Report criticizes performance of state's incentive program
A new analysis of one of the state's largest programs to entice job growth in North Carolina says a majority of those projects fail to deliver on promises of hiring, wages and investment.
Posted — UpdatedChief on McCrory's wish list is the expansion of the Job Development Investment Grant, or JDIG, program, the focus of the Justice Center report.
Allan Freyer, director of the center's Workers' Rights Project and author of the report, says the low success rate is a sign the legislature needs to slow down its move to expand the program and study ways to make it more effective.
"If the state wants to continue to pick winners and losers with incentive projects, we need to do better at picking winners," Freyer said. "Any time you have any government program that's failing 60 percent of the time, it's important to stop what you're doing – certainly not expand."
JDIG projects are performance-based, so companies don't get grant money until they meet certain benchmarks. So-called "clawback" provisions also require firms to pay back grant money in cases where jobs are later eliminated.
When those efforts don't pan out, he said, citizens lose.
"We want a program that creates jobs, not headlines," Freyer said.
The Justice Center report also notes that JDIG awards overwhelmingly benefit urban counties, rather than rural counties that need job growth the most. Since 2002, Freyer found, almost 60 percent of JDIG's incentive awards went to firms in Wake, Mecklenburg and Durham counties.
A portion of the grants awarded to urban counties is set aside for an rural infrastructure development fund. That's a good thing, Freyer said, but given that grants to rural counties fail 77 percent of the time, compared with 56 percent in urban counties, he said it's clear there's not enough support for areas with struggling economies.
"The fact that so few dollars are going to direct job creation in those counties is a concern," Freyer said.
Praise from across the aisle
The release of the report Monday prompted a rarity among North Carolina think tanks on opposite ends of the ideological divide: policy agreement.
Sarah Curry, director of fiscal policy studies from the conservative John Locke Foundation, said she liked much of what she saw in the study, including its recommendation not to expand JDIG or enact a new "catalyst fund" for closing big deals.
"If we're going to keep using incentives, we need to do a better job of using our tax dollars," Curry said. "But expanding is the last thing we need to be doing, especially when we have other necessary government functions that require attention."
"We know we have a budget shortfall and we know money is going to be tight," Curry said. "Why are we putting money into a failing program when we have needs like teacher pay out there?"
Curry said she's not surprised to see agreement from the left and right on the issue of incentives. Liberal groups, she said, would argue the money would be better directed at the needy, while free market proponents see lower taxes for everyone as a better strategy for attracting business.
"There are different core reasons, but they both come to same conclusion: It's not the state's responsibility to give money to corporations," Curry said.
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