As state House and Senate leaders debate two jobs incentives bills, they’ve got one top priority in mind: bringing a major auto manufacturer to North Carolina.
A car plant would be the state’s first, and it would mean thousands of jobs and more than $1 billion invested. But as the Senate introduced a plan Wednesday that differs dramatically from Gov. Pat McCrory’s proposal in the House, economic developers are worried that automakers won’t wait for a compromise.
“Timing is of the essence right now, because these things are moving fast,” said Oppie Jordan of the Carolinas Gateway Partnership, an economic development agency that’s trying to lure a major manufacturer to a site in Edgecombe County. “I think we need the package now. We’ve already lost time. We needed it yesterday.”
The Edgecombe site is one of three “megasites” that state officials are offering to automakers. The property, the Kingsboro Industrial Park, has more than 100 acres tucked between U.S. 64 and a rail line, about 12 miles east of Rocky Mount.
Jordan said she can’t name any companies looking at Kingsboro because of confidentiality agreements. But news reports have surfaced that both Land Rover and Volvo are weighing North Carolina against several other states in the Southeast. Some car companies are also considering Mexico, which has multiple trade agreements that result in lower export costs.
McCrory says governors in Florida, South Carolina, Texas and Tennessee are courting many of the same companies.
“I’m telling you, they are tough competitors, and they’re following me everywhere I go – or in front of me wherever I go – when we’re meeting businesses to recruit to North Carolina,” McCrory told a group of mayors on Wednesday.
McCrory said the Senate’s jobs bill – which focuses more on corporate tax cuts and incentives for rural areas – is the wrong approach and “breaks the bank” because it would result in less state revenue. He said he wants a bill on his desk soon.
McCrory’s commerce secretary, John Skvarla, said Friday that the legislature’s divide makes it hard for him to seal any deals. “It certainly sends mixed messages, and it certainly doesn’t indicate that North Carolina has its act together,” Skvarla said.
Rep. Jason Saine, senior chairman of the House finance committee, said the House bill was developed over weeks of meetings between legislators and McCrory’s administration. He said House members were surprised their Senate counterparts wouldn’t bring it to a committee hearing.
“To see such a brief look at what we’ve done is disappointing,” he said, adding that the Senate proposal could face opposition in the House.
Saine, a Lincolnton Republican, said he’s concerned that the Senate wants to eliminate a provision that ties future corporate tax cuts to increased revenue – an aspect of the 2013 tax reform bill aimed at preventing budget cuts. “Removing the triggers (required to lower the rate) makes many on our side nervous,” he said, “and it’s going back on deals made a session ago.”
Senate leader Phil Berger says his members want lower overall taxes because that would allow “a balanced approach to the issue of economic development ... by not ignoring the companies that are already here.”
While legislators debate the finer points of corporate tax policy, that’s not the part of the legislation that concerns Jordan. She said both the House and Senate proposals contain the provision that auto manufacturers are seeking: the single sales factor.
That’s a method that calculates companies’ tax liability based entirely on sales – instead of also factoring in their payroll and property value. It’s effectively an additional corporate tax cut that favors companies with extensive property and payroll taxes in the state.
The Senate wants that tax approach to apply to all companies statewide. The House plan would reserve the tax benefit to companies investing more than $1 billion – namely an automaker.
South Carolina offers the single sales factor, and Jordan said it’s why that state has several auto plants and North Carolina has none.
Until North Carolina makes it available, “we’ll be off the table,” she said. “I know it’s crucial in Edgecombe County for us to win that auto project or a larger project.”
Recognizing that legislators will take weeks – if not months – to hash out their differences, Senate leaders have filed a separate bill that would immediately raise the cap on the state’s main incentives fund, the Job Development Investment Grant. JDIG is currently out of money, and the bill would give it $5 million until a long-term economic development plan is approved.
Both Jordan and Skvarla said the stopgap measure wouldn’t go far enough to land a major employer. Skvarla worries that the JDIG program would still be set to expire on Jan. 1, 2016, which makes companies hesitant to commit to North Carolina. The House bill would extend the program through 2020.
“Without extending the sunset, we are sending the message to the world that we are still not serious about the program,” Skvarla said.
Skvarla and others argue that a major incentive program can pay dividends to the state. In South Carolina, the single sales factor has helped land BMW’s plant. A 2014 University of South Carolina study pegs the plant’s economic impact – including commerce generated outside the facility – at $16.6 billion and 30,700 jobs.
If a similarly large company picks Edgecombe County – or similar sites in Randolph and Chatham counties – the economic landscape in the high poverty areas would change dramatically.
“It would be a game changer for all of northeastern and eastern North Carolina,” Jordan said of a win for the Edgecombe site she’s marketing. “There’s a proven track record. It would even spin back around to parts of Wake, Franklin and Johnston counties.”