THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Friday, November 10, 1995 TAG: 9511100472
SECTION: BUSINESS PAGE: D6 EDITION: FINAL
SOURCE: BY PAUL NOWELL, ASSOCIATED PRESS
DATELINE: HICKORY, N.C. LENGTH: Medium: 75 lines
Gov. James B. Hunt Jr.'s industry-recruiting advisory board moved a step closer Thursday to sweetening North Carolina's tax incentives for companies looking to move or expand in the state.
Now comes the hard part: reaching a consensus that will satisfy recruiters in cities like Charlotte and Raleigh as well as in smaller rural communities.
The board gave its blessing to the findings of a task force draft report which called for ``modest expansion'' of North Carolina's incentives so the state can compete against neighboring South Carolina and Virginia.
The proposals include:
Extending an existing corporate income-tax credit to all counties and increasing the credit in the 25 poorest counties from $2,800 to $4,000 for each job created.
Allowing non-manufacturing companies to qualify for credits if they make at least 75 percent of their sales outside North Carolina.
Expanding exemptions from a 3 percent sales tax on energy costs and a 1 percent sales tax on machinery and equipment.
Creating new credits for research and development and for training new workers.
At Thursday's meeting, some board members expressed concerns about whether the revised policy would help some parts of the state at the expense of other regions.
``This is not an easy solution,'' said Sen. David Hoyle, who comes from Shelby in rural Cleveland County. ``There's no simple way to do it.''
Fellow board member Mark Bernstein argued for urban areas. He said Charlotte has to compete against cities like Louisville, Ky., and Jacksonville, Fla.
``We must help the smaller counties but we also must give larger counties the tools to compete,'' he said.
The task force was asked by the full board to provide specific financial details on each of the proposals. The group is expected to recommend the plan to Hunt or reject it at its February meeting in Charlotte.
The legislature has the final say in any changes in the state's industrial recruiting programs.
The package would mark a shift from North Carolina's historical reluctance to use incentives and preference for more conservative inducements, like technical-college training for workers.
It also comes at a time when the state has lost dozens of major projects to neighboring states that offer more aggressive tax breaks.
``We've got some Republican lawmakers and some Democratic lawmakers in that room,'' state Commerce Secretary Dave Phillips said after the board gave its tacit approval to the blueprint. ``The point is no one said no.''
The task force recommendations are designed to get North Carolina back in the industry-recruiting ball game at the same time the state Supreme Court is considering a lawsuit that challenges the use of tax dollars as incentives to private industry by local governments.
That lawsuit, filed by Winston-Salem lawyer William Maready, claims that the cash incentives are unconstitutional because taxpayer dollars are given to private corporations.
Ron Leatherwood, the head of the task force that assembled the proposal, said North Carolina needs to retool its recruiting efforts.
``We don't want to send our economic developers armed with a knife to a gunfight,'' he told the board. ``This is what we have been doing.''
Board chairman Bill Lee said North Carolina cannot afford to remain stagnant while neighboring states are recruiting companies that offer thousands of high-paying jobs.
``After Maready, we are goose eggs,'' he said. ``I happen to know of one instance in which we dropped out of contention without even knowing we were being looked at by one company. Their interpretation was that North Carolina wasn't interested in more industry.'' by CNB