The Corporate Welfare Weekly is launching an effort to identify ANY company doing businesses in North Carolina who plans to expand, relocate within the state, or simply create new jobs – but ISN’T getting any incentive from the state or local government. Email Shelley Gonzales at email@example.com
The Richmond Times-Dispatch reported in a January 14 article written by Olympia Meola and Michael Martz that Virginia lawmakers are proposing to eliminate the corporate income tax to make the state more competitive. “Legislators looking to strengthen the state’s competitive edge when vying for new jobs are proposing to scrap the state’s corporate income tax. The idea is being pushed by a small group of businessmen who see it lending a ‘wow factor’ to the state’s marketing pitch, creating jobs and encouraging investment. It would give Virginia ‘economic competitiveness that is unparalleled,’ said [Sen. Ryan T.] McDougle, who quotes estimates that revenue from new jobs should exceed the money lost within two years.”
“We’re now being held hostage to in-state companies who are threatening to leave. An unwillingness to say ‘no’ to businesses is depriving the state of money for the very things that attracted businesses in the first place. We’re mortgaging our ability to get on that short list. So it won’t matter in the long run how many incentives we’re willing to offer. Businesses won’t want to come.” ~ Amna Cameron of the N.C. Justice Center, as quoted by the News & Observer
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.”
Merry Christmas! Dear Friends, The North Carolina Institute for Constitutional Law would like to wish all of our Corporate Welfare Weekly recipients a very Merry Christmas! This week we will take a break from the madness of corporate incentive give-a-ways in order to reflect on the past year and devote our full attention to family and friends. We are grateful to all of you, both businesses that hire and those who are hired by them, for being the engine that is responsible for making our economy run like a well-oiled machine. It is more evident than ever the more government tries to get involved and influence this economic engine, the more the engine's “oil” gets drained out and the machine is no longer able to function efficiently. We will continue to provide you the most up-to-date corporate incentives news in 2010 and are grateful for the support we continue to receive from our local communities. Please be safe in your holiday travels! Sincerely, Your friends at NCICL
“We’ve been in the incentive game now for 14 years. It’s a game none of us particularly like to play in. I refer to it as a high stakes poker game.” ~ Senate Finance Chairman David Hoyle of Gaston County stated while being questioned by NBC 17 about the special tax credit passed for Apple Computers. Hoyle was the main sponsor of the controversial tax bill. Apple could save up to $46 million over the next ten years. “I would welcome any business that wants to create 50 jobs, 100 jobs, but I don’t think these businesses ought to come here and say they need a special arrangement before coming here. Treat all businesses equal.” ~ North Carolina Senator Phil Berger of Rockingham County stated while being questioned byNBC 17 regarding the Apple Computers special tax bill. Berger was against the legislation.
So far Dell has been cooperating with state and local governments and has agreed to repay a total of $26.5 million to city and county governments, and $1.5 million to the N.C. Department of Commerce. Dell officials said yesterday however that the company will not be reimbursing the state for the tax credits it received from 2005 through 2007 or for the additional $3.6 million the company received in workforce training funds. Dell spokesman David Frink was quoted in a recent Winston-Salem Journalarticle as saying: “Our belief and our understanding is that we met the performance thresholds required for those incentives during those years, and no, we are not obliged to repay those. Nor have we received any request from anyone at the state level of North Carolina to do so.” According to the article, “the company’s position is that it qualified for tax credits in previous years by creating jobs and meeting other criteria during those years. Those credits can’t be taken away after the fact, the company says.” But the state’s revenue secretary, Kenneth Law, said in a recent interview that “because Dell no longer meets the criteria used to determine the tax credits, the state can now require the company to repay the money.”
Recent Announcements… In September of 2008, Providencia USA Inc. received $2,500,000 in incentives from Iredell County and a $56,000 grant from the One North Carolina Fund. According to a 2008 Statesville Record & Landmark article, the Latin American-based company planned to build its first U.S. manufacturing plant in Statesville. The project was delayed for 15 months due to the recession. The Iredell County Industrial Facilities and Pollution Control Financing Authority agreed on Thursday to grant the company an additional $9,100,000 in Recovery Zone bonds. ~ Bethany Fuller, Statesville Record & Landmark, December 4, 2009
Happy Thanksgiving! The North Carolina Institute for Constitutional Law would like to wish all of our Corporate Welfare Weekly recipients a happy Thanksgiving!
