The administration of Gov. Pat McCrory is pushing a proposed tax on fracking as a substantial piece of its economic recovery strategy, with key Republicans saying it would raise millions for financial incentives to recruit companies or help them expand in North Carolina.
Commerce Secretary Sharon Decker said this week the states biggest competition in luring business is from Texas, where Gov. Rick Perry has what she called a big slush fund, financed by energy taxes, to spend on recruiting companies there. Her comments were to a group of business and community leaders Wednesday afternoon during a question-and-answer session at Robeson Community College near Lumberton.
Decker told the group she wants a similar piggy bank here and that energy partners are ready to provide us with the money in a climate where increasing traditional funding streams for incentives, such as income and corporate taxes, isnt likely. She said the money would be used to lure major projects to the state.
Decker said she would not go as crazy as Perry in Texas, where officials have spent billions on incentives for corporations.
But she said more flexibility and more money for incentives in North Carolina are important as the state tries to improve wages and grow jobs.
When you hear some conversation about hydraulic fracturing and offshore drilling, recognize that weve got to do it safely and theres power in the energy, Decker said. But theres also a revenue stream there that folks are eager to offer us for greater economic growth in the state.
She added: Im glad the press isnt here.
An aide then pointed out a News & Observer reporter and the session shifted to other economic concerns.
In an interview, Decker explained her position on fracking-for-incentive money as aimed at finding a new approach to creating jobs. And she pointed out pending legislation that she said would accomplish that goal.
The bill, SB 127, emerged in the waning days of the legislative session with language she said the administration helped craft that would raise the incentive money from fracking. The bill did not pass as lawmakers said time to study it ran out and they adjourned last week.
The term fracking is short for hydraulic fracturing, a process used to extract natural gas from deep in the ground that has raised concerns across the nation about its possible impacts on the environment, including water pollution and a correlation with earthquakes.
The legislation says the purpose of the new tax would be to provide revenue to administer and enforce the provisions of the legislation.
A leading lawmaker handling the bill, state Sen. Harry Brown, a Jacksonville Republican, said that language ties back to the economic development efforts spelled out in the bill. Thats what would create the new funding for incentives. The bill contains no other specifics about the incentive plan.
The new tax would apply to industries engaging in the severance of energy minerals from the soil or water of this state, and the revenues would also go to other purposes: a gas and oil regulatory program; environmental needs; and to reclaim land affected by drilling and gas exploration.
Brown said estimates vary on how much money could be raised by the tax, underscoring uncertainty about how fracking would play out in North Carolina. He thought it could bring in as much as $1 billion, but wasnt certain over what period. He said it could be much less.
Decker and Brown said a large new source of incentives would help the state compete and act with more speed.
We were looking for a way to fund big projects within the state where we had an opportunity to recruit these big projects, such as a car manufacturer or something in that realm, Brown said.
Staff writer John Murawski and news researcher Peggy Neal contributed to this report.
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