Under the Dome

Sunday Dome: Major incentives still need to be settled in NC budget

Gov. Pat McCrory meets with officials at the 2012 groundbreaking for MetLife, which received state incentives.
Gov. Pat McCrory meets with officials at the 2012 groundbreaking for MetLife, which received state incentives. NEWS & OBSERVER FILE PHOTO

On a typical day at the legislature, big changes to the state’s main jobs incentive program would generate a lengthy debate. Not last week.

Senate leaders tucked their proposal for the Job Development Investment Grant – or JDIG – program on page 463 of their 508-page budget bill.

It’s the state’s major jobs recruiting tool.

The JDIG changes outlined in the Senate were barely mentioned in six hours of debate as education funding, corporate tax cuts and a change in how the state distributes sales tax revenues took center stage.

The Senate approved the budget bill in a final vote on Thursday, with all Democrats present voting no. That will set up lengthy negotiations with the House that could stretch for weeks.

The House passed a dramatically different budget, and its leaders have different ideas for key policy items like Medicaid – and jobs incentives.

The House’s plan is to replenish the state’s incentive fund, which has been largely out of money since last fall. The House would double what could be spent from the JDIG fund to $45 million for the current two-year period from the current $22.5 million.

The Senate sharply diverges.

The Senate’s incentives plan

The Senate’s plan is to restructure JDIG to offer more generous packages for large manufacturers – like automakers – and for companies that choose to create jobs in poor, rural counties.

The plan was first unveiled June 10 in the Senate Commerce Committee. A few days later, it was grafted into the budget bill.

Senate plan would limit to $15 million each year what could be spent on the jobs incentives – and extend the program to January 2018.

In order to catch up on job deals postponed during the funding shortage, $12.5 million would become available as soon as the bill passes.

The Senate also wants to offer bigger packages for companies bringing at least 2,000 jobs and investing at least $750 million – a category that would fit an automotive plant.

JDIG grants are based on a percentage of payroll tax withholdings that a company generates. The program’s biggest grants today give a company back 75 percent of those tax witholdings.

But under the Senate plan, the “high-yield” jobs deals would be worth 100 percent of a company’s witholdings.

To pay for that, the Senate would double the program’s overall cap to $30 million during any year in which the state lands a “high-yield” project.

“That’s a positive step,” said Dianne Reid, president of the Chatham Economic Development Corporation, which is trying to lure a large manufacturer to a site near Siler City. “It lays out some ground rules for what the state would do if a mega-project would land.”

Reid said the Senate’s proposal for major jobs deals would make North Carolina more competitive with what neighboring states offer. On three occasions in the past two years, the state has been a finalist for an automotive company and fallen short.

“It’s getting us to the place where we are in the ball park,” Reid said. “We’re going to get close to being competitive.”

Changes to favor rural NC

Companies offering fewer than 2,000 jobs would receive higher payouts if they locate in poorer counties. JDIG awards in counties the state considers to be the poorest would be worth up to 80 percent of tax withholdings.

Meanwhile, urban counties – which have received much of JDIG money in recent years – would offer a lower maximum amount.

Companies in Wake, Durham and Mecklenburg counties can currently receive up to 50 percent of their tax withholdings. Under the Senate plan, that maximum would drop to 35 percent.

MetLife, which is adding 2,622 jobs in Wake and Mecklenburg counties, is set to receive a JDIG grant of $87.3 million over 12 years. Had the Senate plan been in place at the time of the award, MetLife would be eligible for about $60 million.

In all of the state’s wealthiest counties, local governments would be required to pitch in with incentives of their own.

Going elsewhere for a ‘better deal’

With major differences between the House and Senate plans, it will likely be weeks before a final bill dealing with incentives reaches Gov. Pat McCrory’s desk.

Meanwhile, with JDIG out of money, economic developers are hindered by an “absence of certainty over what is our flagship incentive tool,” said Chris Chung, CEO of the state’s public-private Economic Development Partnership.

“There’s going to be plenty of instances where a company is going to need to go where the better deal is,” Chung said.

The Economic Development Partnership doesn’t take formal positions on the competing jobs bills, Chung said. Commerce Secretary John Skvarla has said the legislature’s failure to extend JDIG is hampering the state’s ability to compete for jobs.

While the JDIG plan wasn’t debated in detail during the Senate budget deliberations, three Democratic senators brought up North Carolina’s recent job recruiting failure: A Volvo manufacturing plant that’s now headed to South Carolina and could eventually employ 4,000 people.

Volvo sought incentives as it looked at three sites in North Carolina. But with JDIG out of money, the state had little to offer, records show.

Democrats didn’t mention Volvo’s decision to make the case for more JDIG funding. Instead, they argued the state needs to invest more in education to lure major companies.

“I always enjoyed being able to look down at South Carolina and talk to my friends across the border in Dillon County about how much more we were doing in education than they were in South Carolina,” said Senate Minority Leader Dan Blue.

“But Volvo going to South Carolina really raises a different issue with me. It means that they figured out in South Carolina how to create jobs and how to make use of education in a way better than we can.”

Blue gave little mention to a key aspect of the Volvo deal: South Carolina offered Volvo a package of state and local incentives totaling at least $209 million.

“Incentives alone,” Blue said in the Senate last week, “won’t do it, and giveaways will not do it.”

Colin Campbell

Key N.C. votes in Congress

Trade vote

Voting 218 for and 208 against, the House on Thursday passed a bill (HR 2146) that would enable trade agreements such as the 12-nation Trans-Pacific Partnership to move through Congress without amendments or filibusters. The bill gives President Obama fast-track Trade Promotion Authority for shepherding the TPP into law, and instructs U.S. officials to pursue GOP policy objectives on issues such as climate change and immigration as they negotiate the agreement. Whether the bill becomes law depends on other House and Senate trade votes expected soon.

A yes vote approved fast-track rules for debating the Trans-Pacific Partnership when it arrives on Capitol Hill.

Voting yes: Republicans Renee Ellmers, Virginia Foxx, Mark Walker, David Rouzer, Richard Hudson, Robert Pittenger, Patrick McHenry and George Holding.

Voting no: Republicans Walter Jones and Mark Meadows, and Democrats G.K. Butterfield, David Price and Alma Adams.

Withdrawal vote

Voting 139 for and 288 against, the House on Wednesday defeated a measure (H Con Res. 55) requiring the U.S. military to withdraw from Iraq and Syria by year’s end unless Congress by then has authorized America’s war against the Islamic State in Iraq and Syria (ISIS). In the absence of updated congressional approval of U.S. combat abroad, the administration is using the 2001 Authorization for Use of Military Force (AUMF) and the 2002 Iraq war resolution as the legal underpinning of the current war.

A yes vote was to withdraw U.S. forces from the Middle East unless Congress authorizes their deployment.

Voting yes: Jones and Adams.

Voting no: Butterfield, Ellmers, Price, Foxx, Walker, Rouzer, Hudson, Pittenger, McHenry, Meadows and Holding.

Sex assaults in military vote

Voting 50 for and 49 against, the Senate on Tuesday failed to reach 60 votes needed to advance an amendment to the nation’s military budget that would transfer the military’s handling of sexual-assault cases from the chain of command to outside military prosecutors, who would determine whether to file charges.

A yes vote was to remove prosecutorial decisions on sexual assault from the chain of command.

Voting yes: None.

Voting no: Republicans Richard Burr and Thom Tillis.