Job action

After the Continental Tire fiasco, North Carolina needs to rebuild consensus on incentives.

November 20, 2011 

North Carolina's on-again, off-again General Assembly has at least one more get-together planned this year, so how about this for an agenda item: Resolve that in 2012, this state gets its act together on economic incentives.

Right now, those policies, intended to attract or retain job-creating businesses, are in disarray. Incentives have become so entwined with politics that it's impossible to say just what the state would, or wouldn't, do to attract a big new employer. That level of uncertainty doesn't help anyone - or help create a single job.

The catalyst for a confrontation over incentives came this summer in the form of "Project Soccer," aka Continental Tire's plan for a big new plant that would employ hundreds of workers. To make a long story short, the (Democratic) Perdue administration swallowed hard and argued the case for giving in to the tiremaker's request - demand, really - for $45 million in upfront cash. The (Republican) legislature balked. The Continental deal went south, literally, to South Carolina.

The finger-pointing that followed brought to the surface two things. One was the politically charged and unseemly back-and-forth among legislators and officials as they negotiated, in secret, concessions to Continental. The other was the erosion of a longstanding consensus over the granting of incentives.

Tax breaks and direct assistance (new roads and sewers, and job training at public expense) have always had critics on the left and right. Even mainstream politicians swear that they'd gladly stop granting incentives if only - and only if - competing states would cease and desist (they won't). Continental's cash call laid the issue bare: just how far should the state go to land a big one?

Last week Pat McCrory, Gov. Beverly Perdue's all-but-nominated Republican opponent next year, came out against cash grants. McCrory might find it harder to resist coughing up the dough, however, if he were in office and Democrats were about to hound him over the "loss" of a major employer.

So, before next November's election, legislators should re-establish a bipartisan incentives policy that would clarify matters for either Perdue or McCrory. They might well consider suggestions made on the opposite page last Sunday by Allan Freyer of the N.C. Budget & Tax Center.

Freyer calls for ruling out nearly all cash grants, for getting a handle on the incentives that cities and counties feel forced to offer, and for holding companies to strict standards of actual job creation. Also, there must be greater openness and accountability. Couple those reforms with lower corporate taxes, which both Perdue and McCrory favor (North Carolina's are high for our region), and the state might have the beginnings of a workable policy.

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