Business Facilities - February 2009 - (Page 32)

BUSINESS REPORT North Carolina By Brian Donahue Aiming for the Cream of the Crop A new governor’s battle plan to energize a sluggish economy zeroes in on incentives that work and the growth of knowledge-based jobs in the Tarheel State. N orth Carolina Governor Beverly Perdue and her newly appointed commerce officials are setting out to grow knowledge-based jobs and energize the slowing economy. The first-year governor wants to continue building upon the state’s rich foundations in biotechnology and aerospace, while paving the way for cleaner, greener business endeavors. As its economic focus is renewed, the state is taking a close look at its incentives, one of which, the tax credit program for new and expanding businesses, is facing criticism as being outdated and largely ineffective. Perdue and the state legislature are reviewing this and other incentives to determine how the state’s economic toolkit can be revamped. NORTH CAROLINA FAST FACTS Population (2007): 9,061,032 Largest Cities (2007): Charlotte, 671,588; Raleigh, 375,806; Greensboro, 247,183; Durham, 217,847; Winston-Salem, 215,348 Targeted Industries: Telecommunications, Biotechnology, Textiles, Financial Services, Chemicals Key Incentives: Workforce Development Network, Industrial/Road Access Program, Article 3J Tax Credits, One North Carolina Fund GDP (All Industry 2007): $399.5 billion* *Bureau of Economic Analysis, U.S. Department of Commerce “There will be a lot of discussion around it,” says Kathy Neal, assistant secretary for communications and external affairs for the North Carolina Department of Commerce. Neal says that regardless of any incentive changes, the state’s goal will be to continue recruiting and expanding business in the aerospace, life sciences and military defense industries. “Commerce is certainly continuing to work on the various sectors that are important to the state—the kind of knowledge-based, higherpaying jobs in sectors that have been useful for us,” Neal says. Perdue, who was lieutenant governor for the past eight years, has said that based on principle she is not a big proponent of incentives, but she realizes they are necessary when competing with other states to recruit companies. Her administration will weigh the value of maintaining programs such as the William S. Lee Act, which was established in 1996 to award tax credits for job creation and machinery purchases. A recent study by the University of North Carolina Center for Competitive Economies concluded that these credits may have lured business in the 1990s, but may no longer be effective in bringing jobs to the state. The study revealed that more than 41% of companies receiving a Lee Act tax credit had a declining growth rate, with fewer employees in 2006 than they had in 1996. Though job creation is the major focus of economic development initiatives, only TAX CREDITS FOR TARHEEL STATE SITES • Article 3J Tax Credits – Provides tax credits to qualifying businesses for job creation, investment in business property and, in some cases, investment in real property. • William S. Lee (Article 3A) Tax Credits – Repealed for business activities that occur on or after January 1, 2007. Article 3J Credits became effective for taxable years beginning on or after January 1, 2007. • Research and Development Tax Credits – Provides tax credits for qualified North Carolina research expenses during a taxable year. • N.C. Ports Tax Credits – Provides tax credits towards income taxes paid by businesses or individuals using ports facilities at N.C. Ports at Morehead City and Wilmington. • Renewable Energy Tax Credits – Provides a tax credit of 35% of the cost of renewable energy property. 32 FEBRUARY 2009

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Business Facilities - February 2009 Contents First Word Snapshots Corporate Moves: Ohio Governor's Report Growth Magnets Industry Focus: Automotive International Report: Luxembourg Corporate Moves: Tennessee Cream of the Crop in North Carolina Advertiser Index Ask the Expert

Business Facilities - February 2009

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