NC urgently needs to get back into the incentives game

by Bob Morgan, CEO Charlotte Chamber of Commerce and Allen Purser, CEO Roanoke Valley Chamber, published in Charlotte Observer, June 17, 2015.

The Charlotte Chamber serves an area of 1.2 million, and the Roanoke Valley Chamber’s is 125,000. Even though our communities are vastly different, we have more in common than not. We both work hard to build a better business environment and a better community. We applaud the legislature for its work in recent years to reduce the income tax rate, streamline regulations and fund transportation infrastructure for a rapidly growing state.

For months, the Job Development Investment Grant Program, a key tool to attract jobs, has been in limbo. Under the program, new or expanding companies receive a portion of the taxes generated by their projects in the form of an annual rebate for a specified period of time. No payment is made until jobs are created.

The JDIG program has helped to bring significant projects to the state, including MetLife, Sealed Air, General Electric, and United Technologies, in Charlotte. Klaussner Lumber and PCB Piezotronics chose Halifax County with JDIG’s help. Rural and urban communities have benefited.

When projects locate in an economically less distressed (Tier 3) county such as Mecklenburg, 25 percent of the grant is put into a utility infrastructure account that only rural communities can access to attract new jobs and investment. Over the past three years, more than $121 million has been added to this fund.

The JDIG program is currently without funding. Many projects statewide are on life support. Others are considering dropping North Carolina from their list due to this issue. N.C. House legislation would fund a more robust JDIG program, putting North Carolina back in the game. The Senate budget bill places severe limitations on the use of JDIG in major metro counties. Coupled with the proposed redistribution of sales tax, the economic engines of our state will be stifled. Jobs will go to other states. Furthermore, the end result will likely be property tax increases for citizens and businesses.

In Mecklenburg County alone, we are engaged with 15 companies in the final decision phase with projects that have a combined potential job creation of more than 8,000 new jobs and over $1.4 billion in new capital investment. These projects all could qualify for a JDIG. Corporate decision makers are frustrated with North Carolina over this stalemate. Other N.C. counties are facing similar uncertainty.

The problem has epic proportions with North Carolina’s loss of Volvo, Mercedes, Toyota, Boeing, Giti Tire and others. Corporate decision makers and relocation consultants say North Carolina is not in the game for significant projects. The state’s reputation is being tarnished. Some have even indicated that they and their clients will look elsewhere to locate their projects until North Carolina is willing to get back into the game. We don’t have to be the highest bidder, but we do have to compete to win.