A bill introduced in the North Carolina legislature Tuesday would boost the amount of money that the state could offer “high-paying companies” to locate or expand here.
The bill would allow the N.C. Department of Commerce to offer companies up to $16,000 for every job created. Currently, the limit is $6,500 per job. It’s one of several bills being considered during the General Assembly’s current session.
“You want to attract big companies? They are not going to come unless you offer big incentives,” said state Sen. Jerry Tillman, a Republican from Randolph County, in an interview Tuesday afternoon. “It’s the game you have to play if you want to recruit business, especially big ones who will do a big headquarters and change the whole dynamic of the city and the state.”
Tillman, who sponsored the bill, said the state needs to make these changes because of one to two companies that are considering adding 1,000 to 2,000 jobs in Wake and Mecklenburg counties. Though other cities could take advantage of this in the future, he added.
State Sen. Paul Newton, a Republican from Cabarrus County and another sponsor of the bill, added that the per-job cap, which is part of the Job Development Investment Grant (JDIG) — the state’s main incentives program — hadn’t been changed since 2002 and was affecting the state’s ability to bring “high-paying job creators” to the state.
“When you get a headquarters located in your state, it becomes the center of gravity for that company,” Newton said. “Benefits will flow to existing citizens of North Carolina, even without job creation, but jobs will be created where the corporate headquarters is.”
Tillman added that the $6,500 cap was put in place when top salaries were usually around $150,000 a year — but now the state is competing for headquarters where some executives will make more than $300,000.
“We are just getting the ground set for whenever this takes place so that we can make the offer,” Tillman said.
Tillman said that the state Commerce Department, which manages the JDIG program, was on board with the changes.
“We collaborate closely with legislative leaders on many economic development issues and policies in order to keep North Carolina competitive in today’s marketplace,” Commerce Department spokesman David Rhoades said in an email. The department declined to comment further on pending legislation.
The state estimated that increasing the cap from $6,500 to $16,000 would cost the state a little more than $7 million over the next five years. Though, Tillman was quick to add that tax revenue brought in from new employees would outpace those increase.
“This will pay itself back many times over,” Tillman said.
But while the bill went through the Senate Finance Committee unanimously, not everyone was happy with the proposed changes or the fact that the state is even playing the incentives game at all.
Donald Bryson, president of the conservative think tank the Civitas Institute, said using incentives puts the state in the “game of choosing winners and losers instead of treating all businesses the same.”
“The government has no business saying one business is preferred over another. And that is what incentive programs do,” Bryson said, adding that it would be more fair to just lower the corporate tax rate for everyone rather than a select few businesses.
The bill is now set to go through the Rules Committee on Wednesday, and then eventually to the Senate floor for a vote.
The state has tweaked its JDIG program several times in recent years in an effort to make it a more competitive program.
Earlier this year, it created a new threshold for “transformative projects” that could bypass the per-job cap entirely.
Under the new standards if a company were to invest $1 billion into the state and create at least 3,000 jobs, the state would eliminate the $6,500-per-job cap on incentives awards. That change came earlier this year, after it was reported Apple was considering Research Triangle Park for a potential expansion.