Business tax break incentives are a tool for NC’s prosperity, and they’re working | Opinion
North Carolina enjoys a well-earned reputation as a business-friendly state. Respected media outlets consistently say we’re a top state for business, such as the CNBC study ranking us among its best states the last five years in a row. That’s why the business un-friendly attitude taken by Andrew Dunn in his recent News & Observer opinion columns is so striking and misplaced.
North Carolina sometimes uses performance-based economic development incentives to help attract and retain good-paying jobs, with more than 80 percent of projects going to counties with greater economic distress. It’s not our only tool for economic development, but it’s an important one. Indeed, the state’s discretionary incentive programs are working as intended, and the state only pays on performance, not “up front” when a project is first announced. These incentives enjoy bipartisan support from the General Assembly, which wisely created them to attract new jobs while protecting taxpayers’ best interests. Dunn’s argument spins around in circles, as he first says incentive deals fail but then acknowledges the programs are working as designed and the state only pays out when companies create the jobs.
If a company ultimately falls short of initial job creation estimates, that’s not a failure, but more often a reflection of the ups and downs of the business cycle. In the vast number of cases, the projects still create jobs. In the rare event a company does completely shut down, claw back mechanisms are available to get the incentive money back.
It’s worth noting that actual performance can exceed earlier projections too. Merck, awarded a incentives deal in 2019 to manufacture vital medicines in Durham, initially projected they’d pay an average annual wage of around $73,000, but today that average wage reaches well over $100,000, according to its latest performance report to the state. In 2021, Toyota initially projected their Randolph County project would create 1,750 jobs but now expects to hire more than 5,000 people.
Dunn suggests we don’t ask enough of companies in exchange for incentives, that even in cases where the state doesn’t pay any incentive money, we somehow give away too much goodwill and public support to the companies. But generating goodwill and public support for economic development goes hand-in-hand with being a business-friendly state. Microsoft, Electrolux, Allstate and Xerox didn’t bail on the state, as Dunn said. These companies all maintain operations here. Centene never received incentive money, so there’s nothing for them to pay back.
Maintaining North Carolina’s business-friendly climate takes constant vigilance and using every tool we can. If fundamentals like great education and workforce training systems, world-class infrastructure and a reasonable tax and regulatory environment aren’t in place, then incentives alone will never close the sale. But economic development incentives are a critical part of staying competitive. In today’s competitive economic development world, North Carolina can’t afford to show up with an empty toolbox.