Study: NC counties paid $144M in incentives over 5 years
A report released Thursday by the John Locke Foundation shows North Carolina counties paid out about $144 million in economic development incentives over the last five years.
The conservative think tank's study, created using public records requests, appears to be the first-ever tally of awards on the county level issued to companies to create jobs. Researchers found counties entered into 776 incentive contracts worth about $284 million from July 2009 through June 2014, although they paid only about half that amount.
Sarah Curry, co-author of the study, said the research revealed that county leaders use a variety of incentives to drive economic development, sometimes in unexpected ways. Alleghany County, for example, used an incentive grant when it needed a dentist who accepted Medicaid patients – which the area didn't have at the time.
"That kind of hit me that, wow, it's much broader than we think," Curry, the foundation's director of fiscal policy studies, said. "It's not just going to big businesses."
Adjusting for the number of county residents, the report found no divide between rural and urban counties in either award amounts or dollars actually paid per capita.
Curry said the difficulty of the research, which required study authors to obtain data directly from county governments, underscores the need for better transparency in county-level incentive spending. The study recommends that state lawmakers pair a reporting requirement with a website to allow taxpayers to explore the data.
"There's no way the average citizen knows where their tax dollars are going if it was this hard for us to get it," Curry said.
It also recommends legislators use that data to evaluate the effectiveness of incentives, which the John Locke Foundation in general opposes.
While he said he's in favor of transparency and reporting requirements, Wilson County Assistant Manager Ron Hunt said county leaders would need more information before weighing in on the data portal. All incentive agreements and documents, he said, are already part of the public minutes from commissioner meetings.
"We would need to know if there are any county costs (in addition to the state costs) to building a web portal, as suggested," Hunt said in an email.
Allan Freyer, director of the Workers' Rights Project at the left-leaning North Carolina Justice Center, praised the report Thursday and called its recommendations "a good first step for improving accountability." The Justice Center has also been critical of incentives in the past and released a report in February detailing how they often fail to create jobs.
Proponents of incentives argue they're necessary in competing against other states and countries for company relocations and expansions that can often have a multiplier effect on the economy. Hunt said that's been true in Wilson County, which according to the report paid out more than $100 per resident in incentives, the highest in the state.
"While there are varying opinions and ideas regarding incentives, we do feel that our economic incentives have been very beneficial for Wilson County and allow us to compete with similar communities statewide and nationwide," Hunt said. "In addition, incentives support our efforts to maintain our valued employers."
Freyer said he'd like to see state lawmakers go even further than the Locke Foundation's recommendations, setting up rules for the award of incentives across the state's 100 counties that would mean less uncertainty for companies, local governments and taxpayers alike.
"We don't want locals to sign bad deals that are going to cost more than they benefit the state," Freyer said.
Curry said getting a completely accurate picture of how much state, county and local governments spend on incentives will require more study. The foundation plans to release a follow-up report detailing economic development spending by the state's 15 largest cities.
Better data, Freyer said, can help state lawmakers as they grapple with competing plans for the future of economic development programs such as the Job Development Investment Grant, which will end this year without action from the General Assembly.
"This reflects how locals are spending their money, but we're less sure of what the outcomes are," Freyer said. "That would be the really interesting question. That's the question we should all care about."
