Despite Skepticism, Bill For Incentives Is Likely

The N.C. House voted 81-34 in favor of an economic incentive plan Monday after representatives ironed out limits last weekend.

If the new plan survives in the N.C. Senate, new businesses would receive up to 75 percent of income taxes paid by employees for up to 12 years.

A cap on the bill would allow no more than $15 million in grant agreements each year -- reaching as high as $180 million in the 12-year span.

A seven-member committee composed of state officials would choose 25 businesses to receive the grants.

The committee would contain appointees from both houses of the General Assembly and the president of the N.C. Community College System, among other officials.

Despite the bill's passage in the House, some representatives say they still disdain the idea of bribing organizations to come to the state.

"I wasn't happy with the plan," said Rep. Martin Nesbitt, D-Buncombe. "I don't think it's necessary, and you can recruit industry in other ways."

Nesbitt advocated for a stricter cap and took issue with businesses already in the state receiving no grants. He also said money could be better spent for infrastructure or citizens' salaries.

But he said that in the end, he still was not satisfied with the final product.

"I amended the bill because I feared it was going to pass," he said. "But I voted against it."

Tad Boggs, director of public affairs for the N.C. Department of Commerce, said previous business incentives like this one have been successful.

"When it comes to the state's existing incentives, like the William S. Lee Tax Credit, on the whole, the tax credits have been effective," Boggs said. The Lee tax credit provides tax breaks to "up-and-coming businesses," he said.

Boggs also said North Carolina lags behind other states that provide incentives to business. He said other states can attract potential businesses or even lure away ones already based in North Carolina.

"(Incentives are) something that you've seen build up speed with other states," Boggs said. "In a perfect world, we'd just as soon not be in this type of arms race with other states."

Senate Finance Committee Co-chairman John Kerr, D-Greene, said he believes the Senate will pass the economic incentive bill.

He said the Senate will first scrutinize funding issues like the new cap and also examine the makeup of the proposed committee to ensure that members work to benefit displaced workers.

"I certainly think that's what we want to look at -- the composition of this committee," Kerr said.

But he also said that while legislators are hesitant to enact an incentive plan, they have their hands tied by tough economic times and a need to compete with other states for potentially budget boosting businesses.

"All this would be a tool in our arsenal," Kerr said. "Nobody likes a war of incentives, but we didn't start it."

The State & National Editor can be reached at stntdesk@unc.edu.