At least 15.
1. Economic Development Reserve Fund: Established in 2006 (S.L. 2006-66) with a $10 million appropriation from the General Assembly, the Economic Development Reserve Fund provides funds for grants for site acquisition and economic development projects. The Secretary of the Department of Commerce administers the fund and makes the final decision on grant awards, but the Office of State Budget and Management and the Fiscal
Research Division of the General Assembly also keep track of where the funds go and how they are used.
2. William S. Lee Quality Jobs and Expansion Act: Repealed, effective January 1, 2007
The Bill Lee Act was replaced in 2006 by (S.L. 2006-252) North Carolina General Statutes, Chapter 105, Article 3I, which created a new tax credit program called “Tax Credits for Growing Businesses.” Lee credits are repealed for business activities occurring after January 1, 2007, with Article 3I credits beginning on or after January 1, 2007.
Article 3I provides three types of credits:
The credits can be combined to take up to 50 percent of state income and franchise tax income taxes off of the taxpayer’s tax liability. Unused credits in any one year can be carried over for five additional years. A bonus program for investments in real estate can be carried over for 15 years, with a 20-year carry forward for an investment of at least $150 million over a two-year period.
In order to qualify for the credits, a business must meet certain requirements:
Enhanced credits are offered based on designated special needs areas of the state. Counties are divided into tiers based on economic health. The poorer the county, the more generous the credit. Cities with a population of 10,000 or more can designate poorer areas as Urban Progress Zones (UPZ). Counties that have a city with a population of 10,000 or more can designate poverty areas as Agrarian Growth Zones (AGZ). Additional credits are available to businesses willing to expand or locate in UPZ or AGZ.
3. Industrial Revenue Bonds: Issued to help new and expanding businesses, Industrial Revenue Bonds (IRBs) provide funds to a manufacturer at a tax exempt interest rate. They are available only to a company engaged in manufacturing and only for land, buildings, and equipment. IRBs are regulated by both state and federal laws.
Three types of IRBs:
4. Composite Bonds: A bond program run by the state that offers tax exempt bonds between $500,000 and $2 million for small to medium-sized manufacturing companies. As with IRBs, the bonds are available only to a company engaged in some type of manufacturing. Proceeds must be used for land, buildings and equipment (fixed assets).
5. Community Development Block Grants:
Two types:
a) Grants for public facilities of up to 75 percent of cost, with the local government providing a 25 percent cash match.
b) Loans through a participating bank to the targeted business for 50 percent or more of the funds needed for construction or to buy machinery, equipment, or property.
6. The Industrial Development Fund (IDF): Provides grants, some to local governments and some to businesses, eligible under the Bill Lee Act criteria in the poorer areas of the state — namely, Tiers 1, 2, and 3. Funding depends on the number of new, full-time jobs that are created and can be used for infrastructure needs, equipment or building renovations. Funds from IDF cannot be used to purchase land or buildings or to build new facilities.
There are four categories of funding:
7. One North Carolina Fund: The One North Carolina Fund exists to provide cash payments to companies seeking to locate or expand in North Carolina. The fund is under the control of the governor and is dispersed solely at his discretion. It is often referred to as the governor’s “walking around money.” The governor decides which companies receive a subsidy and how much they get. More specifically, the fund is used to close deals for the recruitment, expansion, or retention of new and existing businesses. The money is distributed via local governments that must also provide matching grants.
One North Carolina funds can only be used for the following purposes:
The Department of Commerce is required to file a report at the end of each fiscal quarter on how the money in the One North Carolina Fund has been committed, disbursed and used. Governor Jim Hunt established the fund in 1993 as the Governor’s Industrial Recruitment Competitive Fund; Gov. Mike Easley renamed it the One North Carolina Fund in 2004. In 1993, the General Assembly allocated $5 million for Gov. Hunt’s special pool of grant monies to help “close deals”; in 2006, they gave Gov. Easley $15 million.
8. Job Development Investment Grant Program (JDIG): JDIG was passed in 2002 (S.L. 2002-172, s. 2.1(a)) with the aim of providing recurring yearly grants to new and expanding businesses in an effort to stimulate the economy and create new jobs. JDIG gives select employers a tax credit equivalent of anywhere from 10 percent to 75 percent of an employee’s withholding tax for eligible positions, with a 12-year maximum on the length of the grant. Eligibility for the credit requires that the business provide health insurance and pay at least 50 percent of insurance premiums for all full-time employees hired under JDIG. Retail facilities are not eligible to receive JDIG grants. The JDIG program was effective beginning in January 2003 and is supposed to sunset in January 2008.
9. One North Carolina Small Business Fund: Established in 2006 with a nonrecurring $5 million appropriation (S.L. 2006-66), the One North Carolina Small Business Fund provides money to small businesses to encourage them to apply for federal innovation grants.
10. Industrial Access/Road Access Fund: Funds offered through the North Carolina Department of Transportation for the construction of roads when needed for access to new or expanding industrial businesses.
11. Rail Industrial Access Funds: Funds offered to new or expanding industries to help in financing construction or rebuilding railroad tracks needed for access to a business, with a requirement that the business create a certain number of new jobs or capital investment results.
12. Tax Increment Financing: Tax increment financing (TIF) is used by local governments to provide incentives to developers and others who presumably would not otherwise choose to invest in certain areas. Such financing often entails providing subsidies for land acquisition and/or for installing or improving infrastructure for water, sewerage, streets, and local services. The financing may even entail giving away or selling land at an attractive price to developers (see Q & A: 15).
13. County and Local Subsidies: Counties and cities have recently joined the corporate welfare bandwagon by offering select companies taxpayer subsidies, often in addition to those already offered by the state. In July 2006, the town of Holly Springs, for instance, made news by offering Novartis a $20.8 million package that, according to the News & Observer, included providing 167 acres of cleared land, new road, water and sewer service, a new fire truck, and priority snow-plowing service. Apparently, the town is unsure of how it is actually going to pay for the $20 million subsidy.
14. The Golden LEAF Foundation: A non-profit corporation created in 1999 at the urging of then-Attorney General Mike Easley, Golden LEAF uses funds from North Carolina’s share of the national tobacco settlement to distribute economic development grants to tobacco-dependent and/or economically distressed counties. The foundation’s board is appointed by the governor, the President Pro Tem of the Senate, and the Speaker of the House. By 2025, it is estimated the foundation will have received $2.3 billion (or 50 percent) of North Carolina’s share of the tobacco settlement monies. Thus far, Golden LEAF has dispersed over $155 million in grants to various government entities and non-profits. Critics charge that the foundation operates as little more than a slush fund controlled by Democrat leaders.
15. Slush Funds: Pots of money are available to the Speaker of the House and President Pro Tem of the Senate, through the Department of Transportation and the Economic Reserve Fund. These funds are distributed to select companies with little or no accountability or oversight.