- Associated Press - Tuesday, March 3, 2015

RALEIGH, N.C. (AP) - House Republicans gave support Tuesday to expanding economic recruitment tools sought by Gov. Pat McCrory, despite continued grumbling by some GOP members that targeted incentives aren’t the way to go.

The measure cleared the House Finance Committee by a relatively easy margin of more than 3-to-1 despite two hours of debate centered largely over the usefulness of the state’s chief incentives tool, and whether rural areas are benefiting. The bill later passed the chamber’s budget-writing panel on the way to floor debate, likely Wednesday.

Even those who championed the bill didn’t give resounding support to the concept of cash incentives and tax breaks that North Carolina has used for two decades to compete with other states to lure companies that want to expand and create jobs.

“A lot of us don’t care for incentives,” said Rep. Susan Martin, R-Wilson, one of the bill’s primary sponsors, but “we’re not in a position where we can just say, ‘we’re not going to play that game, period.’”

Right now, the state is essentially out of money to offer what’s now called the Job Development Investment Grant, state Commerce Secretary John Skvarla told the finance committee. This puts North Carolina behind the 8-ball when companies screen states for relocations, the secretary said. Many potential incentive targets are in the pipeline, according to Skvarla.

“There’s no question that incentives are the first box that is checked by anyone looking at North Carolina,” he said. “We need these tools.”

The measure is anchored by changes to the JDIG program, which would also be rebranded as the Job Growth Opportunities Program. The 12-year-old program gives to companies an amount equal to a percentage of the income tax withholdings originating from new jobs, provided they meet investment and job-creation thresholds.

McCrory’s administration would see its cap on 2015 awards grow by $15 million, increasing the potential JDIG commitment by $180 million over the next 12 years.

Some rural legislators are unhappy so many awards are going to companies in urban counties - particularly those including Charlotte and Raleigh-Durham. Less than 10 percent of the award dollars went to rural counties from 2003 to 2013, an outside report found.

“I just can’t accept the fact that we can take money the many and give to the privileged few,” said GOP Rep. Bert Jones, who represents economically distressed Rockingham and Caswell counties. Fiscal analysts estimated the entire bill’s potential liability as high as $739 million through 2032. It would be better, Jones said, to give tax breaks to hundreds of thousands of North Carolina small businesses.

The bill’s sponsors and Skvarla defended help for rural areas, pointing out a portion of JDIG awards always have been earmarked for a special fund to help with roads and water and sewer lines to attract business. Martin got an amendment passed that would require a higher portion of the awards for companies building in urban counties to end up in the fund.

Rep. Bob Steinburg, R-Chowan, has opposed targeted incentives for years. But he said he’s had a change of heart and became a primary bill co-sponsor. People he represents in northeastern North Carolina still haven’t felt the full economic recovery that has slashed the state’s unemployment rate to 5.5 percent.

“Everybody needs to share in the prosperity,” he said.

The measure, approved 30-9 in the finance committee and by a voice vote from the budget panel, also would extend through 2019 a sales tax refund for jet fuel for airline carriers. American Airlines, which handles most of the traffic at Charlotte Douglas International Airport, sought the extension. The bill also widens sales tax breaks on computer data centers popular in the western Piedmont and foothills.

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