State would pay to keep jobs

A new incentives program would require modernization of factories in the state's poorest counties

To get tax breaks, grants and other economic incentives in North Carolina, companies in the past have had to create jobs.

Under a plan put forth by Gov. Mike Easley on Wednesday, they wouldn't have to add a single one.

Easley proposed an incentives program aimed at keeping manufacturing facilities that employ a lot of people and pay well in the state's poorest counties. They could qualify for aid if they agree to "invest substantial amounts" to modernize existing plants.

The proposal, which Easley plans to push when the General Assembly reconvenes in May, will help "secure commitments from major anchor industries" to upgrade operations and "enhance their presence in North Carolina," Easley said in a statement.

The plan comes after the legislature this year approved a grant program that, because of the way it is written, would mostly benefit Goodyear Tire & Rubber Co. in Fayetteville. The tire maker could get as much as $40 million over 10 years for spending at least $200 million to modernize its plant and maintaining at least 2,000 of its existing 2,750 positions.

The bill awaits action by Easley, who can veto it or sign it into law. If he does nothing by Saturday, it will automatically take effect.

Dan Gerlach, Easley's adviser on fiscal matters, said his boss proposed the new plan because of a broader conversation started by the legislature's action. "There was a lot of discussion this year when this bill emerged about existing companies in North Carolina and how do you help these companies," Gerlach said.

And the General Assembly has approved a measure with that goal, said Tony Rand, a Fayetteville Democrat and one of the state's most powerful lawmakers. Companies other than Goodyear, at least in principle, could qualify.

"The one that was passed was worked on by the legislature from January through July," Rand said. "If you want to talk about the score of the football game, it's important that you participate in the game. That game ended in July. If we want to play in overtime, I reckon we can do that, too."

This decade, more than 200,000 people in the state have lost their jobs because of declines in manufacturing. Communities across North Carolina have struggled to revamp their economies after major job losses.

The state has grown far more aggressive at using incentives to entice companies to add jobs. Dell, for instance, won a $280 million package of state and local aid in 2004 to build a computer plant in Winston-Salem. Google, which runs the popular Internet search service, last year won tax breaks and grants potentially worth as much as $260 million to put a facility in Lenoir.

In many of the places hammered by manufacturing declines, leaders and residents have questioned whether the state would have been better off using similar incentives to keep existing businesses from moving away in the first place. It is expensive -- and difficult -- to recruit new employers.

That theme, in part, underlies Easley's plan.

Under his proposal, a company could qualify for aid if it employs at least 1,500 workers in the state's most economically distressed counties. A company would have to pay wages that equal or exceed 140 percent of the county average, and provide health insurance and other benefits. In addition to significant new investments, it would have to maintain existing jobs.

If it meets the criteria, a company would get back a portion of the new taxes it generates. Easley's plan also aims to involve local governments, likely requiring them to match at least a portion of the state incentives, according to terms sketched out in a statement from Easley.

He identified one company that already has expressed interest: Bridgestone Firestone. The company, a rival of Goodyear, employs 2,179 employees and contractors at a plant in Wilson County, home of former Gov. Jim Hunt. Easley is from adjacent Nash County.

Gerlach said he did not know how many businesses in the state could qualify for the incentives, but he said the proposal was not engineered for one company.

"No, no, no, no, no," he said. "We want jobs in North Carolina. We're not particular about the names of the companies."

The state has awarded grants to existing companies, including Cree and Quintiles Transnational in Durham, that have threatened to create new jobs elsewhere. But they all, ultimately, agreed to add new jobs in North Carolina, not just maintain existing ones.

The state's incentives policies have been a point of much contention, and North Carolina has been sued over awards to Dell and Google. Easley's measure is likely to encounter resistance as he pushes it next year.

"It represents giveaways," said Dean Webster, executive director of the N.C. Institute for Constitutional Law, which has fought incentives in court. "The government is paying a business to do its business."