EconWar



The Charlotte Observer


August 21, 1994

Why not first in integrity?
(Column)

Jerry Shinn, Staff Writer

Copyright © 1994, The Charlotte Observer



Last year the N.C. General Assembly approved something called the Governor's Recruitment Competitive Fund, which Gov. Jim Hunt can use - as the guidelines put it - ``to close a deal.''

In other words, he can use the taxpayers' money to pay businesses to establish or expand facilities in North Carolina.

The principle isn't new, unfortunately, but the specifics are. A company can get $1,000 from the state fund for each new job it expects to create - if it's recommended by a review committee of the Commerce Department and selected by the governor, and if local government will match the state money.

Mecklenburg's county commissioners are being asked to establish a fund for that purpose.

When they asked how much money that could cost, they didn't get a clear answer. When they asked what would happen if a company got the money but the jobs never materialized, they didn't get a clear answer. They decided they needed answers before acting on the request.

Good for them.

Maybe they also ought to ask why Mecklenburg County should have to pay companies to locate here, and just how far this corporate welfare at the taxpayers' expense is going to go before somebody finally says ``enough.''

*

Taxpayers said enough

The taxpayers already have said ``enough,'' but maybe nobody was listening. Remember, not long ago N.C. voters overwhelmingly rejected a constitutional amendment to allow tax increment financing for new business - a strategy that makes a lot more sense than most other industrial development ``incentives.'' What do you think would happen if some of these other schemes were put on the ballot?

The governor and his economic development folks probably will argue that unless a state can offer ``incentives'' it can't compete in the industrial recruitment game. But maybe it's time to test that assumption.

Remember the embarrassing spectacle of our governor's and South Carolina's governor's courtship of Mercedes executives - offering to do almost everything but kiss their, er, feet? And the plant went to Alabama.

Doesn't this bidding war, which keeps escalating, have to stop somewhere, sometime?

Is it fair to established companies that have been providing thousands of jobs for North Carolinians for many years? They'd probably like to get $2,000 for each of those jobs, too.

Instead, their tax money goes to pay other companies to come into their communities and compete with them in the same labor market - maybe even driving up wages and the cost of benefits.

*

Other funds, too

The competitive fund isn't the only source of state incentive money. There's also the Job Creation Tax Credit, the Industrial Development Fund, the Investment Tax Credit, and probably others I don't even know about.

Some of those are easier to justify than others because they target counties where unemployment is high and indigenous incentives for new business are few.

But surely there are good companies that simply want a good business climate, the necessary infrastructure, hard-working people - and honest state and local governments that say, we won't try to bribe you, but if you come, we promise we won't tax you later to bribe anybody else.

If our state's leaders would try that approach, they might find some companies are smart enough to know that kind of government attitude is more important to their long-term success than a one-time handout.

Someday a state is going to drop out of this demeaning competition, and other states will notice that it doesn't prevent good companies from locating there, so they'll drop out, too.

Wouldn't it be nice if North Carolina, first in freedom and first in flight, could be first in integrity in industrial recruiting?




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Copyright © 1994, The Charlotte Observer.


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