Commerce secretary: Economy getting help
By Steve Herring
Published in News on October 14, 2009 1:46 PM
North Carolina Commerce Secretary Keith Crisco, right, jokes with state Rep. Efton Sager, left, and former representative Louis Pate following Tuesday's meeting of the Goldsboro Rotary Club. Crisco, who spoke at the meeting, said he has no crystal ball to gaze into the future of the state's economy.
State Secretary of Commerce Keith Crisco Tuesday told Goldsboro Rotarians he does not have a crystal ball to look into the future of the state's economy. But he said he believes the state is moving in the right direction.
"I think we are bouncing along the bottom. I don't think we have recovered, but I think we have stopped falling," he said.
Regarding the state budget, he said the bad news is that finding the money to pay for programs will continue to be a problem for some time.
"We had a $4.5 billion deficit," he told the gathering at the Goldsboro Country Club. "It was 40 percent cuts, 30 percent stimulus, 20 percent increased taxes (to balance the budget.) The legislature did everything and they probably made everybody mad.
"As you project out, you assume the stimulus money will not be around, so some of the issues, maybe not in the short session, but in the next long session, if the economy does not turn around ... we are going to have to address either the tax structure or something in North Carolina. We are relatively better off than others states, but we do have our own issues."
Crisco said he is "very aware" of the problem posed by high unemployment.
"We care and work hard to try and understand the plight of people in North Carolina today and it is not a pretty picture," he said. "We are relatively better off than so many states. California is losing 100,000 people a month. We are gaining people."
Crisco was questioned about Dell's recent closure of its plant and how it reflected on the practice of providing companies with economic incentives. One Rotarian suggested that lower taxes would work better than incentives.
"It was very disappointing that Dell closed its plant," Crisco admitted. "You hear a lot in the press about incentives, but you need to know that every one of North Carolina's incentives are pay as you go. There is no money up front. You need to know that the state is not giving money, big money to people and saying 'Please come.' They must come and perform before they get anything.
"The key point is if you come and employ people we will pay you money for those jobs, but you have to employ people first. Winston-Salem put about $15 million in that program. They will get every penny back plus 90 acres of land."
The state has about $8.5 million that it will not get back, he said. Of that amount, $500,000 went to the company. The remainder was invested in roads and training.
"I, as a businessman, have a little problem with the theoretical concept. I do. But I also worked in a textile business so I know about competition. I am here to tell you that if we stop, South Carolina, Tennessee, Virginia, Alabama and Mississippi will clean our plow."
He said the state needs to lower its corporate tax rate.
"We need to get our corporate tax down to the point, you know the old joke, 'I don't have to outrun the bear, I just have to outrun you,'" he said. "We need be the lowest corporate tax rate in the Southeast. If we can do that we can attract more. But you will still need incentives. If it is performance based, it is OK anyway."
But the state must be judicious in lowering the rate, he said.
"You are swimming upstream a little bit when you lower the tax rate," he said. "The short run when we cut HHS (Health and Human Services) they are matched three to one by federal dollars. For every $1 we cut out of health care for a nurse or something like that, in addition to lowering services, we lose $3 of federal match. It is a tightrope."
Crisco was asked what the state is doing to develop deep-water ports and an inland port in eastern North Carolina. He said that he is working with Transpor-tation Secretary Gene Conti to put together a "total logistic plan" for the state including the ports, distribution and rail. The state has applied for $5 billion in federal stimulus for rail.
"Georgia has put in these big box warehouses," he said. "That was really smart. This is embarrassing. Lowes, a North Carolina company, uses the Savannah port because of the big box warehouse. ... We should have gotten on that quicker. We are reviewing the whole thing to make sure nothing else slips up on us."
Crisco, who was to leave for Japan and China today, said there are potential customers in China for such big box warehouses.
He also supported recruiting trips abroad.
"I am leaving Wednesday for Japan," he said. "Thursday, she (Gov. Beverly Perdue) is leaving for Japan and China.
"She is going to be wowed. She needs to do it early in her administration because it is so important to what we do. Whether you understand globalization, agree with it, or don't agree with it, or wish it would go away or not, it is here and she needs to see it."