Civitas Review Online

Since most companies know our state’s leadership are a bunch of suckers for incentive packages and will throw taxpayer money around chasing the elusive score, North Carolina has once again been used as the rabbit to run up the incentive package for another state — this time, Radio Shack has made NC its tease.

RadioShack, which has looked at Raleigh as a possible place to move its corporate headquarters, is making signs that it plans to stay in Fort Worth.

The Fort Worth Star-Telegram reported today that the company’s lease on the Tarrant County College campus it shares with the college had been extended for five years.

So once again the state gets “played” for a package of incentives.  Instead of just being used as a tool to drive up a negotiating position, it’s time the state just said no.

Pretty neat video of 58 million of your tax dollars hard at work.  Some aerial footage of the new data center being built by Apple in Catawba County.

I’m still waiting for all the greeny environmentalists to put down their iPhones or iPads long enough to notice the number of poor defenseless trees who gave their lives for this or the fact that data centers are one of the largest users of electricity (you know, that stuff that when generated  cause global warming).

From our good friends over at the NC Institute for Constitutional Law.  More taxpayer giveaways:

$107,170 in tax incentives grants was approved on Monday, February 1, by the Statesville City Council for an unnamed furniture company to expand its local operations.

~ Jim McNally, Statesville Record & Landmark, February 4, 2010

$100,000 to Commonwealth Brands Inc. from the state’s One North Carolina Fund to add a product line for its cigarette tubes. The Corporate Welfare Weekly’s issue #34 previously reported that the company is also eligible to receive an additional $83,207 from the City of Reidsville and $81,600 from Rockingham County.

~ Richard Craver, Winston-Salem Journal, February 4, 2010

$341,000 in local incentives has been approved for Kewaunee Scientific Corporation, a localStatesville laboratory furniture manufacturer. The company is to receive $184,000 from Iredell County and $157,000 from the City of Statesville. The furniture manufacturer announced it will be expanding its operations and renovating its corporate headquarters.

~ Joe Marusak, Charlotte Observer, February 4, 2010

$50,000 in incentives has been approved for Solaris Industries, Inc. from the One North Carolina Fund. The international manufacturer of steel tubing will build a new manufacturing facility in the Cleveland Town of Kings Mountain. All One North Carolina Fund grants require a local match.

~ Chris Baysden, Triangle Business Journal, February 3, 2010

Ok, so I’m havin’ a bit of fun with a title today.  Many folks might well recall the from bad to worse tire incentive deal a while back wherein the Governor said that giving $40 million in incentives to Goodyear and Firestone was a bad deal and way to much and then negotiated a $60 million deal.  Just an update from our good friends over at NCICL.

The Triangle Business Journal reported in a January 22 article that the time has come for two tire plants to receive millions in promised incentives.

“A state committee is gathering data to determine whether two large eastern North Carolina tire manufacturing plants each will receive their first $2.5 million in cash payments under a program aimed at retaining jobs.

The General Assembly created the program back in 2008, agreeing to give Goodyear Tire inFayetteville and Bridgestone Americas in Wilson $30 million each over the next 10 years if they continue to employ at least 2,000 full-time workers at the operations and meet other requirements.

…The decision on whether the first incentive installments will be paid to Goodyear and Bridgestone is in the hands of the North Carolina Department of Commerce’s five-member Economic Investment Committee, or EIC, which also approves Job Development Investment Grants, or JDIG’s, in the state.

Unlike JDIGS’s, which provide cash to companies for creating jobs, the so-called Job Maintenance and Capital Development program, or JMAC, covering the two tire companies, pays cash to keep jobs already in place.

Aimed at keeping Goodyear and Bridgestone from moving their operations elsewhere, the incentives marked a new approach for North Carolina.”

Here’s the latest update from the NC Institute of Constitutional Law on the incentives game that has done NOTHING to help NC’s unemployment rate.

$5,560,000 in total possible incentives has been granted to Celgard LLC to expand its Charlotte campus into Concord. The Charlotte-based company develops and produces the specialty membranes used in lithium batteries. The incentives include $4.6 million in potential tax benefits from the Job Development Investment Fund (JDIG) and $955,000 from the state’s One North Carolina Fund. If that wasn’t enough, the company was also selected to receive a $49 million grant from the U.S. Department of Energy for the expansion. The state grant is contingent upon the approval of local incentives.

~ Salisbury Post, January 19, 2010

A recent Triangle Business Journal article written by Ken Elkins claims the total incentives could reach as high as $18.6 million when it is all said and done.

$1,000,000 has been granted to Reser’s Fine Foods from the state’s One North Carolina Fund. The Oregon-based company will be expanding its current food production plant in Halifax County. The company makes potato salads, mashed potatoes, and other prepared foods. Local incentives will follow.

