Follow the Money: Issue 85


Feb 17th, 2011
by Elizabeth Lincicome

 

“Pledged to create” not the same as jobs created  

If you were privy to the governor’s State of the State speech Monday night you might be under the false impression that North Carolina has added thousands of jobs over the last two years. This couldn’t be further from the truth. While the governor said businesses have promised to create 58,000 jobs, she omitted the fact that the state has lost 128,260 jobs since she took office. A spokesman for the N.C. Dept of Commerce said the governor’s figure was based on “announced” jobs via the state’s incentives programs, which include the One NC Fund and JDIG. The rub is that companies that receive state incentives money are typically allowed three to five years to create the number of jobs they promise to the state. Thus these jobs are simply “pledged to be created,” rather than actually created right away. Kudos to the N&O’s Michael Biesecker for his candid and balanced report on the truth behind such claims of “job creation.”   

 

Urging cuts, association targets film incentives

On Tuesday, the State Employees Association of North Carolina presented a report on how the state could create billions of dollars in savings or revenue options as an alternative to layoffs. One of the top items: completely eliminating the state’s film industry incentives. According to the association, N.C. could save $22.5 million by cutting off film incentives, which recently increased to pay filmmakers for 25 percent of their expenses. The report also recommends four-day workweeks, consolidating state health services, and ending other corporate incentives and special tax breaks.

 

MORE incentives giveaways:

Another intracity incentives deal: Tuscarora Yarns paid to move…

Tuscarora Yarns has received incentives to move its current facility to a different location, also in Rowan County. The project was made possible in part by a $146,000 grant from the One NC Fund, which requires local matches. Both the China Grove Board of Aldermen and the Rowan County Board of Commissioners approved incentives to secure the expansion. As part of the incentives deal, both the city and county will refund 75 percent of the company’s property taxes on new investment for five years. Tuscarora Yarns will move from 406 N. Main St., to the former Hanesbrands building at 308 E. Thom St. The company says it will create new jobs. 

 

Mocksville fabric maker receives $84,000 adding only 42 jobs…

Avgol, a manufacturer of lightweight nonwoven fabrics, has received an $84,000 grant from the One NC Fund, according to a press release. The company will “expand” its Mocksville facility, creating 42 jobs during the next three years. Currently, Avgol's Mocksville facility has 132 employees, operates three production lines, and will expand with a fourth production line. In addition to the Davie County plant, the manufacturer has operations in Israel, China, and Russia.

 

Companhia Provencia gets incentives from the state, Iredell County, and Statesville…

Companhia Providencia, a Brazilian textile manufacturer that currently employs 53 people has received $2 million in incentives to add an additional 28 workers. Companhia is located in Statesville and most of the incentives money will be provided by Iredell County and Statesville. The state will also contribute $42,000 from the One NC Fund.

 

Kinston’s Global TransPark has seen better days… 

Global TransPark (GTP), the government-funded business park that houses Spirit AeroSystems appears to be headed for bankruptcy. The Carolina Journal’s Don Carrington writes in an exclusive report: 

 

An economic impact analysis prepared by the N.C. Department of Commerce in June documented a mere 232 total jobs located at the GTP while claiming those jobs produced a total annual economic output of $42.5 million.

 

In 2008, the park landed an “anchor tenant” in Spirit AeroSystems, a Wichita, Kan.-based company that will manufacture large aircraft components. The anchor tenant came at a high cost to the public. While Spirit officials have stated the company plans to invest approximately $500 million in the facility, state officials committed subsidies in excess of $200 million to attract the company. If Spirit hires 1,000 workers as planned, the cost to taxpayers may exceed $200,000 per job.

 

A major component of North Carolina’s incentive package is an agreement for GTP to pay $100 million toward Spirit’s building. The TransPark also obtained a $100 million grant from the Golden LEAF foundation to secure the Spirit project. GTP will own the structure and lease it to Spirit for $100 per year. Since rent is the park’s primary source of revenue, Spirit will never generate enough money to help GTP repay its debt.

 

More from the Triangle Biz Journal:

 

The facility still remains obligated to meet an Oct. 1, 2011 deadline repay a $38.4 million loan to the North Carolina Escheats Fund in the office of State Treasurer Janet Cowell. Since GTP’s current operating cash isn’t sufficient to pay that amount, “substantial doubt about the authority’s ability to continue as a going concern exists,” concludes (the auditing firm) Thomas & Gibbs. However, General Assembly lawmakers repeatedly have extended the repayment deadline. 

 

The People’s Voice: Letters and Opinion Pieces

Tasty subsidy

I read with interest the Feb. 6 article reporting on a proposal that would create a tax credit to help parents send their children to private schools. The most interesting part of the article, however, was not the discussion of the proposal, but rather the quotes from state Rep. Rick Glazier.

 

According to the article, Glazier said, "I don't think taxpayers ought to be involved in funding private schools, nor do I think the taxpayers want their money going there." That is a curious statement considering that Glazier has a history of voting to give public money directly to private schools.

 

In fact, he voted for five pieces of legislation that gave a total of $7.5 million to Johnson and Wales University, a cooking and hospitality school based in Rhode Island and operating college campuses in North Carolina and several other states. The state Court of Appeals is now considering a constitutional challenge to those appropriations. The state has defended the multimillion-dollar appropriations on the grounds that the government may subsidize both education and economic development.

 

If Glazier thought taxpayers didn't want their money going to private schools, why did he give million-dollar handouts to a cooking school?

 

-Jeanette K. Doran

Senior Staff Attorney, N.C. Institute for Constitutional Law

Raleigh

Budget riddles

Hear ye, hear ye Republican and some Democrats. There are those of us, many of us, who are willing to pay more taxes. Really, we are! We don't want teachers or their aides fired. Our children need them.

 

We don't want state employees laid off. Far better to pay them for services rendered than put them on the unemployment rolls. More jobs lost just makes this go from bad to worse.

 

"If you can't beat 'em, tax 'em." Sound good to me. Pay to play. West Virginia has it right. The GOP has it right claiming unspent money for luring businesses. I find it offensive to use taxpayer money to lure (bribe) businesses to come here. If they want to come to North Carolina, we have plenty to offer.

 

"Expand the tax base" - expands all the care-taking of more people and more infrastructure. You never catch up. Never!

 

Don't privatize state agencies to save money. It doesn't. Find the loopholes and close them.

 

If we can't figure this out, heaven help us all.

 

-V.R. Moore

Apex

Carolina bloat 

I feel for anyone losing their job, but raising taxes to help keep state employees on the job is the root cause of the problem. North Carolina's government is bloated, too big - this means too many employees, period. Raising taxes in an already over-taxed state will only lead to bigger problems. If you haven't noticed, before this state started raising taxes unemployment was never this high, even during prolonged recessions.

 

We no longer live in a state that businesses flock to; we have become an expensive state, with this bloated overbearing state government. It is time to reduce the size of the government in this state and this country before we become the next California and Greece.

 

-Joseph Kolb

Raleigh

 

Quote of the Week: 

“I find it offensive to use taxpayer money to lure (bribe) businesses to come here. If they want to come to North Carolina, we have plenty to offer.”

-V.R. Moore

Apex

2/13/11 Letter to the Editor, Raleigh News & Observer