- Associated Press - Tuesday, September 22, 2015

RALEIGH, N.C. (AP) - A package of expanded economic recruitment tools long sought by Gov. Pat McCrory neared final General Assembly approval Tuesday after votes affirming that the House and Senate majorities can live with targeted taxpayer-funded incentives.

The House voted 84-24 to give preliminary approval to a negotiated compromise for the “North Carolina Competes” initiatives, just before the Senate gave its final OK by a 48-0 margin. Senators already gave initial approval by a similar unanimous vote Monday night.

Now only one more House vote is needed Wednesday to send the measure to McCrory, who with then-Commerce Secretary Sharon Decker began lobbying last fall to extend incentives programs that were set to expire. They said the state was running out of financial capacity to offer economic sweeteners designed to keep North Carolina in the running for projects with other states.

The measure is anchored by an extension to the Job Development Investment Grant program - the state’s primary incentives tool to create jobs - through the end of 2018. The program gives companies that reach job creation and investment goals cash grants equal to a percentage of the income taxes withheld from workers’ paychecks.

The bill increases the monetary value of JDIG grants the state can commit to annually from $15 million to $20 million, but it could also reach $35 million when a “high-yield” project, such as an automotive manufacturing plant, receives grants as well.

Some criteria are adjusted to make the state’s most economically distressed areas more attractive, and adds a requirement that local governments in the 20 most prosperous counties provide their own incentives for projects to qualify for JDIG. Required matching funds for McCrory’s “One North Carolina” cash grant program would be adjusted to favor high-unemployment areas.

These changes were designed to address arguments that grant awards were overwhelmingly going to projects in the Charlotte and Raleigh-Durham areas. A final compromise took until late summer to develop in part because Senate Republicans had put incentives changes in their original budget proposal.

Debate was vigorous in the House, where lawmakers used arguments repeated over the years about the efficacy of incentives.

Rep. Paul Stam, R-Wake, handed his colleagues copies of his previous speeches opposing incentives to try to condense the debate, which still lasted almost two hours. Stam said extending the JDIG grants will put the state on the hook over time for up to $400 million - money that could otherwise be used for infrastructure improvements that would help promote jobs across the state.

“I believe incentives are wrong. I think it’s putting taxpayer money into something that’s not government’s business … picking winners and losers,” said Rep. Larry Pittman, R-Cabarrus. He urged lawmakers to defeat the measure, calling it a “misappropriation of funds.”

But bill supporters say North Carolina can’t afford to stay out of the incentives competition with other states. Rep. Charles Jeter, R-Mecklenburg, pointed to South Carolina’s success in using incentives to attract plants by BMW, Boeing and most recently Volvo.

Legislators can’t “put our heads in the sand and pretend that it doesn’t matter,” Jeter said. The bill also got support from rural and small-town legislators whose regions are desperate for jobs.

“I consider this a working-class bill,” said Rep. Charles Graham, D-Robeson. “This gives us hope.”

The bill also would:

- expand a sales tax exemption for computer data centers, extends and broadens a sales tax exemption on aviation fuel used by interstate airlines and expand a similar exemption to service contracts on qualified aircraft or jet engines.

- extend two sales tax refunds for NASCAR and other professional motorsports racing teams set to expire this year to the end of 2019.

- exempt motor vehicle service contracts from sales tax in light of a new budget provision that would subject repairs and maintenance themselves to the sales tax.

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