~ David Bracken, News & Observer, January 20, 2010

The Durham City Council has approved $70,000 in local incentives for ACW Technology, a British contract manufacturing company for international commercial, aerospace and defense customers. ACW wants to build a domestic factory to be closer to their U.S. suppliers and clients. The company has not yet confirmed they will build in Durham County. They are considering sites in Maryland and Virginia, and are also being courted by North Carolina’s Wake and Franklin counties. The N.C. Commerce Department has declined to comment whether the state will pitch in any additional incentives.

~ Jim Wise, News & Observer, January 21, 2010

$164,807 in total incentives has been approved by Rockingham County officials and the town of Reidsville for Commonwealth Brands, a local tobacco manufacturer. The company is eligible to receive $83,207 in incentives from the city of Reidsville and $81,600 from Rockingham County.

~ Journal Staff, Winston Salem Journal, January 13, 2010

$796,280 in combined incentives has been approved for SANS Technical Fibers to expand its Stoneville plant. The synthetic nylon filament and yarn manufacturer will receive $625,000 in state grants to the city for sewer and water improvements, $41,960 from Rockingham County, $39,320 from the city of Stoneville, a $60,000 grant from the state’s One North Carolina Fund, and a $30,000 grant from Duke Energy Corp.

~ Journal Staff, Winston Salem Journal, January 13, 2010

NC’s state and local governmens have used incentives heavily over the past decade.  It can be argued that such policies have actually contributed to a massive loss of jobs. Worst jobless numbers in 30 years! And do our policy makers have an answer?

North Carolina’s unemployment rate hit a historic high of 11.2 percent in December as the tally of jobs lost by the state’s workers since the recession started two years ago neared 250,000.

December’s jobless rate of 11.2 percent rose from 10.8 percent in November, the Employment Security Commission said Friday.

This is a recent update on the ongoing incentives debacles across our great state from the NC Institute of Constitutional Law.

$100,000 in additional incentives has been approved for Innovative Emergency Management (IEM) by commissioners in Durham County on January 11^th. The company has also been granted a $150,000grant from the state’s One North Carolina Fund and could get as much as $9,000,000 in income tax rebates as part of a Job Development Investment Grant.

~ Ray Gronberg, Herald Sun, January 11, 2010

Incentives are being debated by state, county and town officials to keep ConAgra Foods in Garner. We all remember the June 13, 2009 explosion that killed four workers and injuring dozens more. The company has since shifted some of its Slim Jim operations to other sites and local officials want to make sure the remaining operations stay in Garner. ConAgra expected to see an incentives proposal by January 15, but officials say they will have one by Friday, January 22. The incentives package could climb into the millions of dollars.

~ Sarah Nagem, News & Observer, January 16, 2010

The Charlotte Observer reported in a January 13 article written by Dan Nephin that a recent study advises against states being involved in incentives war.

The study found minimal difference in tax rates among Pennsylvania and the other six states – Maryland, New Jersey, New York, North Carolina, Ohio and West Virginia – when taking economic development incentives into account. The authors also conclude that most companies that get tax incentives would have chosen that state or locality anyway.”

As every person in North Carolina saw their tax bill increase last year, the State of NC was busy granting a tax break to a company owned by the world’s 2nd richest man — Warren Buffett.

The Greensboro News & Record today reveals that flight simulator company FlightSafety is expanding operations to Greensboro will receive a $128,000 sales tax break on the purchase of the flight simulators.

FlightSafety is the largest such company in the world, according to its spokesman. It has 40 training centers and trains 75,000 people every year.

Formed in 1951, the company is owned by Berkshire Hathaway and trains pilots for other aircraft companies such as Gulfstream and Cessna.

This marks the second time in eight months that North Carolina has given incentives to a Berkshire Hathaway subsidiary.  In April 2009, MiTek industries was given $28,000 in cash to expand its operations in Edenton, NC.

The sales tax break was contained in SB 1057 which passed the NC Senate unanimously (46-0) and passed the NC House by an 80-32 vote.

I guess the leaders of NC are concerned that Mr. Buffett had fallen to #2 on the World’s Richest Man list and wanted to give him a little extra cash to help get him back above Bill Gates.

SunEdison, an out of state company, is building a solar energy farm near Lexington, NC.  The plant is taking advantage of all sorts of new benefits doled out by the legislature.  This story has so many interesting components I’m not entirely sure how to lay it out.

1) A new solar facility that will produce really expensive electricity in NC is going online and we have to pay for it because of a renewable energy bill passed by the legislature. North Carolina’s new renewable energy standard requires each public electric utility to meet at least 12.5 percent of its North Carolina retail customers’ electricity needs through new renewable energy sources or energy efficiency measures by 2021.

