Legislature should determine which incentives work before taking action

Editorial by Wilmington Star-News, January 11, 2015.

Gov. Pat McCrory is right to make economic development a top priority for his legislative agenda this year, and he already has said he will start by seeking to renew and increase business incentives. If the General Assembly doesn't act this year, the Job Development Investment Grant program will expire.

Incentives, particularly those that provide tax credits or up-front cash awards, are distasteful to many taxpayers because they amount to special treatment for a select group of companies. But they also are expected, and unless North Carolina has a competitive incentives smorgasbord we may lose out.

The governor also has lobbied for other types of incentives, including a "closing fund" that as proposed last year would be spent at the discretion of the secretary of commerce. Lawmakers aren't in as big a hurry, and Republican leaders are prudent to note that it's time for the legislature to take a broad look at which incentives work, which ones don't and exactly how much benefit North Carolina gets in exchange for the money that goes out.

JDIG has been a popular program because it ostensibly ties the grant to job creation. But its success is questionable. Last year Raleigh TV station WRAL looked at JDIG grants issued under former Gov. Beverly Perdue, a Democrat, and found that many of the promised jobs did not materialize. That type of information is vital for legislators to have.

But while they are scrutinizing job incentives, McCrory and the Honorables also should recognize that the film tax credits they killed last year provided good jobs that support several thousand families, including many in the Cape Fear region. Legislative leaders dismiss these as "temporary" jobs because by nature, films and TV shows have a beginning and an end.

What they apparently do not realize is that the tax credits brought in so many of these projects that film crews here were working year-round. And while some studies question the value of film incentives, others have quantified the economic value of the film industry in North Carolina. We certainly have felt its impact here.

But half of a $10 million grant fund that replaced the defunct film credits has been spoken for already, creating uncertainty about how 2015 will shape up for people who make their living from the movie industry. Wilmington Regional Film Commission head Johnny Griffin says inquiries are down at least 50 percent compared with last year's numbers, and an HBO project whose producers were eager to come to Wilmington recently announced it would film instead in Charleston, S.C., he said. Those are not good omens.

McCrory understands that North Carolina needs an arsenal of strategies to attract good jobs to the state, and the legislature should take a broad look at all types of incentives. But the film incentives brought in more business, employed more people and supported a lot of local businesses here in the Cape Fear region. They, too, should be on the table when the General Assembly convenes this month.

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