Leaders in the state Senate on Wednesday voiced concerns about the state’s main jobs incentives program and said they’ll combine elements of competing House and Senate economic development plans into a proposal.
The Finance Committee meeting was the Senate’s first public discussion of House Bill 117, an economic development proposal backed by Gov. Pat McCrory and approved by the House in early March.
The House proposal would double the money allotted to the Job Development Investment Grant fund from $22.5 million for the current two-year period to $45 million, allowing McCrory to promise millions to employers before the end of the year.
Senate Republicans have filed a separate bill raising the cap while changing the program to limit incentives in urban counties. They’ve also filed legislation that would lower corporate income tax rates and change how the taxes are calculated through a method that benefits large manufacturers.
Senate Finance Chairman Bob Rucho, a Mecklenburg County Republican, said his committee will review “all three of the bills and decide how we blend it together to make the most effective incentive package.”
Senate Republicans said Wednesday that the current JDIG incentives program doesn’t do enough for rural counties. More than 80 percent of the money in recent years has gone to companies in Wake and Mecklenburg counties.
“I think part of these programs were to spread this across the state,” said Sen. Harry Brown, a Jacksonville Republican. “Commerce has got to get out of Raleigh and Mecklenburg and see where the opportunity is in the rest of the state.”
Others took issue with minimum wages and numbers of jobs required for an employer to get JDIG incentives. Sen. Tom McInnis, a Rockingham Republican, said his rural district is eager to attract low-wage jobs. “We’re trying to get people employed, and this seems to be a roadblock for us,” he said.
Senators also said they don’t like provisions in the House bill that extend tax breaks for technology data centers and aviation fuel – the latter of which benefits only American Airlines. Some want the tax credits to have strings attached.
“They’ve cut some flights out of North Carolina,” Brown said of American Airlines and its Charlotte airport hub. “You start to ask the question, if you want the tax break, then earn the tax break. In this particular situation, I’m not sure that’s happening.”
Sen. Andy Wells, a Hickory Republican, said data centers are similar to manufacturing businesses and should get the same tax treatment. He said the data center break is “ignoring the small manufacturers.”
And Sen. Tom Apodaca, the rules chairman from Hendersonville, argued that the legislature shouldn’t single out industries at all. “Here again, we’re talking about who gets what,” he said. “I would like to see us go down the line and provide tax breaks for all businesses.”
Wednesday’s debate comes as the McCrory administration says the state urgently needs more incentives money. A day earlier, news reports said North Carolina is no longer in the running for a Volvo automotive plant. The company is now reportedly looking at South Carolina and Georgia for the $500 million investment.
Commerce Secretary John Skvarla said this week that the legislature must increase the JDIG cap and extend the program’s expiration day. If that doesn’t happen in the coming weeks and months, more employers in the incentive pipeline will go elsewhere. Commerce considers 10 other southeastern states to be “highly competitive” for the same companies.
“Companies want certainty, and they want an extension of the sunset date,” Skvarla said. “The rest of the stuff has been a lot of rhetoric.”
Rucho, however, said the Senate has done its part to address the immediate incentives needs. It passed a bill that raises the JDIG cap by $5 million, but the House hasn’t yet discussed the bill.
“There’s $5 million sitting on the House side right now that could be used for (Skvarla’s) concerns,” Rucho said.