2) It doesn’t really help the property tax base because additional laws prevent the taxes from being collected.Steve Googe, executive director of the Davidson County Economic Development Commission, said the solar farm, which represents an investment of approximately $170 million, will benefit the county, though not as much as initially hoped because of a change in tax law approved last year by the state Legislature that exempts 80 percent of photovoltaic equipment from property taxes.

3) Weirdly, it proves that incentives aren’t necessary:  “But it’s still like getting a $34 million investment without any incentives,” Googe said, noting SunEdison didn’t take an offer of $2 million in incentives for grading a specific site the company ultimately decided was not the one it wanted. The company ended up purchasing a different site, so no incentives were given.

4) It doesn’t bring meaningful jobs to the state. The project was never about job creation; there will only be three permanent full-time employees who will monitor the equipment and do maintenance.

5) All of the power must be converted before being used and cannot be stored for use at night when it actually is needed to heat homes. A Duke Energy substation near the farm will change the voltage of the AC power before distributing it through power lines.

6) Let’s not forget, it may also clear cut up to 356 acres of land. Where are all the enviros on that one?

6) And this is only 10% of what the state will require to be produced.  North Carolina’s new renewable energy standard requires each public electric utility to meet at least 12.5 percent of its North Carolina retail customers’ electricity needs through new renewable energy sources or energy efficiency measures by 2021. The utility provider needs to sell 12,000 megawatt-hours of solar energy per year by 2010 and 10 times that amount by 2018.

Now really think about that last point.  That energy demand by the legislature requires “10 times” more electricity to be produced.  That means that Duke Power would have to clear cut thousands of additional acres for solar energy.  And Progress would have to clear cut tens of thousands to do the same.

So, in the end, we have a power station that didn’t need incentives, has three jobs, produces expensive power only on sunny days, must be converted to be used, clears hundreds of acres of wildlife habitat, isn’t needed and doesn’t add to the property tax base in any significant way.  But hey, SunEdison will take lots of OUR money back to Maryland.  Sorry for the length, but I’m still grappling with this story.

Supporters of the Dell deal in 2004 promised the state taxpayers that they would benefit from the $300 million tax giveaway deal. With Dell’s closing, even Speaker Joe Hackney is still trying to convince the public that the state will at least break even.

“The company didn’t get most of the incentives,” said Hackney, D-Orange, who was House Democratic leader at the time of the Dell deal. While the bottom line is still being calculated, he added, “either we didn’t lose money or we had a net gain in revenues for the state.”

But Hackney isn’t waiting for the final FACTS on the deal. From WRAL:

RALEIGH, N.C. — Dell Inc. (Nasdaq: DELL) officials said Tuesday that the company is entitled to keep the money saved through tax breaks the state offered to convince the computer maker to build an assembly plant in Winston-Salem.

And Governor Perdue currently looks somewhat foolish on this.  At the time she was presiding over the senate, now she’s trying to defend the bad deal.  Her words are almost comical if not for the fact that it is OUR money she made the mistake of not understanding.

“I will fight them if they want to fight about this,” Perdue said. “They made some agreements. We offered some incentives. The locals offered some incentives, and they need to live up to their side of the bargain. If that means going to court, I guess we will.”

Her aides later clarified her comments, conceding that, by law, Dell might be entitled to keep some of the tax breaks they earned while in business.

Obviously the Governor and the supporters of this bad deal didn’t read the small print. And if they go to court, we also pay. While the Democrats are caught up in this because they led, the GOP left itself little wiggle room on the deal as many of them also voted for it.  Taxpayer lose yet again!  This could have been a real issue for the GOP heading into next year’s elections. And very little coverage is being given to the dozens of incentive deals at the local level that have failed statewide.

That’s the only sound you will hear coming out of the left-wingers today as another NC based business decides to expand its operations in our neighbor to the south.

According to the AP:

A research firm that develops advanced textiles for the automotive, aeronautics and defense industries says it will open a new facility in South Carolina, creating 120 new jobs.

The state Department of Commerce announced Monday that Fletcher, N.C.-based Materials Innovation Technologies will bring a new facility to Florence County. The company specializes in processes for reclaiming and molding carbon fibers – a strong, light and flexible material.

Will those on the left who were so quick to highlight one company’s expansion in NC last week have anything to say today?  I doubt it.  The fact remains over the long term NC’s tax structure is unfavorable to economic growth.  Gov. Perdue and the Dept. of Commerce bribing, er,  paying off, er, buying a press release using incentives to encourage a company to do something it was already going to do is never going to be a good example.