Corporate Welfare Weekly - March 8th, 2010 – Issue 40

March 8, 2010 – Issue 40

Recent Announcements…

$600,000 in incentives has been granted to Pierre Foods through the One North Carolina Fund. The Cincinnati-based meat processing company will expand their existing Claremont facility by 45,000 feet and promises to add 500 jobs starting at $8.00 per hour.

                ~ Jordan-Ashley Baker, Observer News Enterprise, March 5, 2010

ConAgra has announced it will close its Garner Slim Jim plant by next year, eliminating 450 jobs.After an explosion at the factory last summer that killed four workers and injured dozens more,ConAgra Foods has decided it is more feasible for the company to move the remainder of its Slim Jim operations to a plant in Troy, Ohio than to reestablish operations at the damaged Garner plant. The state offered the company $450,000 through the One North Carolina Fund and the Town of Garner offeredanother $450,000 in tax breaks. Lawmakers also approved waiving the company’s property taxes for 15 years, a potential value of $3 million. Wake County declined to offer any additional incentives.

                ~ Sarah Nagem & Alan M. Wolf, News & Observer, March 4, 2010

$1,800,000 in potential incentives is being offered to Baltimore-based Northeast Foods Inc. by Johnston County and the Town of Clayton. On Monday, March 1, Johnston County commissioners approved a property tax break worth approximately $1.03 million over seven years. Clayton’s Town Council is proposing an incentives package worth an additional $800,000 over eight years. The company has already been granted $350,000 from the state’s One North Carolina Fund.

                Brian Rapp & Rick Mercier, Clayton News-Star, March 1, 2010

Surry County Board of Commissioners approved a $142,300 incentive to extend a water line that will only benefit Wayne Farms, a poultry producer in Elkin. County commissioner Craig Hunter, the lone dissenting vote against the incentives, said, “We don’t want to raise taxes… We’re in imminent danger of doing that.”

                ~ Meghann Evans, Mount Airy News, March 1, 2010

Quotes of the Week…

“In the grand scheme of things, the tax incentive wasn’t going to make or break the decision.”

~ Bill Carstarphen, president of Pharr Yarns, as quoted by the Gaston Gazette, discussing his company’s motivation for choosing Gaston County for its carpet yarn making operations.

“Do I like incentives? No. Every time I’ve voted for them, it’s left me with a bad taste in my mouth. But this is nothing new. It’s the nature of business today.”

                ~ Tom Keigher, Gaston County Commissioner, as quoted by the Gaston Gazette.

“We’d love if the federal government would say you cannot offer incentives. Seeing that’s not the rule of the land, if we want to get involved in bringing growth here, we have to offer something.”

~ Gaston County Manager Jan Winters as quoted by the Gaston Gazette. Ms. Winters was commenting on the return on investment regarding incentives.

How do we end the incentives war? Let the Supreme Court decide!

I love G.D. Gearino’s article in the March issue of the Business North Carolina magazine, “How to end the incentives war.” I have argued time after time that the only way to effectively end this destructive and wasteful practice is to address it at the federal level.

“The [Winston-Salem] Journal, using the soon-to-be-closed Dell Inc. computer plant as its starting point, … analyzed 70 incentives packages handed out by local leaders in recent years. It found that of the 13,000 jobs the recipient companies pledged to create, more than 40% ‘either were never created or no longer exist.’ What naïve soul thinks the situation is different anywhere else in the state?

If there were a slippery slope, the practice of throwing public money at private business in the name of economic development is it. Once it begins, it’s hard to stop. Local leaders may start out with large ambitions and noble intent, but in short order they find themselves offering six-figure bribes to companies to move just a few miles. … But the problem, of course, is that if everyone else is doing it, any local official also feels compelled to get in the game. No one has the option of pushing away from the table.

In light of that, I don’t understand why local and state leaders so vigorously oppose legal efforts to derail the system of tax incentives. …

The General Assembly should rewrite statutes to eliminate targeted incentives, announcing that as a basic matter of equal treatment under the law any benefit available to one business should be available to all. Then at first opportunity – when, for instance, a neighboring state uses a targeted incentive to lure a company away from North Carolina – we should sue the other state in federal court under the Commerce Clause. Let the U.S. Supreme Court end the practice permanently. My guess is that every local and state official in America, given the chance to end the handout game, will line up to file amicus briefs in favor of the brave men and women of North Carolina who pushed away from the table first.”

Gearino, G.D. (2010, March). “How to end the incentives war.” Business North Carolina, pp. 20-21.