Maready v. City of Winston-Salem, et al.

FOR SEVEN MONTHS through the fall of 1995 and into the winter of 1996, North Carolina's industrial recruitment methods were in legal limbo. At issue was whether certain city and county recruitment incentives served a "public purpose," as the constitution required of any expenditure of public funds. But the question had wider ramifications that impinged on the state's use of incentives, as well.

William F. Maready, a trial lawyer in Winston-Salem, NC, successfully argued before a Superior Court judge that his city and the surrounding county violated the state's constitution by giving taxpayer money to private companies for such incentives as helping to rent an office building and providing subsidized parking. The judge, ruling in August 1995, also found that the statute authorizing local government expenditures for economic development was impermissibly vague.

The judge's ruling involved only Winston-Salem and Forsythe County. Local governments throughout the state, however, soon began to question their own use of incentives. State officials worried that if the ruling were upheld on appeal, other statutes governing state-level expenditures for economic development might also be cast into doubt.

Fall Out

Businesses began to look elsewhere. Into the fall, state recruiters claimed that the number of prospective projects had dwindled. Some site selection firms were rumored to have taken North Carolina off their lists altogether pending some final resolution of the issue.

Attention to the Maready Case eclipsed a similar case in another North Carolina county. In late October 1995, a Superior Court judge ruled that incentives to attract businesses were constitutional "further muddying the waters," according to the Charlotte Observer.

The Maready case came before the state Supreme Court in February 1996. In early March, the high court overturned the lower court's ruling. The justices voted along party lines - 5 Democrats in favor, 2 Republicans opposed - with the majority supporting the notion that incentives "are directly aimed at furthering the general economic welfare" and one of the minority castigating the state for justifying its use of incentives because "all the states are doing it."

Business as Usual?

"Now we can get back to the business of going after jobs for our people," declared Gov. Jim Hunt upon hearing of the ruling. But the question remained whether the business of attracting business could ever be the same again.

The principal briefs and the amicus curiæ briefs are articulate and persuasive in defense of their various positions. The body of writing spurred by Maready's challenge makes clear that the legal issues surrounding incentives are but one aspect of broader economic, social, and political considerations that frame policy discussions of industrial recruitment incentives.

Key Links

Legal Briefs

NOTE: The briefs assembled for this case have been abridged, when possible, to focus on those sections stressing policy issues beyond the constitutional challenge posed by the case.

The KSG Case Program appreciates the efforts made by Mr. Maready, the Attorney General of North Carolina, and the amici curiæ to supply documents for this case.
Principal Briefs
Amici Curiæ
The Court Decides
The Supreme Court's Decision, March 8, 1996

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