IN MY OPINION

Orr's platform: End tax incentives
Candidate for N.C. governor gambles that taxpayers will agree

October 14, 2007

JACK BETTS

RALEIGH --
Almost 40 years ago, before Bob Orr had finished his undergraduate work and enrolled in law school, Justice Susie Sharp wrote a majority opinion for the N.C. Supreme Court on economic development policy that was the law of the state for decades.

"If ... we are to bait corporations which refuse to become industrial citizens of North Carolina unless the state gives them a subsidy," the public must approve of it first, she wrote.

Chief Justice Sharp had been retired for 16 years before Orr joined the Supreme Court as an associate justice in 1995, but he says his view about the use of public money for private purposes is still more in line with Sharp's 1968 view than that of subsequent majorities on the Supreme Court. In time, they came to view as constitutionally acceptable the use of public tax funds for private companies, as long as there was a demonstrable public purpose.

That's a shift in state policy that Orr, now a Republican candidate for governor next year, would reverse if he gets the chance.

His opponents are better financed, and the odds against his candidacy are long. So are his chances of bringing about sweeping change in state economic development policy. But he has made this a central theme of his candidacy: He believes state aid to private corporations should focus on work force training, not on doling out dollars to selected companies the state finds most attractive.

For more than half a century, the governor of North Carolina has been a major player in state economic policy. Gov. Luther Hodges was an early advocate of industrial development.

Gov. Jim Hunt ramped up the state's investment in job-hunting, using a variety of incentives to land big companies or get existing employers to expand operations here, including offering tax credits under the Bill Lee Act.

Gov. Mike Easley's administration has refined those policies, using the job development investment grant program to lure more employers and the One North Carolina Fund to seal the deal when a company is on the verge of coming but needs one more reason to locate here

In a state where many traditional manufacturing jobs in textiles, tobacco and furniture have gone away, those funds have helped Easley land big employers such as Dell and Google and keep others already here, including two tire manufacturers that will qualify for handsome incentives thanks to the 2007 legislature.

But tax incentives also cost a lot of money in future tax revenues that would otherwise go to state and local coffers to pay for services. And they have created a system where many existing companies can never hope to qualify for public assistance while their newly welcomed competitors enjoy significant public subsidies.

Orr is betting that this aspect of publicly financed incentives -- the inherent unfairness of a system where taxpayers underwrite going concerns that don't even need the help -- will strike a chord with voters. "We must stop the practice of handing out incentives based on the influence of corporate lobbyists, eliminate state discretionary incentive awards and end the competition to attract businesses among our counties," he said the other day in a prepared statement.

Orr has called for an end to tax incentives and cash grants; for regional and national approaches to halting the economic development arms race among the states; for more work force training programs; for local governments to adopt more uniform economic development policies; and for a halt to grants that, in effect, rebate taxes to favored employers.

It's a gamble. Many businesses have gotten addicted to the notion of tax incentives and cash grants in exchange for jobs. It's no longer the radical idea it once seemed. But Orr is betting that taxpayers have had enough of it -- and want business, not the taxpaying public, to take care of business.

in my opinion Jack Betts