Raleigh, N.C. — A bill that would boost the state's efforts to recruit large companies to North Carolina, particularly big automakers, passed the House Finance Committee on a 30-9 vote Tuesday morning, despite opposition from both liberal and conservative lawmakers.
The measure, which appears to be on a fast track through the House, was also vetted by the House Appropriations Committee on Tuesday afternoon. Top leaders say they expect to take a first floor vote on the measure on Wednesday.
A major feature of the bill is a re-branding and boost in funding to the state's Job Development Investment Grant and One North Carolina Fund programs, along with the re-purposing of other incentive funds. Although there are lots of moving parts to the bill, the headline number is a roughly $900 million potential liability when the potential benefits are measured over the next 15 years.
"We're not in a position where we can just say, 'We're not going to play that game.'" said Rep. Susan Martin, R-Wilson, one of the bill's primary sponsors.
Martin's statement acknowledges a push and pull among Republicans who have philosophically opposed incentives but now control a legislature and the governor's mansion at a time when spurring job creation is both a pressing practical concern and a top-tier political issue.
"There is no question that incentives are the first box that are checked by anyone looking at North Carolina," Commerce Secretary John Skvarla told the Finance Committee, pleading the administration's case for the expansion. "We need these tools."
That sentiment drew criticism from opponents of the bill, who said changes North Carolina has made to tax rates were already helping to prod economic growth.
"We keep hearing, 'We have to do this. We have to do this to compete,'" said Rep. Bert Jones, R-Rockingham, an opponent of the bill.
"I just looked at the latest unemployment figures," Jones said, noting that North Carolina's 5.5 percent unemployment rate is lower than rates in other southeastern states. "We must be doing something right."
He added, "I just cannot accept the fact that we can take money from the many and give it to a privileged few. I actually believe in free markets and fair competition and the level playing field."
Answering that criticism, Martin said that the state's tax rates have helped but that the existing job inducement programs have also helped lure companies to expand and relocate in North Carolina. Rep. Bob Steinberg, R-Chowan, a past critic of incentives who is now a sponsor of the economic development measure, said lawmakers should not "turn up their nose" at incentives when there are still pockets of the state where people cannot find decent jobs.
"Please, please for God's sake, support this legislation," Steinberg said.
Bill contains boon for airlines, data centers
Although the bill itself is sprawling, the highlights are:
- It renames the JDIG program to the Job Growth Reimbursements Opportunities - People Program, or Job GRO People. It also puts more money into that program for both the short term and extends its existence for the long term.
- The measure also renames and funds the One North Carolina program to Job GRO Capital, which focuses on rural areas.
- It extends a tax break that caps the maximum amount of sales tax an airline will pay for jet fuel in the state to $2.5 million per year.
- The bill expands tax breaks on electricity for large computer data centers.
Left out of the package are features sought by Gov. Pat McCrory, including an expansion of the historic preservation tax credit program for old mill buildings and a measure to create crowd-funding regulations that would facilitate small investors putting money into startups. There is also no mention of the state's film grant program, which industry advocates say is under-funded.
While conservatives blasted the bill for spending government money on private businesses, more liberal lawmakers decried the fact it would give money to businesses that they said could be better spent on schools and families.
"The middle-class consumer doesn't get any break on the 7 percent sales tax on electricity," said Rep. Paul Luebke, D-Durham, in objecting to the tax breaks for data centers.
Rep. Mike Hager, R-Rutherford, said the data center tax break did help middle-class families by providing jobs.
"Rural areas really benefit" from the provision, Hager said.
In an effort to appease some critics of the bill, sponsors did push through a package of amendments, including a requirement that local governments in wealthier counties chip in their own incentives when the state offers grants to a large firm.
But an amendment by Rep. Paul "Skip" Stam, R-Wake, that would have refocused the state's incentive programs on rural areas and strengthened the state's ability to recoup money from companies that don't meet their obligations was turned back.
"To me, it just ties one arm behind the backs of the Department of Commerce," said Rep. Ken Goodman, D-Richmond.
North Carolina, Goodman said, should not risk losing a big employer because they weren't building in the preferred part of the state.
"Companies locate where it serves their best interest," he said.
Despite opposition from several quarters, the measure is expected to make it easily to the House floor and likely has the votes to pass. However, it's unclear what will happen to the bill when it moves to the Senate, where GOP leaders are more skeptical of the state's efforts to lure jobs.