Corporate Welfare Weekly - January 4, 2010 – Issue 31
Jan 4th, 2010
Recent Announcements…
That’s a lot of bread!!
$575,456 in local incentives has been granted to “Project Dough,” which sources have hinted to beHarvest Time Bread Company. The Mount Airy bakery desired to expand in Piedmont Triad West Corporate Park, but city and county officials want to keep the company in Mount Airy. Surry County approved $283,200 in incentives and the City of Mount Airy approved $296,256 in incentives.
~ Tom Joyce, Mount Airy News, December 21, 2009
Taxpayers give so Mortgage Company can loan!
$8,600,000 in maximum benefits to Zenta Mortgage Services from North Carolina’s Job Development Investment Grant (JDIG). The incentives were granted by the state’s Economic Investment Committee to encourage the New York-based mortgage company to expand its local Charlotte operations.
~ John Prior, Housing Wire, December 28, 2009
Taxpayers taken to the cleaners
$136,000 to Maple Springs Laundry from the One North Carolina Fund to expand its western North Carolina operations. The Hickory-based company provides commercial laundry service for the western region health-care industry. The state incentives require a local match.
~ Chris Baysden, Triangle Business Journal, December 29, 2009
N.C. taxpayers help subsidize Hollywood studios
Effective January 1st, 2010, North Carolina began offering a 25% Film incentive credit. On August 27, 2009, Gov. Bev Perdue signed legislation to expand North Carolina's film tax credit from 15% to 25%.
~ North Carolina Film Office, January 4, 2010
Quotes of the Week…
“The town is picking winners and losers. They may not be the jobs people want in the long run, but they’d be jobs to have while they look. …The town just needs to focus on creating an environment where all businesses can succeed, and get the heck out of the way.”
~ Cary Town Councilman Don Franz, quoted by the News & Observer regarding the Town of Cary’s decision to deny an economic incentives package to an undisclosed technology manufacturer soon after approving similar packages for other companies promising similar expansions. Franz is the council’s most fervent opponent of incentives.
“She did ‘em all!”
~ N.C. Commerce Secretary Keith Crisco, as quoted by the News & Observer. Crisco said he asked Gov. Bev Perdue to step in 46 times during 2009 to help with business recruitment and “she did ‘em all!” Apparently, she does not say no very often.
“States should call companies’ bluffs – that if a business likes a region enough, incentives won’t matter.”
~ Mike Walden, an economist at N.C. State University as quoted by the Charlotte Observer. Dr. Walden created the formula state officials use to measure the costs and benefits of proposed projects.
Town of Cary rejects incentives for undisclosed local company
Back in mid-December, Cary Town Council members were discussing offering an incentives package to an undisclosed technology manufacturer to bring more jobs to the town. Even though Cary Town Council members had agreed to give cash incentives to at least five other expanding companies over the past three years, they rejected the incentives plan for the technology manufacturer.
Initially, The Cary News reported in a December 13th article, written by Sadia Latifi and Jack Hagel, that
“Town Council members met Thursday to discuss offering a cash grant for the [technology manufacturing] company. … Incentives are typically reserved to lure companies that plan to create lots of jobs and otherwise add to the tax base. …
‘The Town believes this project will help stimulate the local economy, result in a substantial capital investment in personal property in the town, and create a substantial number of new, full time jobs,’ according to a preliminary agenda of Cary’s Town Council meeting on Thursday.”
Then, the News & Observer reported in a later article written by Sadia Latifi that
“The Town Council rejected a proposed economic incentives deal during a closed session Dec. 10 but didn’t make the action public until early last week. The decision sheds new light on how and to whom the town chooses to dole out money for jobs. It also surprised economic developers and bothered the council’s most fervent opponent of incentives.
‘My honest opinion is that the majority of the board was against the deal because they were manufacturing jobs, not high-level, administrative executive jobs,’ Councilman Don Franz said.”
While we at the Center for Economic Development Reform are glad to see an incentives package rejected, this shows exactly what is wrong with these economic incentives policies. Elected officials pick and chose which companies they feel warrant monetary assistance and which do not. What system do these legislators use to determine one company more deserving than another? Either all companies should benefit equally or none at all!
Another Dell?
The Charlotte Observer reported in a December 19th article that landing a business is no guarantee that it will thrive, Kings Mountain Learns.
“It was a sign of hope for this battered region. After years of manufacturing losses, boat maker Chris-Craft wanted to open a production like that would create hundreds of jobs.
Workers in this city of 11,000, 30 miles west of Charlotte, cheered as the Florida company accepted a multimillion-dollar incentives package in July 2006 and bought a sprawling, empty factory.
Company officials hinted that suppliers would soon follow, bringing more work. Economists theorized that the industry could propel North Carolina into a more prosperous future.
But less than two years after the new plant churned out its first shiny yachts, Chris-Craft shut down the production line, citing economic troubles. Last December, it withdrew from the state’s incentives program and put its building up for sale, saying it could be years before it was healthy enough to return to Kings Mountain.
The failed Chris-Craft deal was another blow to Cleveland County, where closing textile and furniture plants have driven the unemployment rate above 15 percent. It’s also one of the latest reminders that, no matter how successful incentives are in landing a major deal, they can’t guarantee the company will create the jobs it promised, or even stay in the state.”
Discouraging Tidbit…
North Carolina owes the feds $1.5 BILLION in unemployment loans!!
Even though North Carolina is in deep debt to the Federal Government, Commerce Secretary Keith Crisco told the News & Observer the Commerce Department is discussing more than 100 projects for 2010. In another News & Observer article, it was reported that
“North Carolina ranks sixth among 25 states that have outstanding loans from the federal government to pay unemployment benefits, according to U.S. Department of Labor statistics.
In 2009, the state borrowed more than $1.5 billion to pay initial unemployment benefits for a maximum of 26 weeks to individuals who are eligible.
Some states have considered raising payroll taxes to cover the amounts they owe, North Carolina’s Employment Security Commission, however, says there’s no plan in place on how the state will pay back the loan.
This isn’t the first time North Carolina has borrowed money to pay for unemployment benefits. It’s the amount that’s unprecedented. During the 2001-2002 recession, the Employment Security Commission borrowed about $240 million.”
The intention of this tidbit is not to argue the validity of North Carolina receiving loan assistance from the federal government, but the logical conclusion is for North Carolina to cut spending in order to pay off this $1.5 Billion debt to the Feds, and not continue to increase spending with more and more corporate incentives?