President Pro Tem Sen. Phil Berger (R-Guilford) announced Wednesday, during a press conference, the Senate answer to HB 117, otherwise known as Gov. Pat McCrory’s NC Competes Act.
Berger’s plan, SB 338, would make changes to the way the state Job Development Investment Grant (JDIG) corporate incentive program is doled out, as well as instituting new employee position thresholds for projects to be eligible for JDIG support.
“This balanced plan will not only help North Carolina attract new jobs, but will also provide a real boost to the job-creators already making a valuable investment in our state’s economy – instead of simply asking them to pay for new businesses to move here.” Berger said. “By equipping Gov. McCrory with stronger tools to recruit major manufacturers, helping level the playing field for allocating economic development funds, and providing much-needed tax relief, we will empower the entire state to grow and prosper.”
McCrory and his cabinet have been lobbying the Legislature to approve his NC Competes plan, which would include a bump from a cap of $30 million over the biennium to $45 million, but the Senate has thus far been content to leave the legislation with the Rules Committee.
The plan passed the House quickly but with no scheduled meeting on the books for the Senate Rules Committee, the bill is expected to remain there.
Under the Senate plan JDIG would remain at $30 million over the next two years, but would be capped at $15 million a year, unless a “high-yield project” was awarded.
The bill would also establish a definition for high-yield projects as projects where a business invests at least $1 billion and creates at least 2,500 eligible positions.
If a high-yield project were landed, then the cap on JDIG would increase by another $15 million to accommodate a large corporate incentive package for that project, bringing the cap to $30 million for that year alone.
The stipulation is aimed at landing a large automobile manufacturer. McCrory’s Administration has been actively courting the automotive industry, but has said it needs more funds to land a big auto plant.
Berger said that the allowance for a high-yield project, which would provide a $15 million grant, not beholden to other JDIG limits, available to offset up to 100 percent of the businesses’ withholding taxes, is specifically “an effort to make sure that (the state will) have an ability to be competitive in bringing that manufacturer to North Carolina.”
Increased jobs minimum/more rural funding
The Senate plan also increases minimum eligible position thresholds for projects seeking JDIG benefits, in an effort to spread the projects out across the state, not just to the most affluent counties.
Under the current schedule a Tier One project, which would be located in a high-need area, would have to create 10 positions to be eligible for funding. Under the Senate plan, that minimum would be raised from 10 to 25 positions.
Tier Two areas would increase from 20 to 50, Tier Three from 20 to 200, and a new “Major Market Community” level would require 250 jobs to be eligible.
A Major Market Community, under the draft bill, is defined as: “A county in which the average weekly wage for all insured private employers in the county is one of the three highest in the state.”
According to a 2014 Bureau of Labor Statistics report Durham County led that state in average weekly wage at $1,225 with Mecklenburg and Wake trailing in second and third respectively at $1,098 and $984.
Berger said that the top three counties in the state, which pulled 83 percent of the JDIG awards over the last three years, have an average annual salary of $56,000 while the remaining 97 counties have an annual average salary of $40,000 during the press conference.
He said that the bill, introduced Wednesday, is meant to spread the JDIG funding out to other counties instead of the top three.
The bill would limit JDIG awards in major market communities to twice the percentage of the state population residing in that county, leaving a chunk for rural incentive projects, as long as the employment increases top the new increased minimums.
Corporate tax cut promise fulfilled
Also included in the Senate plan would be the fulfillment of promises to enact scheduled cuts to the corporate tax rate — in 2016 the rate would drop to 4 percent and then in 2017 the rate would drop again to 3 percent.
The current corporate tax rate is 5 percent.
The bill does eliminate fiscal thresholds tied to the original scheduled reductions.
Senate looks to approve $5M stopgap bill
Also announced Wednesday was an additional bill, SB 326, filed by Sen. Rick Gunn (R-Alamance), aimed at providing McCrory an additional $5 million in JDIG funding in the current fiscal year to seal the deal with an auto manufacturer, with the possible promise of more funding under Berger’s bill.
Secretary of Commerce John Skvarla said that more JDIG funding is needed in the next week so attract up to three possible corporations to the area, which the Senate seems eager to provide with this bill.
“Secretary Skvarla informed the General Assembly yesterday about three manufacturing prospects that are moving on a tight timeline,” Gunn said. “This infusion of additional JDIG funds should allow the Commerce Department to move swiftly on these deals as we continue working toward a comprehensive economic development solution.”
Skvarla specifically mentioned three opportunities in the air for the state on Tuesday.
“We have three opportunities right now that are looking for JDIG awards in the next seven days, maybe sooner,” he said Tuesday in front of the Senate Finance Committee. “I am convinced that they will not come to North Carolina if we don’t make the award.”