Corporate Welfare Weekly
Corporate Welfare Weekly - October 30, 2009 – Issue 22
Shelley Gonzales
Oct 30th, 2009
North Carolina Institute for Constitutional Law attorneys Bob Orr and Jeanette Doran recently argued an appeal in a lawsuit challenging a corporate welfare package given to Google in connection with the construction of an internet data center in Lenoir County. That package included direct grants and special tax exemptions. The State Constitution requires that taxes be imposed in a uniform manner, but the State created tax exemptions narrowly tailored for Google’s benefit. The trial court held that the plaintiffs who are three individual taxpayers were not legally permitted to bring a lawsuit challenging the tax exemptions created for Google. On appeal, however, NCICL has focused on appealing the trial court’s decision that ordinary taxpayers lack standing and so cannot challenge specially crafted tax exemptions. Justice Bob Orr is quoted by the News and Observer as saying… “How are people going to challenge the acts of government that they feel are unconstitutional if, as taxpayers, the courthouse door is shut?” Much has changed since the initial 2007 filing of the case. The closing of Dell’s Winston-Salem plant, the film credit expansion, and Winston-Salem’s baseball park construction debacle are a few examples that have inflamed the anti-incentives sentiments of many.
Corporate Welfare Weekly - October 23, 2009 – Issue 21
Shelley Gonzales
Oct 23rd, 2009
Since last week, Governor Perdue and a few top economic development officials have been on a trade mission to Japan and China seeking more ways to spend already scarce North Carolina tax revenue. While Japanese companies are certainly enticed by the prospect of financial incentives from the state, fortunately, Chinese companies are not. WRAL reported Governor Perdue’s observations in an October 22 article written by Capital Broadcasting Company: “China’s growing economy is so strong that incentives are not the key factor to luring investment, Perdue observed. … Rather than money and incentives, Chinese companies are looking for support and assistance in navigating the state system. … Companies with a base in Communist China are used to dealing with government entities, she said.”
Corporate Welfare Weekly - October 16, 2009 – Issue 20
Shelley Gonzales
Oct 16th, 2009
“Small business creates many more jobs – often a few here and a few there – and they are already in the state paying taxes, and yet they get no similar tax breaks.” ~ NC Senator Tom Apodaca, representative of Buncombe, Henderson, and Polk Counties, as quoted by Blue Ridge Now regarding Dell’s recent plant closure announcement
Corporate Welfare Weekly - October 9, 2009 – Issue 19
Shelley Gonzales
Oct 9th, 2009
“The closure has become a political embarrassment for local politicians who had been urging the state to go further with incentive packages aimed at luring businesses, including a controversial $200 million plus package used to entice Google to build a location in the Blue Ridge Mountains two years ago.” ~ Nanette Byrner, Business Week, October 9, 2009. The quote refers to Dell’s plant closing in Winston-Salem.
Corporate Welfare Weekly - October 2, 2009 – Issue 18
Shelley Gonzales
Oct 2nd, 2009
The Dispatch, a Davidson County news source, reported in an article written by Seth Stratton that more jobs are being cut in North Carolina. “ATM and bank security manufacturer, Diebold, is cutting approximately 100 positions from its facility in the Lexington Business Center near the south side of the city. … Lexington and Davidson County approved separate incentives packages worth more than $60,000 each over five years in May 2008 for a 30,000-square foot expansion for the addition of the security-equipment lines but reportedly never signed the contract for a $4.5 to $4.7 million investment.” ~ Seth Stratton, The Dispatch, September 28, 2009
Corporate Welfare Weekly - September 25, 2009 – Issue 17
Shelley Gonzales
Sep 25th, 2009
The News & Observer reported in a September 23 article by John Murawski that even as the “economy giveth…the economy taketh away.” “Central States Manufacturing, based in Arkansas will open a metalworking plant that will create 45 jobs. … The company will receive $135,000 in state grants if it meets the hiring targets. …Last week, however, WEK Industries said it would cut 71 employees and by Dec. 14 shutter [sic] its plant in Reidsville, about 90 miles northwest of Raleigh.” ~ John Murawski, News & Observer, September 23, 2009
Corporate Welfare Weekly - September 18, 2009 – Issue 16
Shelley Gonzales
Sep 18th, 2009
Jeanette Doran, Senior Staff Attorney with the N.C. Institute for Constitutional Law announced Wednesday that the Institute: “…filed a lawsuit today on behalf of two taxpayers from the Charlotte Metro area. The lawsuit, filed in Wake County Superior Court as lawsuits against the State generally are, challenges the constitutionality of the State of North Carolina’s appropriations to Johnson and Wales University, a private cooking and hospitality school in Charlotte. The State has already appropriated several million dollars to the cooking school to fulfill individual promises made by various officials. The lawsuit seeks the stop any future payments and to have the millions already given to Johnson and Wales returned to the State treasury…”
Corporate Welfare Weekly - September 11, 2009 – Issue 15
Shelley Gonzales
Sep 11th, 2009
“The proposal violates the basic tenet of taxation in North Carolina: Except under very precise limitations (like returning tax overpayments), rebating taxes in North Carolina is illegal. Specifically, N.C. General Statute 105380 calls for ‘No taxes to be released, refunded, or compromised.’ It adds: ‘The governing body of a taxing unit is prohibited from releasing, refunding, or compromising all or any portion of the taxes levied against any property within its jurisdiction.’… “…One or 11 Guilford County commissioners supporting the proposed policy just doesn’t matter and makes it no more legal. Yet, Arnold persists in this quixotic quest to arbitrarily reduce taxes for developers.” ~ Rob Bencini, former Guilford County’s economic development director, wrote a piece in Greensboro’s News & Record about the $1.3 million tax rebate policy introduced by Guilford County commissioners Vice Chairman Steve Arnold. The legality of the policy is being debated.
