Civitas Review Online » Dell

The “Incentive” Band Plays On. .

Chad Adams — Tue, 23 Mar 2010 13:30:33 +0000

Healthcare rhetoric may have dominated the news cycles, but that hasn’t slowed down the pace of taxpayer funded giveaways. Here’s the latest from NCICL:

200,000 in incentives is being sought by Tri Vantage from the Alamance County and the City of Mebane. Tri Vantage, a division of Glen Raven Inc. of Burlington, is an international supplier of specialty fabrics and hardware and wants to build a manufacturing plant at the North Carolina Industrial Park on Third Street in Mebane. County Commissioners began negotiations on “project CDC” on February 15 during a closed door meeting. No vote was taken during the February meeting. The board will hold a public hearing on the incentives request on April 5. ~ Robert Boyer, Burlington Times, March 15, 2010

Alamance County is demanding that Continental Components, LLC return $33,289 in incentives because the company has not lived up to a 2006 agreement that netted the manufacturer over $60,000 in incentives. The County is demanding just over half of the full incentives package to be returned. Getting the money could prove to be challenging because the parent company, International Designer Transitions, went bankrupt in 2008. ~ Robert Boyer, Burlington Times, March 16, 2010

Dell Inc. delays its Forsyth County plant closing date for the third time. The increase in demand for desktop computers has let the computer giant to announce it will remain open through the end of October. Staying open this long would have enabled Dell to keep half of the $26.5 million in local incentive money it has already paid back. ~ Richard Craver, Winston-Salem Journal, March 18, 2010

Based on what is happening in NC, it is safe to say that incentive policies have done NOTHING to stem the loss of jobs in the state. With 11 months of 10+% unemployment and many areas with much higher levels, it could be argued that such giveaways have only contributed to the job losses, giving money to risky manufacturing enterprises statewide. Judge Orr and his group deserve a lot of credit for keeping the public in the loop.

Paying For Jobs

Chad Adams — Mon, 15 Mar 2010 21:19:02 +0000

Nary a day passes that legislators or local officials don’t find a way to say that it’s government’s job to create jobs. The lack of free-market understanding and lack of a principled approach to job creation is staggering. The most recent and ludicrous example was highlighted today by the good folks over at the NC Institute for Constitutional Law:

$80,000,000 in promised incentives has been granted to Siemens Energy Inc. from multiple sources to expand its gas turbine operations in Mecklenburg County. The power-generation company has been awarded a $1,000,000 grant from the state’s One North Carolina Fund as well as a Job Development Investment Grant (JDIG) that could yield as much as $21,750,000 in maximum benefits over twelve years. In December 2009, the City of Charlotte pledged $44,500,000 in federal tax-exempt bonds and Mecklenburg County pledged $13,300,000.

~ Staff Reports, Asheville Citizen-Times, March 11, 2010

~ Steve Harrison, Charlotte Observer, March 10, 2010

Sadly, state and local government have learned NOTHING from the failure of the Dell package and the countless other failures of economic incentives. Lower taxes if you want to create jobs. It takes money to create jobs. Entrepreneurs take money, invest it and with passion and hard work, produce more money and jobs. More importantly to lawmakers, they produce more revenue for state coffers as well.

Rather than lower taxes, we simply keep the taxes and allow our local economic developers and the commerce department to apologize for the shameful tax code in the state by allowing prospective businesses not to pay them.

Yet more from NCICL:

The Triangle Business Journal reported in its March 12^th paper that wealthier counties are hogging 60% of the incentives money!!

“Sixty percent of almost $700 million in cash paid out by the North Carolina Department of Commerce in business incentives and job creation grants between 2004 and 2009 went for projects in the state’s five wealthiest counties.

A new report also reveals that the total amount of cash and tax credits committed to recruiting companies statewide stood at $1.2 billion at the end of the 2008-2009 fiscal year. Besides the $700 million in cash, the total includes $93 billion in tax credits claimed by companies, $993 million in “other” tax write-offs (largely sales tax writedowns) and $121 million in general fund expenditures.

Thank You Dell

Jason Sutton — Fri, 26 Feb 2010 22:09:56 +0000

Graciously, Dell has decided to keep its doors open until July of this year. You remember Dell, the company that the state gave in excess of $250 million worth of tax incentives and promises to in late 2004 to lure into the state. With only five years gone by since Dell opened its doors here in North Carolina, I doubt that many of the politicians who pushed for such an ambitious package are proud of the results.

Our elected officials in Raleigh apparently realize that tax breaks will lure more business into the state. What amazes me is that they do not understand that lowering the corporate tax rate will render these incentive deals unnecessary because the general business climate in the state will be more attractive.

Speaking of Incentives…

Brian Balfour — Tue, 26 Jan 2010 14:42:26 +0000

Following up on Chad’s post, check out this new article at nccivitas.org listing North Carolina’s 10 largest corporate welfare deals. When you begin to add up the promised tax breaks and handouts, the numbers become a bit staggering. The Dell deal tops the list with a total state deal of $260 million (how’d that work out?), followed by the recycling firm Nucor at $161 million. (NOTE: most of these deals also include local government incentives, but those are not included in the totals.)

