Report: State Needs To Address Failing Incentive Deals

A new report finds that the Triad doesn't fare well when it comes to job incentive money issued by the state.

The North Carolina Justice Center study shows seven out of nine incentives projects failed in Forsyth and Guilford Counties during an eleven year span that began in 2002.  

The center's Allan Freyer says more than 80 percent of the money has been issued to projects in Mecklenburg and Wake Counties.  

“Guilford and Forsyth are getting a much smaller share of state dollars for economic development than the state as a whole,” says Freyer. “Perhaps even more troubling is that of the projects that the department of commerce actually awarded to Forsyth and Guilford counties, 78 percent failed.”

But he adds that job incentives haven't been successful for the state as whole either--about 60 percent of the state's incentive deals failed to live up to their promises of job creation, private investment and wages.

Governor Pat McCrory's administration says incentives lure potential employers and that the state takes back any money if a company doesn't meet the required benchmarks.  

And deals with two companies in the Triad have been successful. Ralph Lauren Media and Honda Aircraft created hundreds of jobs.

Under current law, the state caps the total yearly allotment for the program at $22.5 million. Right now, it's running low. Nearly half of it is being used for an incentives deal with Met Life Insurance Company in Charlotte.

Gov. McCrory plans to ask the General Assembly next week to increase funding for the program.

But Freyer says he wants the state to look into why so many of the projects have failed in the past, before more money is funneled into the program.

“The Job Development Investment Grant program (JDIG) is great in that it protects North Carolina's taxpayers because it makes sure we are not on the hook when deals or projects don't work out,” says Freyer. “But no government program should be failing 60 percent of the time and we need to see if there's some common factor about the firms or industries we are giving money to. What is contributing to this high failure rate?”

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