RALEIGH — Striving to demonstrate it wants to create jobs, the General Assembly seems ready to restock a pot that Gov. Mike Easley taps to sweeten economic development deals.
The state Senate voted Tuesday to inject an immediate $20 million into the One North Carolina Fund. Often described as the governor’s “walking around money,” the account covers equipment purchases, building repairs and infrastructure for businesses looking to relocate or expand.
Easley’s office has said the fund is dry and needs a quick infusion of tax revenue so the state can remain competitive in attracting jobs.
Industrial recruiters elsewhere are “letting everybody know that North Carolina is out of money,” warned state Sen. Walter Dalton, D-Rutherford.
Senators tentatively backed the measure 32-16, with all four Guilford County lawmakers supporting it. A final vote is expected today.
House members agreed to the appropriation last month, which also includes $4 million for community college training programs.
Grants from the One North Carolina Fund since Easley took office in 2001 have spurred investments exceeding $1 billion and 12,000 jobs, his staff has estimated.
Most awards are for five or six figures. The largest single amount — $1.5 million — was for Thomas Built Buses when the company considered moving from High Point to South Carolina, according to information from the state Department of Commerce.
Lawmakers last put money — $15 million — into the fund in 2001.
Critics have panned such government support as corporate welfare and argued the cash could be used more wisely on public services.
Sen. Ellie Kinnaird, D-Orange, pointed to studies that have shown incentives are a low factor for companies in deciding where to locate.
“We need to think in new and creative ways” to lure businesses, she said.
An effective path to attracting development is to cut taxes, suggested Sen. Robert Pittenger, R-Mecklenburg.
Easley, a Democrat up for re-election this fall, has asked the assembly for a tax break aimed at smaller businesses. Under his proposal, the first $20,000 of a company’s profit would be exempt from corporate levies.
A Senate panel moved Tuesday toward adding a narrower break to its budget bill.
The plan backed by the body’s finance committee would exempt the first $25,000 of profit from the 6.9 percent tax on corporate income. This applies only to firms making state net income no greater than $100,000.
Companies earning between $100,000 and $200,000 could exempt the initial $15,000, while corporations pulling down more than $200,000 in taxable income would be ineligible for the break.
The Senate arrangement would cost the state about
$13.7 million in revenue during fiscal 2004-05, which begins July 1. That compares to
$32.9 million for Easley’s plan.
If the Senate proposal becomes law, 85 percent of businesses that pay corporate income taxes would have their bills reduced or eliminated, said Sen. David Hoyle, D-Gaston, the finance panel co-chair.
Perri Morgan, state director for the National Federation of Independent Business, had mixed reaction to the Senate measure.
“It’s complicated, and we don’t need a more complicated tax code,” she said in an interview. “But I’m not going to kick a gift horse in the mouth.”
The budget that the House adopted last week did not include any business tax relief.
Contact Eric Dyer at
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