Congratulations Forsyth County!! It seems incentives-happy Forsyth County has experienced multiple cases of significant job losses within the last two decades, with the top three taking place within the last eight years. While incentives did not play a part in all of them, they were certainly a factor in the recent Dell plant closure debacle. Forsyth County may have stayed out of the limelight had it kept its nose out of the Dell incentives deal. The 900 jobs that will be lost due to Dell’s plant closing received 3rd place for record job losses in the county. The Winston-Salem Journal reported in a November 19 article written by Richard Craver that: “The [Dell] plant closing represents the third-largest job cut in Forsyth County in the past 22 years. It is topped only by the 1,700 jobs cut by R.J. Reynolds Tobacco Co. in September 2004 and the 1,300 jobs eventually cut by Wachovia Corp. as part of being bought by First Union Corp. in September 2001.” The article also states that Dell laid off its first 400 employees on Wednesday, November 18th. And just in time for the holidays.
“Our state needs to abandon this policy [corporate incentives] and return to its investments in education, technical training and small business support. Not only is this sound economic development policy, it removes the insult to ourselves that only ‘outsiders’ can create the jobs and that we have to pay them to bring the jobs to our people. We can do better than that.” ~ Jesse L. White Jr., Ph.D., Director of the Office of Economic and Business Development at UNC-Chapel Hill, News & Observer, November 11, 2009
The Golden LEAF Foundation was created in 1999 by the North Carolina legislature to “administer one-half of North Carolina's share of the Master Settlement Agreement with cigarette manufacturers in accordance with the court consent decree between North Carolina and the manufacturers. A nonprofit organization devoted to the economic well being of North Carolinians, Golden LEAF endeavors to strengthen the state’s economy through diverse grantsmaking,” according to foundation’s website.
North Carolina Institute for Constitutional Law attorneys Bob Orr and Jeanette Doran recently argued an appeal in a lawsuit challenging a corporate welfare package given to Google in connection with the construction of an internet data center in Lenoir County. That package included direct grants and special tax exemptions. The State Constitution requires that taxes be imposed in a uniform manner, but the State created tax exemptions narrowly tailored for Google’s benefit. The trial court held that the plaintiffs who are three individual taxpayers were not legally permitted to bring a lawsuit challenging the tax exemptions created for Google. On appeal, however, NCICL has focused on appealing the trial court’s decision that ordinary taxpayers lack standing and so cannot challenge specially crafted tax exemptions. Justice Bob Orr is quoted by the News and Observer as saying… “How are people going to challenge the acts of government that they feel are unconstitutional if, as taxpayers, the courthouse door is shut?” Much has changed since the initial 2007 filing of the case. The closing of Dell’s Winston-Salem plant, the film credit expansion, and Winston-Salem’s baseball park construction debacle are a few examples that have inflamed the anti-incentives sentiments of many.
Since last week, Governor Perdue and a few top economic development officials have been on a trade mission to Japan and China seeking more ways to spend already scarce North Carolina tax revenue. While Japanese companies are certainly enticed by the prospect of financial incentives from the state, fortunately, Chinese companies are not. WRAL reported Governor Perdue’s observations in an October 22 article written by Capital Broadcasting Company: “China’s growing economy is so strong that incentives are not the key factor to luring investment, Perdue observed. … Rather than money and incentives, Chinese companies are looking for support and assistance in navigating the state system. … Companies with a base in Communist China are used to dealing with government entities, she said.”
“Small business creates many more jobs – often a few here and a few there – and they are already in the state paying taxes, and yet they get no similar tax breaks.” ~ NC Senator Tom Apodaca, representative of Buncombe, Henderson, and Polk Counties, as quoted by Blue Ridge Now regarding Dell’s recent plant closure announcement