Corporate Welfare Weekly - June 14th, 2010 – Issue 54
Jun 14th, 2010
Recent Announcements…
$4,000,000 in potential incentives has been awarded to Clearwater Paper Corporation for a new plant inShelby. $500,000 in grants will come from the state’s One North Carolina Fund and $3.48 million in tax breaks from the Job Development Investment Grant (JDIG). The pulp and paperboard, private-label tissue, and wood products manufacturer plans to hire 250 workers over the next 5 years. The One NC Fund grant is contingent on local matches.
~ Greensboro News & Record, June 10, 2010
$50,000 in incentives has been granted to Automated Solutions, LLC by Caldwell County’s Sales Tax Reinvestment Committee. The plastic packaging company is relocating to Sawmills in CaldwellCounty from Hickory.
~ Hickory Daily Record, June 11, 2010
$15,000 in incentives is being sought by Wisdom Beverage, LLC from the city of Winston-Salem. The adult beverage distributor wants to relocate its headquarters office from High Point to Winston-Salem’sStratford Road Industrial Park. A hearing will be held on June 21st in the City Council chambers.
~ Winston-Salem Journal, June 11, 2010
$35,000 in incentives has been approved by the High Point City Council for Apixir Pharma Sciences. The start-up drug company is seeking a place to open its new facility.
~ Triad Business Journal, June 8, 2010
Mayor wants Dell refunds used for more corporate welfare
The Winston-Salem Journal reported that the city’s mayor Allen Joines is seeking approval from Winston-Salem’s city council to use the Dell incentive refunds for more corporate welfare.
“With the Dell computer plant in Winston-Salem having remained open past its scheduled closings, the company's refund of $15.5 million in incentives is gravy for the city. But, despite increased demand for the desktop computers the company makes, the plant will eventually close, as have so many others in Northwest North Carolina. Mayor Allen Joines has a good plan about how to best use the refund to create jobs, a plan that should lead to public debate on the issue.
In tight economic times, some council members might want to use some of the money for more immediate needs, such as avoiding a tax increase. But for the sake of the city's future economic success, this money should be returned to its original use -- economic development. And yes, that means much of it may be spent on incentives to attract new companies -- an unavoidable part of doing business in today's economy.
The city council would have to approve the separate aspects of Joines' plan, which he estimates could create at least 1,000 jobs and would also have a goal of increasing the tax base. It would divide up the refund, which has earned about $210,000 in interest. Joines said it's hard to calculate the total number of jobs his plan would create, but a proposed $1 million for a technology and jobs fund has a goal of creating one job for each $1,000 invested, he said, or about a thousand jobs. Incentives from the fund would be given to technology companies, either existing or new ones, to create high-paying jobs, Joines said.”
NC House panel clears wide incentives bill
The Asheville Citizen-Times reported that an economic development package similar to the recent tax bill giving special tax breaks to computer data centers has been cleared by a NC House committee.
“Boosters of an economic development package that cleared a House committee Wednesday said it will help bring good jobs to the state and perk up the ailing tax base - even though a university study argues a portion of the tax breaks that would be extended are no longer effective.
Part of the bill is similar to a measure designed to encourage computer data centers, an energy turbine manufacturer and a paper plant to expand in the state. Those expanded enterprises alone could generate at least 1,200 jobs and more than $2 billion in capital investment, deputy state commerce Secretary Dale Carroll said.
The bill, if approved, could create $93 million in tax breaks annually by 2015, according to an analysis performed by legislative staff. But the measure should generate more tax revenues than it gives out to qualifying companies because the new jobs will generate income taxes and sales taxes from the items the workers purchase, said Rep. Bill Owens, one of the bill's primary sponsors.
"It's all about jobs," said Owens, D-Pasquotank, adding that tax revenues won't rebound in the slow recovery "unless we have people paying into the system." Companies won't receive tax credits, cash payments or sales tax refunds unless they create jobs or make investments, Owens added.
But the measure also would extend through 2013 some business tax credits first approved in the 1990s that give breaks to companies for each job they created in a handful of industries, and if they buy machinery.
The North Carolina Center for Competitive Economies, an organization linked to the UNC-Chapel Hill business school, presented a report to lawmakers in early 2009 arguing that incentives previously under the state's William S. Lee Act should be allowed to expire. The center found the credits worked well in the 1990s by giving firms a slightly higher employment growth rate than those that didn't get them. But the gap narrowed over time. The incentives were modified in 2006.”
Promised incentives did not help local company
The Triad Business Journal reported that Caye Home Furnishings, a company that was promised $250,000 in incentives from the state, will eliminate up to 160 jobs in North Carolina.
“Caye Home Furnishings eliminated 90 jobs at a manufacturing plant in the town of Star, nearAsheboro.
Caye will also close a Taylorsville manufacturing plant it opened in the fall, eliminating 70 jobs.
Caye says its bank rejected an offer by the company’s management to buy the business and avoid liquidation.
The layoffs will occur by Aug. 2.
The company announced plans for the Taylorsville operation in September, saying it would invest $1.4 million at the site. At the time, N.C. officials said they had approved $250,000 in incentives for the company. Caye has not received any of that money, according to the N.C. Department of Commerce.”
Company seeks incentives without promising jobs
The Greensboro News & Record reported that LabCorp officials are seeking incentives from AlamanceCounty and the city of Burlington for building a new facility in the region. City and county governments may each grant the company $552,000.
“LabCorp officials are seeking cash incentives for a $27.6 million project the company wants to build somewhere in Burlington, but they are not offering the promise of new jobs in exchange for the money.
Those are among the main points in a memo that Alamance County Manager Craig Honeycutt sent to the county commissioners, Commissioner Tim Sutton said Tuesday.
In the memo, Honeycutt suggested giving the county's largest employer a cash incentive of $552,000, or 2 percent of the cost of the project, instead of the typical 2.5 percent request since LabCorp was offering no new jobs.
The revelation comes after Mac Williams, president of the Alamance County Area Chamber of Commerce, announced at Monday's commissioners meeting that the county's largest employer was seeking incentives from the county and Burlington and asked the board to set up a June 21 public hearing on the request.
Burlington City Manager Harold Owen confirmed that LabCorp is seeking incentives from the city council, but he said the medical testing giant has not submitted a formal request. Owen said he is giving LabCorp until Thursday to submit a request to give the city time to advertise and set up a July 6 public hearing.
LabCorp has had "some very serious conversations about several sites in Guilford County and other sites across the country."
Owen said the council will consider an incentive along the lines of the $552,000 the county is offering. Owen doesn't know where in Burlington the company wants to put the project but said, "It's not downtown."
Owen said LabCorp is offering no new jobs, but like Honeycutt, he said the project would increase the local tax base and bring in additional revenue.”