Adding up the top ten deals, the state of North Carolina has promised more than a billion dollars in targeted tax breaks and handouts to well-connected corporations over the last dozen years. Imagine what that total is for all of the state’s incentive deals.

But as I wrote previously, the cost of the incentives game goes beyond just the dollar figures of the tax breaks and handouts.

The continued use of government business incentives serves to further politicize the economy, distorting the allocation of resources and stifling adaptation and innovation. Worse still, it fosters a dangerously cozy relationship between business executives and politicians, a relationship that should alarm all advocates of liberty and economic progress.

Dell to Cost Taxpayers an Additional $53 million

Chris Hayes — Thu, 22 Oct 2009 15:33:08 +0000

In what has to be seen as a somewhat bizarre and highly questionable decision, the NC DOT has decided to continue with its plans to expand a Winston-Salem road that leads to the soon to be empty Dell manufacturing plant. From today’s W-S Journal:

Even though Dell said earlier this month that it will close the plant early next year, DOT officials say they are moving ahead with the Union Cross Road plans. They say that present and future traffic needs justify the expense.

The cost to widen the road? $53 million.

Oh and the traffic counts the DOT is basing the need for widening on, they were done at the height of Dell’s employment and use of the road in 2007.

So is this the “critical needs” that the General Assembly used to justify raising the gas tax by 2 cents per gallon on July 1? I sure hope not.

Incentives = Craps?

Chris Hayes — Mon, 12 Oct 2009 15:17:26 +0000

Gambling is always more fun when you’re using other people’s money isn’t it? Well, for Sen. David Hoyle (D-Gaston) playing a game of craps with your tax dollars is perfectly acceptable.

After the failure of Dell has rightly focused attention on the use of incentives to recruit business, Hoyle equates the incentive game to gambling:

“They could have succeeded. It’s a gamble,” said Sen. David Hoyle, D-Gaston, the primary sponsor of the state incentives package targeting Dell that was approved hastily in a one-day legislative session in November 2004. “You take a chance, and you roll the dice.”

Gamble? Roll the dice? He does realize he’s using our tax dollars as his bankroll, right?

The next time Hoyle and his all-knowing buddies in the General Assembly get an itch for gambling, I suggest they head up to Cherokee to get their rocks off. And leave the state’s checkbook at home.

Incentives Failure Is Huge!

Chad Adams — Wed, 07 Oct 2009 19:37:05 +0000

November 8th, 2004 lest we forget:

RALEIGH, N.C. — Gov. Mike Easley signed into law on Friday an incentives package designed to lure Dell Inc. to build an East Coast computer manufacturing plant in the Triad. The bill, which provides for most of the $242 million deal being offered by North Carolina to the computer giant, was given final approval by lawmakers Thursday night. Easley called the legislators back to Raleigh just two days after the election because he said the targeted company wants to start building as soon as possible. Administration officials have said the plant could generate more than 2,300 jobs – 2,000 of them permanent.

Will anyone believe them next time? Chris Hayes hit it on the head, albeit in his own snarky way. But the failure of the Dell deal is HUGE! 905 jobs and $315 million according to the Winston-Salem Journal.

This is what Dell said in March:

The company told top Winston-Salem leaders that the cuts at the computer plant would affect a small percentage of its 1,400 workers, Mayor Allen Joines said Wednesday afternoon.

And this is what Secretary Keith Chrisco over at the North Carolina Department of Commerce said in July:

Asked whether the Dell (NASDAQ: DELL) recruitment was a success, Crisco replied, “It has not been yet.” But, he said, “We need three to four years to judge it in total.” Of Dell, he said, “That’s the kind of company we need to be all over (recruiting) in this state.”

This is the deal that the NC Legislature worked on at taxpayer expense to make happen. It was supposed to have a monumental impact on the job creation front with ancillary job creation to take place over ten years or more. Dell even had threatening comments to make about how thankful North Carolina should be to have the plant built here. An excerpt from the Winston-Salem Journal:

The plant is considered as the largest and highest profile incentive project in Triad history, with Dell eligible for up to $315 million in local and state incentives. Dell said in a statement that it will continue to fully comply with the terms of incentive agreements with the citizens of North Carolina.

Once again, the Department of Commerce, the Governor and the Legislature look like fools for taking this one. Don’t pick winners and losers, stay out of the private sector, pay attention to what government should be doing. Truth is, government doesn’t create jobs or protect them, it just stands in the way. Maybe we should conduct a ribbon cutting to celebrate government incentive failure. Hey, what’s up with the Global Transpark again???

Incentives Failure

Chris Hayes — Wed, 07 Oct 2009 18:43:03 +0000

Like we couldn’t see this one coming…

Per the N&O:

Dell plans to close its computer manufacturing plant in Winston-Salem by January, and lay off 905 employees.

Dell opened the assembly plant in 2005 and was offered a massive incentives package valued at $305 million if it met hiring and investment goals. The project was seen as a major economic development victory by supporters and a huge waste of taxpayer money by critics.

Really? Incentives didn’t work. Gee, who woulda thunk it?