Goodyear aid could be vetoed

A $40 million incentive to help upgrade Fayetteville factory draws criticism

RALEIGH -- Gov. Mike Easley is considering vetoing legislation that gives up to $40 million in incentives to Goodyear Tire & Rubber to modernize its Fayetteville plant and keep it running, according to the company's lobbyist and lawmakers involved in the legislation.

The move would be a sharp reversal by the Easley administration, which has used incentives to lure technology giants Google and Dell. But critics in the General Assembly emphasize that those earlier handouts were used to lure new jobs, not keep existing companies happy.

Easley must act by Sept. 1 or the bill, which passed the House and Senate, will become law. Fayetteville area legislators and Goodyear's lobbyist, John Bode, met with administration officials about the bill this week.

"He's seriously entertaining a veto," said Rep. Rick Glazier, a Fayetteville Democrat.

Dan Gerlach, Easley's chief economic adviser, said Easley will make a decision next week.

"The governor is committed to figure out ways to help companies like Goodyear in a fair and responsible manner," Gerlach said.

The dispute over the legislation underscores the heightened scrutiny of state and local incentives across the country. North Carolina is defending a lawsuit against the $242 million package it gave Dell in 2005 to open a Winston-Salem plant. A similar suit was filed recently contesting the $260 million in incentives awarded to Google for plans to open a computer- server farm in Lenoir.

New York state officials last month dispatched letters to 3,000 companies warning they could lose their tax breaks for failing to create promised jobs. Arizona's governor signed a law last month that penalizes certain localities for offering sales tax breaks to lure large retailers, saying the practice was out of control.

The Goodyear legislation offers up to $4 million a year over 10 years for overhauling the 38-year-old plant. Sen. Tony Rand, a Fayetteville Democrat and Senate majority leader, said the company is expected to apply only for $3.5 million a year.

The revamping would allow the plant to produce larger truck and SUV tires that have become a mainstay of the North American market, as well as newer, more durable tires. The plant currently produces smaller, passenger-car tires.

In return, Goodyear commits to investing $200 million over the next five years and maintaining a full-time work force of at least 2,000.

The company, which recently settled a 12-week union strike, said in May it would retool its plant in Gadsden, Ala., after receiving about $125 million in incentives there.

The Fayetteville plant employs about 2,750 workers, jobs that are irreplaceable if the plant would close, Bode said.

"These are blue-collar jobs, but they're the best blue-collar jobs we've got," he said. "$60,000 and health care and retirement -- In Cumberland County, that's like dying and going to heaven."

North Carolina has previously used incentives to reward new businesses for creating jobs. Sen. A.B. Swindell, a Democrat whose district includes a Bridgestone/Firestone plant in Wilson, said he's not opposed to the Goodyear incentive, but the state needs also to look at helping his constituents and other companies.

"We're talking apples and apples here," Swindell said, emphasizing that Bridgestone/Firestone was investing millions in its plant without state help.

Bode said during this week's meeting that Gerlach and Don Hobart, general counsel for the state Department of Commerce, explained that incentives were designed to attract new jobs and that the state helped retain existing jobs through tax credits. Goodyear, however, can't take much advantage of tax credits because it has paid little tax due to low taxable income.

"They were saying it didn't fit the formula," said Rand, a longtime Easley ally, "and I said there's never been a formula."

Gerlach cautioned that the administration remains committed to helping Goodyear in some fashion.

"There have been subsequent conversations (since Monday's meeting) to try to figure out creative ways to address the needs of companies fairly," he said.