Business Incentives Backed by Easley Recommended by Legislative Panel
Gary D. Robertson , The Associated Press
April 30, 2004

RALEIGH, N.C. -- A legislative committee has endorsed expanding and reworking business incentives sought by Gov. Mike Easley to help create new jobs as North Carolina seeks to counter recent economic setbacks.

The panel, which spent seven months studying ways to counter the loss of traditional manufacturing jobs, recommended Thursday putting $10 million in a special fund that Easley can use to sweeten incentives deals.

The research and development tax credit program also would be rewritten to weight rebates toward small businesses, companies in rural areas and work done at state universities.

Business recruiters and state commerce officials have said North Carolina lags behind neighboring states in attracting high-paying jobs.

"This committee was trying to help make better the economic climate of the entire state," said Rep. Bill Daughtridge, R-Nash, a co-chairman of the Joint Select Committee on Economic Growth and Development. "If we want to get industrial recruitment in North Carolina, we have to play the same game all of the states are in."

The recommendations, which will be forwarded to the General Assembly in time for its return to Raleigh on May 10, also included a last-minute entry into the panel's final report that would exempt businesses for the first $20,000 of their annual corporate income tax bill.

The committee's final report recommended no specific legislation for the exemption, which could cost $30 million. The state's top business lobby and several candidates for governor instead have endorsed a reduction in the corporate income tax rate.

Easley has asked the General Assembly to replenish the One North Carolina Fund, commonly referred to as the governor's "walking-around money."

The money is used to improve utility lines to existing buildings or renovate potential sites for companies. The General Assembly has added no money to the fund the past two years, and Easley has said the entire fund is now spent or committed.

The panel also followed Easley's wishes and recommended extending the life of a relatively new grant program in which the state gives back to companies a portion of personal income tax withholdings from new positions they create.

The Job Development Investment Grant Program was slated to end in January. Under the committee's recommendation, it would continue until 2009 and could be expanded from 15 agreements annually to 25.

The committee that selects the grant recipients would see its budget for grants increase from $10 million per year to $18 million annually.

Easley, who is seeking re-election this year, has already used the JDIG program several times this year to attract out-of-state companies to North Carolina.

Dan Gerlach, Easley's budget adviser, was pleased with Wednesday's recommendations.

"We think going through these targeted incentives have made us far more competitive and use our resources most wisely," Gerlach said.

Commerce Department officials began JDIG in 2002, following criticism that the state's primary economic incentives package wasn't luring new firms to poor areas or those hit by layoffs.

Sen. Walter Dalton, D-Rutherford, said JDIG put his foothills county in the running for two corporate projects that would have brought 1,500 jobs to the area. Before JDIG, he said, the county wasn't even in the game.

"In the long term, it would be better to invest in education (alone), but my 13 percent unemployed people aren't interested in the longer term," he said.

Not everyone thinks JDIG has solved the problem, though.

"This is a program for the wealthy counties" said Rep. Paul Luebke, D-Durham, a frequent critic of tax incentives. With little debate on its effectiveness, Luebke said Thursday, recommending this is "a terrible, terrible mistake."

The committee also asked that the General Assembly:

-- allocate $5 million to the Film Industry Development Account to issue grants to companies for up to $200,000 per production. This and another incentives package backed by the state film industry are being touted as a way to bring more such projects to North Carolina.

-- give $15 million to the North Carolina Rural Center to develop a program that would make small-business loans and grants to local governments for wastewater projects.

-- spend $1.6 million next year to help the community college system with its customized worker training programs.