So generous has Gov. Pat McCrory been with the Jobs Development Investment Grant program, or JDIG, that he says the fund is depleted and the General Assembly must provide funding for a refurbished program to be called N.C. Competes.
It may be true that awarding tax breaks or rebates of a percentage of new income tax revenue that new jobs generate is a way of life for states now. The craving for jobs is great, in the wake of the Great Recession and even at a time the national economy is on the rebound.
And employers are simply being savvy when they play off one state, or several states, against each other. The logic behind companies’ arguments for incentives is simple: Show us the money and we show you the jobs.
However, Allan Freyer of the N.C. Justice Center says in a new report that the incentives program has failed to deliver too many times.
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“If North Carolina continues to use incentives to pick winners and losers in economic development,” Freyer writes, “the state needs to do a much better job of picking winners. More than half of all firms receiving incentive awards from the state’s Jobs Development Investment Grant since its inception in 2002 have failed to live up to their promises of job creation, investment or wages. These failed projects have forced the Department of Commerce to cancel those grants and even occasionally take back funds already given to these underperforming firms, according to an analysis of program reports.”
McCrory, a former Charlotte mayor, hasn’t been shy in dangling the incentives in front of potential employers and cites as his biggest achievement landing MetLife, which will add 2,622 jobs in Cary and Charlotte.
State officials also aren’t downplaying the rumors in business circles that North Carolina is in the running for an automobile plant of some kind.
But the governor could have given more credibility to his argument for more money if he had acknowledged the failures and suggested ways to avoid them. His administration also should focus on how to recruit more business and more jobs for rural areas, which have seen only a small investment out of this incentive fund.
And here is something that McCrory and his Republican mates who control the General Assembly had best remember: Good companies, those with the highest-paying jobs and enlightened management, look beyond monetary incentives. They look, for example, at education.
Will their workers have good public schools for their children? Is the teaching force not just adequate but exceptional? Does the state provide enough money to support the schools? Are graduation and college-attendance rates high?
More than money magnets
North Carolina, with GOP legislators making public schools something of a political target and with teacher pay still far too low, needs to invest in those “incentives,” in the things that will benefit all workers and their families.
The strongest advocates of incentives argue that because the JDIG grants pay out only when companies reach their hiring and investment targets, they’re well worth it, especially when balanced against the revenue from new income taxes and the spending of those new workers.
It’s not a bad argument, as long as everything goes according to plan, which apparently hasn’t been the case more than half the time.
The state’s incentives program might have virtues, but it doesn’t appear it’s time to pour more money into it without retooling it to make its outcomes more predictable. A MetLife deal is fine, but it can’t be used to justify millions more taxpayers dollars in JDIG.
The governor wants and needs some success stories in an administration that hasn’t had many, political or financial. But those stories need to be more than wishful thinking.