Local News

Another Incentive Package Awaits House Approval

Posted May 22, 2004

— Another tax incentive package is breezing through the General Assembly.

The House has approved a plan to give the governor $20 million to help lure new businesses to the state.

Why so many tax breaks? Some say it is the cost of competition.

Incentive backers say, in the current business climate, you have to give up tax dollars to make tax dollars down the road. Critics complain the tax breaks are selective and unfair.

Whatever the arguments, states are offering, and businesses are taking advantage.

$25 million in tax breaks will help put a drug manufacturing plant in Durham. For more than $100 million in incentives, R.J. Reynolds promises to bring hundreds of new jobs to the state.

North Carolina offered up a reported half billion to lure Boeing to the Global Transpark, but lost to a higher bid.

North Carolina State University economist Mike Walden believes incentives are necessary for the state to compete.

Although workforce and quality of life are prime factors in attracting new business, Walden said tax breaks can close the deal.

"That's where states are using incentives, to break the tie," Walden said. "And, yes, more states are using them. So, North Carolina has almost been forced into doing this."

Big businesses are learning to capitalize on the competition. A power point presentation given in Georgia by the State Government Affairs Council was titled: "Turn Your Government Relations Department from a Money Pit to a Cash Cow." Upon hearing about the seminar, Rep. Sam Ellis, an incentives critic, told WRAL that "anytime you put food in the trough, the pigs will show up."

GOP candidates for governor like Bill Cobey have made it a campaign issue, saying existing small businesses get left out of the corporate welfare. Still, most lawmakers argue that incentives are necessary to create jobs, and the latest package is sailing through the legislature.

The latest incentives bill is expected to get final approval in the House next week. It then moves on the the Senate.

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