Follow the Money: Issue 83


Jan 28th, 2011
by Elizabeth Lincicome
from Follow the Money

 

A Busy Week for Lawmakers  

Politicos on both the national and local levels were forced to face their respective budget crises this past week as President Obama delivered the State of the Union address on Tuesday night, followed by the North Carolina General Assembly having their first day back in session on Wednesday. 

 

Reacting to Obama’s speech, U.S. House of Representatives Speaker John Boehner said, “It was clear that the president and his team haven’t gotten the message the American people sent in November: We can’t spend and borrow our way to prosperity.” Hopefully, the members of North Carolina’s new Legislature have in fact gotten this message. 

 

Across North Carolina, local cities and counties are afraid the legislature will move to divert money they now claim. Municipal officials are specifically concerned about losing revenue from utility taxes, telecommunications taxes, and beer and wine sales taxes that are passed onto local governments. While the governor’s team struggles to assure taxpayers that she is dedicated to trimming the government fat when it comes to eliminating unnecessary agencies, there is still no end in sight for the corporate welfare being doled out in the form of targeted economic incentives. It will be up to the new General Assembly to take the lead in reforming North Carolina’s failed incentives policy.   

 

-Elizabeth Lincicome

 

(More) North Carolina Incentives-Related News…

 

Forsyth County Lures NS Aviation 

(From the Winston-Salem Journal, 1/27/11): The Forsyth County Commissioners this afternoon approved a plan to provide incentives for NS Aviation LLC, a startup aviation-maintenance company. The vote was unanimous. NS Aviation, led by a management team with ties to Pace Airlines Inc., wants to serve as an anchor tenant at Smith Reynolds Airport. It has pledged to create 308 full-time jobs. The county will act as a conduit for a $300,000 One North Carolina grant to the Airport Commission of Forsyth County. The grant must be matched by local money. Up to half of the local contribution could come from a $500,000 grant being provided for the project by the Golden Leaf Foundation. The county plans to use that grant to buy tooling equipment for NS Aviation that's required to work on Boeing 737 aircraft.

 

BSH Appliance Maker Lays off 100

BSH Home Appliances plans to cut production at its New Bern factory and layoff around 100 workers. The company, which is a joint venture of Germany's Bosch and Siemens, announced last week that it will stop making some front-load washing machines and dryers at the factory, which is about 110 miles southeast of Raleigh. In March of last year, the company asked the NC Department of Commerce to cease its participation in the JDIG program, which provides incentives to expanding companies. BSH was in line to receive $1.56 million under the JDIG program after it announced in 2006 that it would add more than 225 jobs over a five-year period and invest $11 million in its Craven County operations.

 

American Express Cutting 1500 Jobs in Greensboro

For those of us busy fighting corporate welfare, American Express has long been held up as the model company for its decision last year to refuse a massive incentives package from Greensboro and Guilford County. From a news report last May: 

 

Guilford County got the best of both worlds Thursday. American Express has decided to locate a $400 million data services center in the eastern part of the county and agreed to do so without requesting any local financial incentives…It also is a big deal that the company decided to forgo incentives. The decision left local leaders puzzled but delighted. “That’s refreshing,” said Keith Debbage, a professor of urban geography at UNCG…At one point, local officials said city and county governments would consider putting up as much as $13 million in incentives. Some would have come in the form of infrastructure improvements. That would have been the largest outlay ever for area municipalities…Greensboro and Guilford County tentatively had scheduled incentives hearings related to the project but quickly canceled those efforts…Guilford County had been competing with Des Moines, Iowa, for the center…Several attributes lured American Express to the Triad: a strong, uninterrupted power supply from Duke Energy, well-positioned Internet cables and a location generally free of natural disasters.

 

Unfortunately, last week AmEx announced it will cut 1500 jobs from the Greensboro facility, marking the first mass layoff announced by a state employer this year. (From the Charlotte Observer, 1/20/11):

 

The news deals a fresh blow to an already shaky region of the state and signals that companies continue to look for ways to cut costs despite a slowly reviving economy…

The credit card company announced Wednesday that work handled from the Greensboro center will be shifted to other locations in the United States by the end of 2011. Of the center's 1,900 employees, AmEx plans to keep about 400 who will work from home. Some of the others will be offered the chance to relocate to service centers in Ft. Lauderdale, Phoenix and Salt Lake City. The Greensboro center, which opened in 1985, is about 95 miles west of Raleigh. It employed as many as 3,800 people at its peak in the early 1990s, but now has about one out of three seats empty, said executive vice president Jim Bush.

 

Fortunately, taxpayer dollars in the form of incentives were not part of this deal. 

 

 

EVENT: NCICL Invites You to a Constitutional Conversation on Thursday, Feb. 3rd

 

On Thursday, February 3rd, NCICL will host a Constitutional Conversation titled "Amending the North Carolina Constitution: Should we expect more changes in the upcoming legislative session?" 

 

Guest speakers will include John V. Orth, the William Rand Kenan Jr. Professor of Law at UNC-Chapel Hill and Gerry Cohen, Director of the Legislature's Bill Drafting Division. NCICL's Justice Robert F. Orr will moderate the discussion. 

 

This event will take place from 12noon-1:30pm in the 3rd floor auditorium of the Legislative Building in downtown Raleigh. Boxed lunches will be available for a $10 donation to the Institute. This event is open to all members of the General Assembly and the general public. 

 

Please register by calling 919-838-5313 or emailing info@ncicl.org. 

 

Quote of the Week

 

"It appears the governor’s strategy is to use incentives dollars to try to buy the jobs." 

 

-Republican state Sen. Bob Rucho, 

Co-chair of the General Assembly’s Senate Finance Committee (the Carolina Journal 1/19/11).