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Local officials defend state incentives, a GOP target

By Vikki Broughton Hodges
The Dispatch
Published: Monday, February 7, 2011 at 7:11 p.m.

A bill making its way through the General Assembly that would transfer some state economic development incentive funds to the general fund to help address a $3.7 billion budget shortfall next year is facing opposition from Gov. Bev Perdue and economic development officials.

Senate Bill 13, labeled the Balanced Budget Act of 2011 by its Republican sponsors, was approved in a second reading last Thursday by a 30-18 margin, along party lines, with Sen. Stan Bingham, R-Davidson, supporting the measure. A third reading, considered a formality, is set for Monday night before it goes to the N.C. House for a vote.

The legislation would divert $142 million from more than 20 reserve funds, including $67.6 million from the Golden Leaf Foundation, money secured from tobacco companies through the Master Settlement Agreement that is allocated to economic development projects across the state. The bill also redirects $5.2 million in uncommitted dollars from the One North Carolina Fund, a cash fund used to attract new industry, and $3 million in Job Development Investment Grants.

Perdue has said the proposed cuts would damage the state’s ability to recruit new jobs and expand existing businesses in the state.

“I am truly surprised that Senate leadership is considering taking North Carolina’s jobs money as a way to balance the budget,” she stated in a press release. “It won’t work, and what’s more, our people won’t work if we can’t bring new companies and new industries to our state.”

Senate President Pro Tem Phil Berger, an Eden Republican, also issued a statement Thursday: “Our job is to make tough choices to balance the budget. The people expect Democratic legislators and the governor to do more than sit back and say ‘no.’ We are still waiting for them to bring us their ideas.”

Bingham said legislators of both parties understand the significance of the economic development funds and how they have helped recruit industry, adding that no one is advocating doing away with the programs. He said the proposed cuts are uncommitted funds sitting in an account akin to a trust fund.

“We’ve tried to leave a significant part of the balance there,” he said. “This isn’t going to destroy the programs. It’s more like making a loan for a short period of time.”

Bingham said the proposed cuts are a wise business decision in light of the looming budget deficit, adding that raising taxes wouldn’t help create jobs either. He added he’s also concerned about preserving the jobs of school teachers.

Steve Googe, chairman of the Davidson County Economic Development Commission, said the proposed cuts in state economic development incentives would especially hurt counties such as Davidson, as opposed to larger areas such as Charlotte and Research Triangle Park, because One North Carolina funds have been important to every major project recruited in recent years, such as landing the United Furniture plant and the Sav-A-Lot distribution center as well as expansions of Valendrawers, Matcor, Vitacost and ASCO Power Technologies. A Timco Aerosystems plant in Wallburg will receive both state incentives and a grant from the Golden Leaf Foundation. JDIG funds have also been part of several projects.

“It really will create an issue for us to be competitive,” Googe said.

That competitive edge will also be lost across the state without the incentive funds, he said, because neighboring states such as South Carolina, Virginia and Georgia already have more aggressive incentive packages to offer businesses.

Googe said he understands the General Assembly is facing some tough budget decisions, but he believes across-the-board cuts would be more equitable.

“Cutting everybody’s budget 15 percent, to me, makes more sense than to target certain funds,” he said.

Googe noted that he and others are working on three or four projects now that they are counting on for some state incentives, “but we’re going to live with whatever we get.”

Sam Watford, chairman of the Davidson County Board of Commissioners, said he and the other commissioners have been glad to have some state funds to supplement local incentives to bring economic development projects to fruition because he knows neighboring states are very competitive, and everyone is looking to create more jobs.

As county commissioners, we’ve been trying to attract all the businesses we can to Davidson County,” he said. “And there’s no question it’s going to have some negative impact, but we’ve got to cut something somewhere.”

Watford said he’s also concerned about cuts that will affect local schools, as well as mental health and social services.

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