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Republicans Agree with Governor's VetoHouse Bill 1761 does not provide for accountability of the grantee business to the state nor tier one county of development.September 9, 2007 CUMBERLAND COUNTY NC NEWS -- On Monday, September, 10, 2007, the Governor is reconvening the legislative session to reconsider House bill 1761: "An act to create the job maintenance and capital development fund." The bill was vetoed by the governor on Aug. 30, 2007. In its place, North Carolina Governor, Mike Easley, has recommended the General Assembly adopt his "American Productivity And Competitiveness Act of North Carolina" so large existing employers can modernize their North Carolina operations, stay competitive in the global economy and create and maintain their jobs through partnerships with state and local governments. The legislation will be presented to the legislature when it convenes for the short legislative session in May 2008. The Governor said the bill would present a dangerous precedent for North Carolina's economic development policy by providing up to $40 million in state funds to a single company without regard to how much the company pays in state and local taxes, the wages it pays now or in the future and whether it lays off nearly 25 percent of its workforce. Here is the text of the governor's veto message: "House Bill 1761 would set a dangerous precedent for North Carolina's economic development policy and is not fair to her taxpayers. It calls for the state to give up to $40 million in cash to an existing company in one county with little or no regard for how much the company actually pays in state and local taxes, what wages it pays now or in the future, or whether it lays off nearly 25% of its workforce. Never in the history of the state has anyone given a company up to $40 million and allowed them to lay off hundreds of workers. We are proud of the employer and its hard working employees that House bill 1761 was designed to help. But this bill does not protect those employees or the state of North Carolina. Therefore, I veto the bill." The Governor is not the only one in opposition to House bill 1761. Members of the Republican party are also in opposition to bill nicknamed the Goodyear incentive bill. Senator Fred Smith and the Chairman of the North Carolina Republican Party, Linda Daves have spoken out against the bill. Senator Fred Smith, of Johnston and Wayne counties, is quoted in a recent press release by the North carolina GOP as saying: "These incentives have gotten out of hand. Every business owner in North Carolina is entitled to compete on a level playing field." Chairman Linda Daves, North Carolina Republican Party released the following statement in regard to capital development fund incentives: "The best way to lure businesses to North Carolina and ensure that they remain here is to lower our overall tax burden by cutting our high individual and corporate tax rates. Experience has shown that creating and maintaining a favorable economic environment, strong education system, and high quality of life is the way to bring jobs to North Carolina. If North Carolina wants to be competitive in drawing companies interested in coming to the Southeast, then we cannot continue to have one of the highest tax burdens in the region. More targeted giveaways will not provide the solution to the comprehensive challenge of keeping jobs in North Carolina; lowering taxes both on individuals and businesses will." Ms Daves and Senator Smith make valid points. In my opinion, both the Governor and N.C. GOP Chairman Daves are absolutely right. House Bill 1761 does not provide for accountability of the grantee business to the state or tier one county of development. Moreover, continually increasing the North Carolina overall tax burden will eventually outweigh the benefits of incentive development funding. Highly skilled labor will seek employment in states with low taxation to retain more expendable household income. Businesses will not be able to retain quality employees due to the high cost employment, eventually causing the businesses to seek relocation to other states with lower overall taxation. There needs to be fiscal balance between overall taxation and economic development incentives. The use of accountability to the counties and state for development incentives, as the Governor states, is a suitable answer for protecting the use of public funding for business relocation to North Carolina, but overall low taxation must be maintained to keep industries as well as a skilled labor force in the state. The Primary Sponsors of HB 1761 are:
Co-sponsers of HB 1761 are:
House bill 1761: "An act to create the job maintenance and capital development fund," only requires a Grantee company to provide investment of at least $200,000,000 of private funds in the project within the five-year period. The Company employs at least 2,000 full-time employees or contract employees at the establishment that is the subject of the grant, throughout the term of the grant. The Company must already be located and established in a tier one county. Health insurance must be provided for all of the full-time or full-time contracted employees. The business must pay at least 50% of the premiums for health care coverage and the basic health care coverage must meet or exceed the minimum provisions under G.S. 58-50-125. Furthermore, only five companies may receive a maximum grant of $4,000,000 per year. To reiterate Republican Senator Smith's statement, "These incentives have gotten out of hand. Every business owner in North Carolina is entitled to compete on a level playing field." This Bill obviously favors an extremely small group of existing big businesses in North Carolina. The representatives who sponsored House Bill 1761 should be ashamed for promoting such a uncompetitive and reckless use of North Carolina tax dollars. Published by: # # # |
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