State Politics

Proposed NC tax credits aim to spur jobs growth but face criticism

“The Hunger Games,” which starred Jennifer Lawrence and Liam Hemsworth, was shot primarily in North Carolina. Gov. Pat McCrory’s budget proposal would give the film industry a boost by keeping a new grant program, with $10 million available for projects.
“The Hunger Games,” which starred Jennifer Lawrence and Liam Hemsworth, was shot primarily in North Carolina. Gov. Pat McCrory’s budget proposal would give the film industry a boost by keeping a new grant program, with $10 million available for projects. MURRAY CLOSE

Gov. Pat McCrory’s budget proposal includes a number of tax breaks and economic development grants that are being hotly debated in the legislature this month.

The governor’s proposed budget includes $155 million in tax breaks designed to stimulate film, aviation, renewable energy and other sectors. A big part of that would go to keep a tax credit on research and development that is set to expire at the end of the year. McCrory says they are important for “job preservation.”

Many of those ideas are already drawing criticism from Republican legislators who say they don’t fit with GOP-led tax reform, which has aimed to lower overall tax rates by eliminating credits for individuals and businesses.

McCrory has said that reasoning shouldn’t apply in all cases, and he’s singled out the historic preservation tax credit program as one. He’s been lobbying to restore it. His idea is for a new scaled-back credit that would give property owners credits equal to 10 to 20 percent of their renovation expenses. In the program’s previous form, property owners could receive a credit of up to 30 percent of their expenses.

Bringing it back would cost taxpayers $12.2 million.

The film industry would also get a boost – though McCrory wouldn’t restore a previous tax credit refund program for film productions. His budget calls for keeping a new film grant program, with $10 million available for projects. With grants of up to $5 million available for individual film productions, supporters of the program argue it needs more money – or filmmakers will head to neighboring states that offer more incentives.

The governor’s plan includes $7 million to expand an electricity tax credit for technology data centers and $7.5 million to extend a jet fuel tax break that benefits American Airlines. Both are part of the N.C. Competes economic development bill that passed the House on Thursday in an 88-29 vote.

McCrory also wants to double funding available in the One North Carolina Small Business Program, which offers early-stage funding to technology start-ups. That program would get $5 million next year.

KEY STAT: $155 million, the cost of proposed tax breaks.

A DONE DEAL: The proposed budget includes $99 million for incentive grants that would go to companies adding jobs in North Carolina. While legislators disagree on incentives, that $99 million figure isn’t negotiable. “The money that’s in the budget here is to fund grants that have already been made” in years past, Budget Director Lee Roberts said. As for the incentive money the House debated this week? That would be in future spending plans, he said.

HOW LIKELY? McCrory has made it clear that the historic preservation tax credits will be among his biggest fights. It faces opposition in the Senate. He’s traveled the state with his commerce secretary lobbying for the program. Other tax credits in the governor’s budget are in the bill that passed the House on Thursday. Those plans shift to the Senate soon.

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