- Associated Press - Monday, February 16, 2015

RALEIGH, N.C. (AP) - House Republicans want to replenish a favored economic recruitment tool of North Carolina governors in legislation unveiled later this week, even as a report Monday opposes its extension because so many recipients have failed to meet job and investment requirements.

A bill being worked out privately by House GOP leaders will contain more money for the Job Development Investment Grant, said Rep. David Lewis, R-Harnett, the House Rules Committee chairman.

The grants are payments to qualifying companies that agreed to choose North Carolina over other places to grow or expand. The award is equal to a percentage of the income taxes withheld from the paychecks of hired workers. Companies must meet minimum job-creation numbers and wage and investment thresholds or they lose the cash awards.

But JDIG, in its current form, isn’t the way to go, according to a study by the left-leaning N.C. Justice Center.

The report found about 60 percent of the 102 grants awarded since lawmakers approved the program in 2002 through 2013 - valued at $662 million - were cancelled because the recipients failed to meet thresholds. The state can recover disbursed awards, but the failure rate should discourage lawmakers from expanding the program, report author Allan Freyer said.



“Clearly, we need to do a better job of understanding why these choices turned out so badly in order to make better choices in the future,” Freyer wrote by email. He said legislators also should be concerned 91 percent of the value of JDIG awards had occurred in urban counties.

Lewis said he expected the bill would ultimately contain provisions to encourage companies to invest further in distressed rural areas. But he said the grant cancellations are proof actually getting cash grants isn’t too easy.

Gov. Pat McCrory has said he needs more tools to compete with other states in recruiting big corporate projects, and last year his administration lamented it was getting close to a $22.5 million cap for JDIG through this summer.

McCrory last summer unsuccessfully sought the legislature to raise the cap by $14 million. At his State of the State address two weeks ago, the governor said he needed help early in the session from the legislature on job recruitment and planned his own recommendations.

The News & Observer of Raleigh reported Sunday that McCrory’s administration had awarded almost $300 million grants through 2026 for more than 15,300 promised jobs since he took office in early 2013. The largest award went to MetLife, which could receive up to $87 million over 12 years.

Lewis said the measure would authorize “crowdfunding,” in which companies can raise capital through small, individual investments. It also would change the basis by which corporate income taxes are calculated for some projects, Lewis said. Some lawmakers have wanted to shift the formula so companies who export products out of state are favored.

Lewis said bill details were still being worked out, but “North Carolina is serious about recruiting and retaining good jobs, and we’re going to make sure the governor has the tools he needs to be able to do that.”

Any bill would have to clear the House and Senate before going to McCrory’s desk.

House Democrats already filed their own economic incentives bill last week. The 61-page measure in part would restore film production and historic building rehabilitation tax credits and bring back the earned income tax credit.

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