With the state's unemployment rate at an ugly 10.8 percent and with 267,500 jobs lost statewide since the beginning of the recession, some politicians have decided that doing nothing on the jobs front isn't an option.
So the Democrats in power have been fashioning a targeted approach designed to create jobs. The primary target: small business.
"We have a pretty successful effort at recruiting business [to] North Carolina," said House Speaker Joe Hackney, a Chapel Hill Democrat. "We're trying to spend that same amount of effort this time on small businesses."
Complicating matters, however, is the looming $800 million revenue shortfall.
"You have to do it with not very much money," Hackney said. "The idea is to give enough of a boost to spur hiring without severely damaging the state's budget."
A smorgasbord of proposals to help small businesses have been put forth so far, but first they have to survive the budget process. The legislature is supposed to wrap up its budget by July 1, but it's not uncommon for that deadline to be breached.
Gregg Thompson, director of the state chapter of the National Federation of Independent Business, which represents more than 7,000 small businesses, is jazzed about the prospects.
"I'm very optimistic that there will be some meaningful legislation passed that will benefit small businesses in North Carolina - some immediately and some in the long term," he said.
Some question, however, whether reality will match the intent. Joseph Coletti, director of health and fiscal policy studies at the conservative John Locke Foundation, dismisses the proposals as gimmicks that sound good but wouldn't be effective.
Sen. David Rouzer, a Republican who represents Johnston County, agreed: "I thinking we're tackling this problem with spitballs."
Small businesses make an attractive target for state help because they're the main engine for job growth. Firms with fewer than 500 workers accounted for 64 percent of the net new jobs between 1993 and the third quarter of 2008, according to the U.S. Small Business Administration.
"Small businesses are the glue that keeps us going," Gov. Bev Perdue recently told the state chapter of the NFIB.
Meanwhile, the powerful N.C. Chamber is urging the General Assembly to focus on jobs, but by design its agenda doesn't carry a hefty price tag.
"There is no realistic way you are looking at major tax changes if you are looking at this kind of deficit," said Lew Ebert, president and CEO.
Instead, the Chamber is pushing lawmakers to take no-cost steps to improve the business environment, such as fixing environmental regulations that its members consider burdensome and maintaining what it considers to be the state's "pro-jobs" legal environment.
Perdue's proposal
The governor's budget proposal, introduced last month, set the tone by proposing a variety of small business measures, most notably a $1,000 tax rebate for small businesses that hire workers who have been unemployed for 60 days. Estimated price tag: $15 million.
"It is literally cash in the pocket" for small businesses, said Scott Daugherty, the state's small business commissioner.
The recently approved Senate budget proposes a different, more expensive tack: reducing the effective tax rate for small businesses with less than $850,000 in annual revenue from as much as 7.75 percent to 6.9 percent, the same rate larger businesses pay. That approach would cost the state an estimated $50 million in the first year, said Sen. Daniel Clodfelter, a Charlotte Democrat who is a co-chairman of the finance committee.
After the House passes its budget, leaders from the two chambers will work out a compromise.
Is rebate adequate?
Howard Margulies, owner of the 42-employee United Restaurant Equipment Co. in Raleigh, is pleased by the newfound attention from lawmakers.
"Over the years, we have been ignored by government," Margulies said. "They pay a lot of attention and give the money to big business and really have not helped the small businesses."
Some Republicans argue that a $1,000 tax rebate - or a tax credit, which is what the House is considering - wouldn't really work.
"One thousand dollars is not enough to hire somebody," said Rep. Paul Stam, an Apex Republican and the House minority leader. He said the various measures before the House would only have "a marginal impact on hiring" if they are passed.
But Perdue has said her meetings with small business owners across the state have convinced her that the improving economy has brought them to the point where, with just a little help from the state, they could begin hiring. She also said she is willing to consider alternative approaches to helping small business.
Rouzer, the Johnston County Republican, advocates wider tax cuts for businesses of all sizes.
"It's much too narrow in scope to make a meaningful difference with the economy," he said. "I think we need to have broad-based tax reform."
The problem with a broader tax cut, countered Sen. Mark Basnight, a Manteo Democrat who leads the Senate, is that it would require bigger cuts in education and job training, which in the long run would hurt businesses' ability to hire a well-trained work force.
