our means," she said. "The times we have been able to offer incentives, it's helped us seal the deal."

Bell agreed, saying, "We try to stay within reason. We're not going to give away the taxpayers' money. We're making sure we're getting the bang for the buck."

And while there have been occasions in the past when the county didn't meet what the company wanted, Ms. Thomp-son added that she doesn't think that's necessarily a bad thing.

"Some companies do just walk in the door demanding incentives, but that should throw up a red flag," she said. "In those cases we just say, 'Well, we may or may not be able to help you.'

"Incentives should be the icing on the cake. They shouldn't be the batter that bakes the cake."

But, she continued, they aren't going away.

"Its a little regrettable and sad that it's come to this, but like any business, you have to change with the times. It's just the way of doing business," she said.