The Charlotte Observer

February 14, 1996

Incentives Battle Lines Drawn
Hunt Group Favors Sweetening the Put to Attract Industry, Jobs

Taylor Batten, Staff Writer

Copyright © 1996, The Charlotte Observer

Gov. Jim Hunt's economic development advisers will recommend expanding the state's use of financial incentives today, just two days before the N.C. Supreme Court ponders whether to abolish such incentives entirely.

The N.C. Economic Development Board, meeting in Charlotte, will discuss the findings of its incentives task force and recommend new incentives to Hunt. Hunt can then make recommendations to the Legislature.

The 18-member task force, chaired by Waynesville contractor Ron Leatherwood, has studied the incentives issue since June. It will recommend an expansion of the current jobs tax credit, creation of an investment tax credit, a job training and retraining tax credit, and a research and development tax credit. It also will recommend a corporate income tax cut and other business-friendly modifications to current state incentive policy.

``This is definitely a more aggressive step than we've had in the past,'' Leatherwood said Tuesday. ``We're getting a ticket into the incentives game, but we're still not going to be a major player.''

The board's recommendations will come two days before the court hears opening arguments in a case challenging the use of taxpayer dollars to attract private companies. The case, filed by Winston-Salem lawyer William Maready, could fundamentally alter the way North Carolina recruits business.

It is not clear what effect the high court's ruling will have on the state policies to be recommended today in Charlotte. Maready's suit challenges only local governments' use of incentives, but the court's ruling could affect state incentive policies as well.

The proposals are an effort to help North Carolina compete against other states, which are accelerating their use of generous property tax abatements and other incentives. S.C. legislators, for example, are discussing a dramatic sweetening of their corporate tax incentives.

The task force's mission statement recommends ``that North Carolina continue its policy of restraint in the use of incentives for new investment.'' However, ``modest expansion of targeted incentives, as proposed, is necessary in order to remain competitive in a rapidly changing environment.''

``It's going to allow our economic developers to at least stay at the table and give companies a chance to see North Carolina's other positives,'' Leatherwood said. Leatherwood stressed the tax credits do not give away taxpayers' dollars, but forgo some corporate taxes. In order to qualify, a company would have to pay at least 10 percent above the average hourly wage in the county it operates.

Maready said North Carolina can compete without such ``giveaways.''

``There are a lot of people around North Carolina whose jobs and purposes in life are dependent on handing out tax dollars to corporations,'' Maready said. ``When your pocketbook is involved, your hearts and minds soon follow.''

Bill Lee, former Duke Power chairman and the chairman of the economic development board, said the full board may not endorse the task force's recommendation to extend the state's job tax credit to all counties and increase the credit in economically distressed counties.

``All that's going to do is precipitate a chicken fight in the Legislature,'' Lee said.

Hunt, who asked the board to study the incentives issue, will address the board today.

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Copyright © 1996, The Charlotte Observer.

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