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NC Senate hopes to drive more rural job growth with new Job Catalyst Fund

Posted July 28, 2014

NEW JOBS

— North Carolina’s Department of Commerce, which has been largely privatized under Gov. Pat McCrory, could soon have a new recruitment fund designed to help the state lure projects that promise to create 500 or more full-time manufacturing jobs.

The Job Catalyst Fund is geared to promote projects in the state’s less-developed counties, with money to be made available for smaller projects at lower salaries and a lower local matching grant required from 40 “economically distressed” counties.

Projects must also meet minimum requirements for pay and health insurance to receive a grant.

Last week, the state Senate passed a bill that not only includes revisions in county sales tax authority but also a $14 million increase in the Job Development Investment Grant program, crowd-funding for start-up companies and the Job Catalyst Fund.

The bill faces an uncertain future in the House due in part to the sales tax language, which has become a political hot potato.

No money has been earmarked for the Catalyst Fund. However, it is believed that the possibility of landing at least one major jobs project is the driving force behind the creation of a new fund.

To be eligible for a Catalyst Fund incentive, a company must commit to creating full-time jobs (1,600 hours per year):

  • At least 500 in a Tier 1 (defined as “economically distressed” county)
  • At least 800 in a Tier 2 county
  • At least 1,200 in a Tier 3 (least distressed) county

Tier 3 counties, of which there are 20 in the state, include primarily metropolitan areas such as Wake, Durham, Mecklenburg, Guilford and Forsyth counties. There are 40 Tier 1 and 40 Tier 2 counties.

A variety of economic measures are used by the Department of Commerce to rank each of the state’s 100 counties.

Fund kicks in after significant corporate investment

The Catalyst Fund also requires a substantial commitment from companies, starting at $20 million for a Tier 1 county, $35 million for a Tier 2 and $50 million for a Tier 3. The money must be targeted at acquiring land or improving land and infrastructure, facility development, capital investment or manufacturing.

Counties and local governments also would be required to help fund incentives for a Catalyst Fund project.

Tier 1 counties would be required to put together a matching grant equal to 3 percent of the state grant.

The match is double that for Tier 2 counties (6 percent) and triple for Tier 1 counties (9 percent match).

Companies seeking to locate in more well-off counties would be required to pay higher salaries there in order to receive a grant. Employers would have to pay an average weekly wage “that is at least equal to 110 percent of the average wage for all insured private employers in the county.” For Tier 1 and 2 counties, companies would only have to match the average wage in the specific county.

Health insurance for employees also is required in order to receive a grant. The minimum requirement is that a business pay “at least 50 percent of the premiums” of policies that must at least equal “minimum provisions” of basic health care coverage as outlined in state statute.

Companies that have been cited for a violation of the Occupational Safety and Health Act within the past three years for an application are not eligible for a grant.

Catalyst is a fund waiting for funds

Sen. Rick Gunn, R-Alamance, says the Catalyst Fund is subject to funding and replenishment each year.

“We don’t fund it with this bill,” he told WRAL News. “The funding commitment would have to be set at the discretion of the General Assembly each year, and funds would be available in the account for the Secretary the same way any other appropriations are. [It is ] subject to reversions as appropriate, or reappropriation, or if they are recurring (as set by General Assembly) they would replenish each year, and we’d be aware of the balance so we could maintain reasonable levels of funding.

If the bill passes and once a new budget is certified, Gunn said the first grants would “be at the state’s disposal.”

Graham Wilson, deputy director of communications for the Department of Commerce, said there is “no time” for the first grants and added that Commerce still must develop specific grant guidelines. “The department would be required to publish those guidelines 20 days before any grant will be made available,” he explained.

Even with the requirements making Tier 1 and Tier 2 counties more lucrative for projects, there are no guarantees that they will benefit.

Like the Catalyst Fund, the JDIG program also attempts to drive jobs to less economically advanced areas. However, according to the Department of Commerce, 13 of the JDIGs awarded in 2013 went to Tier 3 counties. Only two went to Tier 1 and another two to Tier 2. Three JDIGs went to companies operating across more than one county.

13 Comments

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  • Jim Frei Jul 28, 2014

    Why not help the companies already here? I've had several large manufacturing clients in rural counties close in the past few years.

  • Terry Watts Jul 28, 2014

    View quoted thread



    Welcome to the NCGOP...

  • John McCray Jul 28, 2014

    View quoted thread



    Spot on! The money needs to be spent improving workforce training, otherwise if companies do come in, they will either leave after a short amount of time or import talent.

  • Todd Singleton Jul 28, 2014

    This fund gonna subsidize enough cost to offset the expense of hourly workers at US wages and benefits? Local taxes and good old boys at the trough? Otherwise it already failed.

  • Greg Boop Jul 28, 2014

    So let me get this straight... the Democrats established the private-public Rural Center which was focused on economic development and corporate recruiting. The reality it served as a slush fund for Democratic donors according to Republican pundits. The Republican legislature discontinued the Rural Center.

    Now the Republicans have set up exactly the same thing under a different name, I expect it will have the exact same issues as the Rural Center but the beneficiaries will now all be Republican donors instead of Democrats.

    Retired Judge Bob Orr has pointed out multiple times that providing direct grants to companies as an economic development is not appropriate and violates the state constitution. Why does the state persist with this nonsense when the majority of companies never even fulfill their obligations.

  • miseem Jul 28, 2014

    I wonder how many companies have set up in NC, or expanded anywhere in NC, and added 500 new employees in the last 8 years. Doubt if it's very many. And how many can expand in the economically distressed counties? Some of these counties don't have anywhere near 500 available workers, even if you pull from surrounding counties. If this is an example of how the "private" business development is going to be, don't expect much from it. This is just a publicity stunt that is poorly thought out and has very little chance of getting any jobs into NC without some serious revamping of the policy.

  • John McCray Jul 28, 2014

    View quoted thread

    Why, so they can become someone else's problem?

  • 50s Child Jul 28, 2014

    OHMYGOSH, I wonder if we live in the same county. For awhile I thought of running a small business, but the first obstacle was finding two people to work for me. That's manifested in nearly every business I walk into: what we euphemistically call "old-fashioned" attitudes in some stores, and just plain incompetence in nearly all the rest. I drive to Raleigh or Durham to spend my money. I won't reward the so-called businesses here for their hiring of inept, rude staff, and am trying to find a home elsewhere as well.

  • Anita Woody Jul 28, 2014

    Welfare. Plain and simple. Maybe the welfare class in these "economically distressed" counties need to get off their lazy duffs, get educated and/or move.

  • Bill Johnson Jul 28, 2014

    500 jobs and $20M investment to qualify in a Tier 1 county might as well be 1M jobs and $1B investment. Distressed counties need assistance for existing businesses to grow and provide help for new small start-ups. This is nothing more than a way to help well off counties while claiming to help distressed ones. My prediction is that it will only cause the divide to get bigger.

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