Proposal would limit state economic incentives to Triangle businesses

A bill advancing in the Senate would redirect some state business recruitment incentives away from the Triangle to help boost economic development in poorer areas of the state.

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Matthew Burns
RALEIGH, N.C. — A bill advancing in the Senate would redirect some state business recruitment incentives away from the Triangle to help boost economic development in poorer areas of the state.

The state often provides money to companies looking to move an operation or expand to entice them to come to North Carolina instead of setting up shop elsewhere. The incentives come through the Job Development Investment Grant, or JDIG, program, which refunds some of the state withholding taxes for new jobs over a period of years if annual benchmarks are met, or the One North Carolina Fund, which is a grant matched by local funds that likewise is handed out only if certain job growth or investment targets are met.

Sen. Harry Brown, R-Onslow, said incentives were supposed to help rural counties in the state attract jobs, but they have done the opposite, with a few urban counties soaking up most of the available funds.

A WRAL News analysis of the $859.4 million in state incentive money handed out from 2008 to 2015 shows that $660.8 million went to firms locating in the 20 wealthiest counties statewide, while only $104.8 million went to companies in the 40 poorest counties. Wake and Mecklenburg counties alone combined for $522 million in incentive awards, more than 60 percent of the total during that period.

Under Brown's Senate Bill 660, the 20 wealthiest counties would be limited to no more than half of the $20 million in JDIG funds available each year, and incentive awards for projects locating in Wake, Durham, Chatham or Mecklenburg counties would be capped at $5 million a year.

Those four counties are considered "attainment areas" under the proposal because they outperform the state in terms of unemployment rate, per capita income, growth percentage and adjusted property values. Brown initially included Orange County as an attainment area but later said the state's latest economic data shows the county no longer exceeds state averages in all four areas.

Meanwhile, the other 50 percent of JDIG funds would have to go to business projects in the other 80 counties. Companies locating in the poorest counties would also get 70 to 80 percent of their withholding taxes back under a JDIG award, with those in wealthier counties limited to a rebate of 50 to 60 percent.

For One North Carolina Fund grants, poorer counties would have to put up less of a match to the state funding – 33 cents for every state dollar versus $4 for every state dollar in the four "attainment" counties.

"This gets back to the whole intent of what incentives are about and why they were created," Brown told the Senate Commerce Committee.

Sens. Floyd McKissick, D-Durham, and Paul Newton, R-Cabarrus, asked why the state couldn't increase the incentives available for rural counties without punishing wealthier ones.

"The intent of this bill is to change behavior," Brown replied, suggesting that the state Department of Commerce and the public-private Economic Development Partnership of North Carolina are grabbing low-hanging fruit by working with companies interested in expanding in the Triangle or Charlotte.

"It takes a little bit of work to move or sell product that is not as attractive," he said. "All areas of the state have a lot of benefits, but you've got to sell it."

Commerce Secretary Tony Copeland said he recognizes that "rural North Carolina needs something different" to help attract businesses, but he cautioned lawmakers against major changes to the state's incentives program. Instead, he said, more emphasis needs to be made on workforce development and infrastructure expansion.

"I've seen what companies look for," said Copeland, who previously worked as a site consultant for business expansions. "Without talent, they're not going anywhere."

Senate Bill 660 passed the committee on a voice vote with no opposition and next heads to the Senate Finance Committee.


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