Easley Nixes Goodyear Grants; Special Session Planned

Raleigh, N.C. — House Speaker Joe Hackney said Thursday that he plans to bring lawmakers to Raleigh next month to consider overriding Gov. Mike Easley's veto of legislation that would have provided Goodyear Tire and Rubber Co. with up to $40 million in state grants.

The special legislative session likely would be held Sept. 10 or 11, Hackney said. Senate leaders said they were informally gauging sentiment about an override, but would wait until the House acts to decide what they would do.

Lawmakers last month approved a bill that would amend the state's Job Development Investment Grants program, which traditionally has provided tax breaks to companies looking to locate or expand in North Carolina. The amendments expanded the scope of companies eligible for JDIG money to include "multinational heavy industry manufacturing" facilities that maintain their existing work forces and agree to invest at least $200 million to upgrade their plants over the next five years.

Although Goodyear wasn't mentioned in the bill, lawmakers said the proposal was written with the company in mind. Grants would be restricted to companies located in economically distressed counties and having at least 2,400 full-time employees. The grants would require each recipient to maintain its work force.

Goodyear employs about 2,700 people in Fayetteville and is Cumberland County's largest private employer.

Easley had expressed concerns about the legislation in recent weeks, saying he felt there was a better way to work with existing companies. He vetoed the bill Thursday, saying he couldn't sign the bill in good conscience, saying it would allow Goodyear to lay off as many as 700 workers and still qualify for the grants.

"(This bill) would set a dangerous precedent for North Carolina’s economic development policy and is not fair to her taxpayers," Easley said in issuing his eighth veto since 2002. "It calls for the state to give up to $40 million in cash to an existing company in one county with little or no regard for how much the company actually pays in state and local taxes, what wages it pays now or in the future or whether it lays off nearly 25 percent of its work force. Never in the history of the state has anyone given a company up to $40 million and allowed them to lay off hundreds of workers."

Hackney fired back that Easley pushed a much larger tax break package to lure Dell Inc. to North Carolina that allows the computer maker to cut up to 40 percent of its work force per year.

"Who's going to put in $200 million and then start cutting jobs? That's not what this is about," he said. "We ought to come up with something that we can all agree with, but we've had great difficulties working with (Easley) on this."

The governor has proposed his own legislation to provide financial incentives for manufacturers to expand in North Carolina. The American Productivity and Competitiveness Act of North Carolina would provide state and local grants to manufacturing companies that employ at least 1,500 people in distressed counties.

Elaine Mejia, project director of the nonprofit North Carolina Budget and Tax Center, said any incentives offered to businesses are bad policy.

"Do we ever want the taxpayers of the state, taxpayers who live everywhere in the state, to be subsidizing a handful of corporations?" Mejia asked.

But Hackney said he believes Goodyear will move the Fayetteville jobs elsewhere without the state grants.

"We can't afford to lose that," he said. "(Easley) needs to work with the Cumberland people and not against them."

Cumberland County lawmakers had said in recent days that they would push for a special session to override the veto.

Easley said, however, that he doubted that some legislators who voted for the Goodyear bill understood that it was written specifically for the company. He predicted that getting 60 percent of lawmakers to support an override would be difficult.