The annual incentives debate in the General Assembly is under way, and this year’s installment is expected to be as robust as any in recent memory. Gov. Pat McCrory has said repeatedly that he wants lawmakers to quickly pass tax incentives and other perks to help recruit and retain jobs and new investment.
Whatever decisions are made about incentives this year will be controversial. Here’s a primer to get you up to speed on the status of the debate.
1) McCrory set the stage in his recent “State of the State” speech, saying competition from other states is fierce. He wants lawmakers to approve a “series of tools” to help beat the competition, a proposal he’s calling “NC Competes.” The Economic Development Partnership of North Carolina, the new public-private economic development agency created by the McCrory administration, would be a beneficiary of new incentives because they would help the partnership land companies.
2) The House will take the first crack at incentives legislation. It is expected to seek changes to the popular Job Development Investment Grant, or JDIG, program, with a focus on trying to attract large manufacturers, including automakers. A crowdfunding proposal to allow small donors to invest in start-up companies – an idea considered last year, but not passed – may also make it into the House bill. A third provision the House might consider, WRAL-TV in Raleigh reported, would change the way business taxes are calculated, and such a change might also benefit larger manufacturers.
3) Expect significant discussion around the JDIG program, which gives grants to new or expanded companies based in part on hiring. It is under intense scrutiny as talks begin. The News & Observer of Raleigh reported that the pot of JDIG money is nearly depleted after the McCrory administration, in its first two years, promised employers nearly $300 million through 2026 to create more than 15,000 jobs. McCrory now wants more money in the pot. Others think that’s a bad idea.
Meanwhile, the liberal N.C. Justice Center just released a study claiming more than half of the companies receiving JDIG grants since 2002 – under former administrations – failed to live up to promises of job creation, investment or wages. Expect additional reports from various groups on the effectiveness — or lack thereof — of incentives proposals under consideration.
4) House Democrats filed a 61-page bill that includes numerous incentives proposals. Don’t expect that bill to go anywhere. But House Republicans don’t often agree on incentives, so whatever package makes it through the chamber may need some Democratic support. That could mean some give-and-take, with Republicans throwing Democrats a bone.
5) Lawmakers from rural areas will be looking for help for their parts of the state. While metropolitan areas like Charlotte and Raleigh are rebounding from the recession, unemployment rates remain high in many rural counties. More than 80 percent of JDIG grants issued under McCrory have gone to jobs in the Raleigh and Charlotte areas, the News & Observer reported.
6) McCrory’s administration also is aggressively pushing for a new program to reward developers who refurbish and reuse historic buildings. The Legislature allowed the former historic preservation tax credit program to expire at the end of last year and calls are mounting to bring it — or something similar — back.
Some time this year, we’ll see who the General Assembly picks as winners and losers in one of the major debates expected this session.
Patrick Gannon writes about North Carolina government and politics for the Capitol Press Association.
http://www.reflector.com/opinion/other-voices/gannon-incentives-debate-2799603
