Follow the Money: Issue 87


Mar 4th, 2011
by Elizabeth Lincicome

 

Update to Bayer CropScience’s $2.3 million incentives grab 

Bayer CropScience plans to build a $20 million greenhouse that will only employ 25 people in RTP. The new building will provide support to a project Bayer first announced in 2009, for which it received $2.3 million in incentives to create a Bio Science Innovation Center in Morrisville.

 

Silicone producer getting $600,000 in incentives

Mecklenburg County has lured Bluestar Silicones with over $600,000 in incentives. Half of the jobs Bluestar promised to create will actually be relocations from nearby Rock Hill, which is only 15 miles away. The company has annual revenues of about $900 million and will close its Rock Hill and Ventura, CA. facilities. Bluestar received a $340,000 grant from the One N.C. Fund and matching local grants from Mecklenburg and Charlotte, funded via property tax breaks. 

 

Mecklenburg native and current House Speaker Thom Tillis has been a critic of incentives. He said the state should cut corporate taxes, make tort laws more business friendly, and keep unions weak with right-to-work laws in order to make North Carolina a business-friendly environment. He said, "We have the potential to differentiate ourselves at a level where incentives will be rare."

 

NCICL named the “voice of the national anti-incentives movement” 

As subscribers to our corporate welfare watchdog newsletter, we thought you’d find it interesting that an article that ran in the February 26th issue of the Winston-Salem Journal titled “Measure to keep incentive money,” refers to the North Carolina Institute for Constitutional Law as the “voice of the national anti-incentives movement.” Read the full article. 

 

When it comes to incentives, counties’ “rankings” remain unchanged

The N.C. Commerce Department recently announced that under its arbitrary tier system, the rankings for the 14 counties in the Triad and Northwest N.C. did not change this year. Under the tier system, the department assigns economic rankings to all 100 counties in order to justify how they reward economic incentives across the state. 

 

Surry, Alleghany, Rockingham, and Wilkes, remained Tier 1 counties, which means they are recognized as being economically distressed. Businesses adding jobs in Tier 1 are eligible for a $12,500 tax credit per employee. Alamance, Ashe, Davidson, Davie, Randolph, Stokes, Watauga, and Yadkin are the counties in the region that are still Tier 2. Tier 2 businesses are eligible for a $5,000 tax credit per employee. Forsyth and Guilford were the only Tier 3 counties in the region, and businesses there are eligible for a $750 tax credit per employee.  

 

Fuzzy math when it comes to film incentives 

The following is an excerpt from an article by the Politico’s Michael Kinsley:

 

If you want to understand why it’s so hard for governments, federal and state, to put their accounts in order, consider an op-ed on Sunday in The New York Times by Bill Richardson…Richardson probably can deplore the deficit in his sleep. And yet, asked by the Times for one piece of advice to give his successor as governor, he used the opportunity to beg for a continued subsidy of the film and television industry.

 

New Mexico under Gov. Richardson was a pioneer in this field. In 2002, it began offering a credit of 15 percent — later increased to 25 percent — of the cost of making a movie in New Mexico. Now, 42 states have followed its lead. New York has gone as high as 30 percent. These credits can generally be transferred, saved or used for other things, so it’s no problem if a particular movie doesn’t make money…In less than a decade, the absurd notion of welfare for movie producers has evolved from the kind of weird thing they do in France to an unshakable American tradition. 

 

Richardson says that the film and TV subsidy has brought “nearly $4 billion into our economy over eight years” and has created 10,000 jobs… Some of the movies that have been bribed to locate in New Mexico would have been made in New Mexico anyway. That part of the subsidy is a total waste. Most of the movies that have come to New Mexico for the subsidy would otherwise have been made in other states. New Mexicans may not care if the citizens of those states lose out, but inevitably those other states respond with subsidies of their own and New Mexico gets beggared along with everybody else.

 

In any event, Richardson’s statistical claims are suspect…He says that 10,000 jobs and $4 billion “are huge numbers for a state with a population of only about 2.1 million.” If Richardson’s figures were correct, if every state had a similar program (as 43 of them do), and if every program achieved the same alleged success on a per capita basis, that would mean film subsidies would be adding $600 billion to the economy over eight years and would have created 1.5 million jobs. Given that the entire movie production and distribution industry generates about $55 billion a year, it seems unlikely that this subsidy alone generates $75 billion a year (one-eighth of $600 billion) in new business. Similarly, it’s hard to see how the subsidy could add 1.5 million jobs to an industry that employs about 362,000 people. 

 

In the definitive document on this issue, a paper published in December by the Center for Budget and Policy Priorities, senior fellow Robert Tannenwald notes what he tactfully calls “flaws” in various studies the states have commissioned to justify the subsidy…The most outrageous double counting, of course, is telling one state after another that it can bring in billions by enticing the same movies away from other states…Pit the states against one another, and the subsidies will inevitably become more generous and less effective at the same time. 

 

Quote of the week: 

“Did you watch the Oscars on Sunday? Did that look like a crowd in need of a government subsidy?”

 

-Michael Kinsley

Politico 3/1/11