The recent announcement that Internet giant Facebook will be creating a data center in Rutherford County was the big news at AdvantageWest’s Nov. 15 Economic Summit.
Just before the panel discussion began in the Diana Wortham Theatre, Thomas Jenkins, board chair for the public/private regional development agency, referenced the good news, joking, “I want you all to go out and make friends with Facebook.”
And as Asheville City Council member Gordon Smith observed in a Twitter dispatch that evening, Jenkins’ audience included a “veritable who's who of economic-development leaders.” There were government officials such as Buncombe County Manager Wanda Greene, top utility execs, bankers and A-B Tech President Hank Dunn, among assorted other notables. And to hear ever-upbeat moderator D.G. Martin tell it, they were all seeking hopeful signs amid the often grim economic tidings.
Facebook filled the bill.
North Carolina Lt. Gov. (and Rutherford County native) Walter Dalton called the announcement “truly a game-changer for all of North Carolina.” In recent years, he noted, Western North Carolina has also snagged Google and Apple data centers. Dalton tied these recruitment coups to the state’s emphasis on education, such as the Early College program he oversees. “If you can tell an industry that we have our educational initiatives geared toward the skills that they need, you’re more likely to get them to locate in this area or expand,” said Dalton.
But what about the rest of the economic news? The Facebook center, after all, will create a mere handful of jobs, and North Carolina needs thousands.
Martin, who hosts UNC-TV’s North Carolina Bookwatch, took the stage and proceeded to coax some answers and even some cautious optimism out of the panelists: state Treasurer Janet Cowell, banking-technology expert Austin Adams and Anita Brown-Graham, director of the Institute for Emerging Issues.
A lot of folks, Martin noted, don’t quite understand exactly what the state treasurer does. “If you were like the federal treasurer, we’d just ask you to print us some money,” he teased.
Unfortunately, Cowell focuses more on managing the nearly $70 billion pension fund for the state’s 820,000 employees. With that much money in the balance (and her head on the chopping block, she joked), her department aims for solid, relatively low-risk investments. Lately, they’ve included apartment developments in such real-estate-challenged areas as Atlanta, Houston and Manhattan, Cowell revealed.
Brown-Graham added that integrated health-care facilities and housing for the elderly are also showing signs of growth, in contrast to the still dormant residential and commercial real estate markets. She sees additional possibilities in the budding green economy.
But the shift away from manufacturing has created a disconnect with the state’s tax code, which taxes the sale of goods but not services. And in hard times, when sales of consumer goods decline and many facets of the service economy aren’t taxed at all, lawmakers are doubly challenged to fund essential services.
The code, grounded in North Carolina’s 1930s economy, creates a boom-and-bust revenue cycle that makes it harder to plan ahead and balance the budget, noted Cowell.
Modernizing the code might help the state broaden its tax base in the more service-based 21st-century economy, Brown-Graham pointed out. At the Institute for Emerging Issues, she’s charged with taking such a proposal and trying to bring all the players together for dialogue and action — which is somewhat like hosting a Baptist convention where everyone gets along but goes home and starts cussing again, she joked.
On the serious side, Brown-Graham continued, “A state that’s expected to grow 50 percent by 2030 has got to figure out a way to put into place a fiscal infrastructure that will be the right size for its new demographic, even in these difficult economic times.”
Adams, however, took a different tack. While conceding that he’s open to tax modernization, the retired banker maintained that increased taxation won’t help us climb out of the recession. “We’ve just got to be more frugal,” he argued.
When a company considers expanding or relocating, it looks at tax rates, and North Carolina might have an opportunity to recruit businesses leaving such high-corporate-tax states as California, Adams continued. Another key to maintaining competitive advantage is creating a business-friendly environment.
“There is not a way to lower … corporate tax rates unless you also… broaden the tax base,” countered Brown-Graham.
But all three panelists agreed on the continuing need to support education.
“The world is changing around us faster than we have changed, [despite] great strides in education. … The gap [is growing between] what we need for our work force and what our K-12 system is providing,” Brown-Graham remarked.
Cowell, meanwhile, called for “smart decisions” as the new, Republican-led General Assembly takes over in January. There are fears that public-university tuition will rise, that campuses might be closed and teachers’ resources slashed to address the state’s massive looming budget deficit, said Cowell, who serves on both the State Board of Community Colleges and the State Board of Education.
“That’s scary,” Martin observed. “Any signs of hope?”
Although commercial real estate probably has yet to bottom out, which will continue to restrict the amount of capital banks have available for loans to small businesses and entrepreneurs, the news isn’t all bad, responded Adams. “It’s not well-known how many technology jobs sit in Charlotte [in the banking industry]. Those jobs aren’t going away,” he asserted.
What’s more, they require high-tech skills, leadership and the old-fashioned notions of working hard and never letting your ego get in the way, added Adams.
And as the discussion closed, Cowell told the assembled business leaders, “There are a lot of great things we can do if we’re all engaged and all of us are working together.”
— Margaret Williams can be reached at 251-1333, ext. 152, or at email@example.com.