Corporate Welfare Weekly - September 4, 2009 – Issue 14
Shelley Gonzales
Sep 4th, 2009
The Triangle Business Journal reported in an article by Amanda Jones Hoyle that “Perdue looks a lot like Easley,” at least when it comes to the giving away of corporate incentives. “Since January, when Perdue took office, the state has announced 20 grants worth almost $3.7 million from the One North Carolina Fund, a state-funded program that provides money through local governments to attract business projects. The state awarded 18 such grants for the same time period the year prior. They totaled $7.7 million from OneNC, including a $5 million grant to Spirit AeroSystems to build an aerospace fabrication and assemblies facility at the Global TransPark in Kinston.”…“Of the 20 projects awarded OneNC money so far in 2009, 80 percent went to existing companies expanding operations.”…“Under Easley, the split between new and existing OneNC grant awards was about 50 percent during his eight years in office.” ~Amanda Jones Hoyle, “Perdue Continues Incentives March,” Triangle Business Journal, August 28, 2009
Corporate Welfare Weekly - August 28, 2009 – Issue 13
Shelley Gonzales
Aug 28th, 2009
“They’re a little bit short.” ~Kathy Scott, Executive Director of Roanoke Valley’s Economic Development Department. Scott recommended the city council extend an incentives agreement with Halifax Linen Service until February 8, 2010 because the company did not perform as expected. In 2006, the company received an $81,000 grant from the One North Carolina Fund.
Corporate Welfare Weekly - August 21, 2009 – Issue 12
Shelley Gonzales
Aug 21st, 2009
“History reflects that government solutions to market issues have often been hallucinogenic.” ~Senator Eddie Goodall, Joint Republican Caucus Leader about the Life Science Development (LSD) Corporation Act, Charlotte Observer, August 19, 2009
Corporate Welfare Weekly - July 31, 2009 – Issue 9
Shelley Gonzales
Jul 31st, 2009
“Although the money is in the budget, a policy has yet to be formulated. And we hope to do that before the fiscal year (begins on July 1), and we want to put together an economic development proposal for everyone adding to commercial tax value.” ~Steve Arnold, Vice Chairman of the Guilford County Board of Commissioners, News & Record
Corporate Welfare Weekly - July 24, 2009 – Issue 8
Shelley Gonzales
Jul 24th, 2009
“I have never seen a company lay off in one place and get incentives to hire a new set of workers in a nearby location…This one takes a new prize…that takes chutzpah from the company.” ~Joseph Coletti, Fiscal and Health Care Policy analyst for the John Locke Foundation regarding the recent state and local incentives for Continental Automotive.
Corporate Welfare Weekly - July 17, 2009 – Issue 7
Shelley Gonzales
Jul 17th, 2009
“The statesman who should attempt to direct private people in what manner they ought to employ their capitals, would not only load himself with a most unnecessary attention, but assume an authority which could safely be trusted, not only to no single person, but to no council or senate whatever, and which would nowhere be so dangerous as in the hands of a man who had folly and presumption enough to fancy himself fit to exercise it.” ~Adam Smith, the Wealth of Nations, Book IV, Chapter II
Corporate Welfare Weekly - July 10, 2009 – Issue 6
Shelley Gonzales
Jul 10th, 2009
“These packages send unintended signals to the marketplace. First, it tells the market that your tax system is so out of line that you need specific tax breaks to get a business to locate in the state. Second, it tells your local businesses that they are foolish for staying in the state and paying taxes to subsidize another business with better political connections...” “…Targeted incentives are to a state’s economy what steroids are to the human body – short-term results that eventually weaken the bones, cause heart failure, or worse, impotency.” ~ Scott Hodge, president of Washington D.C.-based Tax Foundation. June 3, 2009 press release in which Mr. Hodge criticized North Carolina’s Apple incentives deal.