Two major N.C. incentives programs sent large portions of funding for increased corporate expansion and job creation to areas of the state that basically needed it the least, according to a study by the Durham office of the Corporation for Enterprise Development, a Washington, D.C.-based advocate for federal and state economic policies.
The study, the subject of a report on in today’s Charlotte Business Journal, was based on data from the N.C. Department of Commerce and covered the years 2003 to 2006 for the One North Carolina Fund and the Job Development Investment Grant — or JDIG — program. It found that One North Carolina spent some $22 million, or 49 percent of its allocation, to increase jobs through corporate expansion in the richest 20 counties of the state, and that JDIG spent some $331 million of its $376 million (88 percent) to spark job creation in the better-off counties.
The researchers also found that 51 percent of the state’s oldest incentives program, the 12-year-old William S. Lee tax credit program, went to businesses in the 20 richest counties. Report authors Frank DiSilvestro and Bill Schweke‘s conclusion: “The current incentives programs are not servicing those parts of the state the need the most help.”
The study was done for a General Assembly committee looking into the effectiveness of and potential changes in the state’s incentives. One possible change, according to the Journal article, would be doing away with “all incentives … in exchange for lowering the state’s 6.9 percent corporate income tax and the $1.50/per $1,000 of revenue franchise tax” in order to potentially free up corporate money for investment and expansion.
In a companion piece from the Triangle Business Journal, tax incentives are cited as representing 90 percent of the state’s economic-development spending in 2006-2007, up from 77 percent in 1995-1996.
— Nelda Holder, associate editor