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Raleigh News & Observer

EDITORIAL

Hunting Up Jobs
With state job-creation incentives making headlines,
a candidate for governor lays out a contrasting vision

October 15, 2007

RALEIGH --
Could we have the jobs without the money? At least, without so much?
It's a sticky issue in a state that's lately seen a string of job announcements accompanied by considerable (though qualified) commitments of state and local incentives. Many citizens and competing businesses complain long and loud when tax revenue, or potential revenue, is earmarked for a single firm. And as long as big companies are thinking of moving to -- or from -- North Carolina, the incentives issue isn't going away.
So it's helpful that a candidate for governor has tackled head-on the often-controversial economic giveaways this and other states use to lure -- or keep -- companies.
Actually, we've known for years where Republican Bob Orr stands on incentives that go directly to individual businesses. He's against them. As (now former) director of the Libertarian-leaning N.C. Institute for Constitutional Law, Orr has figured in lawsuits challenging grants of plentiful incentives to Dell and Google. He protested, too, the state's recent package intended to keep Goodyear in Cumberland County. While serving on the state Supreme Court, Orr dissented in the main ruling on incentives, which allowed cities and counties to offer them.
Now candidate Orr has come out with his alternative to the current incentives system. His plan eliminates special tax credits granted by the legislature, the governor's One North Carolina grant program and Job Development Investment Grants (which is what INC Research will get). Orr would forbid local governments from approving tax rebate programs. They could not offer targeted incentives to North Carolina businesses considering an in-state move.
At the local level, he would require much more openness about business recruitment. In state government, Orr would combine all economic development activities under a unified budget.
Overall, the emphasis is on treating all businesses -- large, small, existing and prospective -- alike, and making conditions better for them all. But not every incentive would vanish. Orr would replace the existing job training money with a Workforce Development Fund. It would offer qualifying companies up to $2,500 per worker for the costs of training new or existing employees.
So some state aid would continue to flow. Would it be enough to entice a Dell Computer to pick North Carolina over Virginia? (Or Toyota to choose us over Mississippi?)
There's the rub. The much-criticized incentives aren't offered in a vacuum. In the real world that governors operate in, there's cutthroat competition for major employers. Other states are as addicted to incentives as North Carolina is, or more so. Southern states are hungry.
And if incentives are controversial, not landing a big employer is too. Miss out too many times and the howls will be for the governor's scalp.
Orr addresses that problem with a plea for Congress to restrict "interstate competition in targeted business incentives." And he'd promote regional economic cooperation, rather than competition.
It's unrealistic to think Congress would rein in the states, even if it could. And states won't disarm unilaterally. But Orr deserves credit for staking out a clear alternative to the status quo, even if as governor he might find it hard to adhere to. His Republican and Democratic competitors in next year's election should be equally forthcoming about their views.