The Charlotte Observer

March 16, 1995

Jobs fund put under new rules
Contracts to rein in some abuses

Associated Press

Copyright © 1995, The Associated Press

Business people who want money from the state's competitiveness fund will get it in installments and will have to sign a contract that they will not move jobs from one county to another under new rules unveiled Wednesday.

And companies applying for the money will have to pass a screening test based on the wages they will pay, where they will locate and the quality of the jobs.

``For the last year and a half we have invested on the front end,'' Commerce Secretary Dave Phillips said. ``Now we're going to put that money in escrow and pay it out in installments.''

Using that approach, Phillips said, will keep the state from losing its investment, as it did with Seffi Industries of Sampson County. The company went bankrupt just months after getting $300,000 from the competitiveness fund.

The state also lost $50,000 when Bombat Sports of Rowan County went under.

And specifying that a company cannot shift jobs within the state will keep one community from using the fund to compete with another.

This End Up Furniture used $230,000 from the fund for a new plant in Harnett County. Once the plant was open, however, the furniture company closed much of its Raleigh operation.

``It's been a learning curve for a year and a half,'' Phillips said.

Gov. Jim Hunt lobbied for the competitiveness fund, which allows him to use up to $1,000 for each new job to close deals with companies that want to relocate to the state or expand their operations here.

Hunt has asked for $10 million in each of the last two years and gotten a total of $12 million from legislators. He is asking for an additional $10 million each year under his two-year budget plan presented to lawmakers last month.

The state Commerce Department used guidelines it developed itself to recommend companies for the fund. The new guidelines were developed by a task force that included business professors and state officials.

``We had a lot of flexibility before,'' said Watts Carr, who has administered the fund for the Commerce Department. ``The positive thing is that it gives you a lot of leeway. The negative . . . is it doesn't give you any way to say no to a business.''

Legislators have been cool to the fund since its beginning, with many referring to it as ``walking-around money'' for Hunt. House Speaker Harold Brubaker has called the fund ``a government program run amok.''

Phillips said he hoped the tighter guidelines would soothe legislators.

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Copyright © 1995, The Associated Press.

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