An economic-development bill focused on the recruitment of corporate headquarters drew criticism in the state House before passing by a 78-23 vote Thursday.

The Senate voted 43-0 Wednesday on Republican-sponsored Senate Bill 820, which was introduced shortly before the extended regular session began Tuesday.

The bill now goes to Democratic Gov. Roy Cooper, who supported the legislation and is expected to sign it. The legislation would begin affecting economic-development projects on the date it becomes law .

During the House discussion, it was revealed that an unidentified Fortune 400 corporation, potentially from New Jersey, is only considering Charlotte in North Carolina for a headquarters move.

Bill sponsors said the corporation could make a decision as early as Friday now that the bill has been passed.

SB820 will increase the amount of incentives per job created from up to $6,500 to up to $16,000 through the Job 5t43wDevelopment Investment Grant (JDIG) program. The bill would work by raising the per-employee tax withholdings cap by those amounts.

The incentives are being aimed at corporations with high-earning employees, defined as $150,000 or more annually.

Rep. William Brawley, R-Mecklenburg, who lost his bid for re-election, said the corporation would bring at least 750 jobs paying an average wage of $348,000 and a $85,000 median wage - signifying half the wages would be above and half below that amount.

“This is a ‘but-for' opportunity in that the employer has said that if this bill passes, they will relocate to Charlotte,” Brawley said. It appears South Carolina is in competition for the project, according to the discussion.

The incentive investment for the potential project is expected to be $6 million to $7 million, which bill co-sponsor Sen. Jerry Tillman, R-Randolph, said the state would be able to recoup within two years of the potential corporate headquarters move.

“Every state in the country will want to go after this project, but most won’t be able to, while North Carolina will be able to with this adjustment,” Tillman said.

Rep. Jonathan Jordan, R-Watuaga, who lost his bid for re-election, questioned whether the pursuit of these corporate headquarters would dry up the annual JDIG funding commitments.

The latest version of JDIG offers $35 million for annual commitments, of which $20 million is dedicated to Charlotte and the Triangle and $5 million toward 40 Tier 1 counties that are considered the 40 lowest-performing counties as determined by an annual economic analysis.

Legislative staff said that successfully recruiting these corporate headquarters would expend the JDIG annual commitment sooner.

Jordan expressed concern that SB820 just adds to the "corporate welfare" that North Carolina already pays to corporations that come to Mecklenburg and Wake counties anyway. Those voting against recommendation cited similar concerns.

Jordan also asked that the bill include a mandate that companies hire North Carolinians for some of the high-paying jobs rather than just bringing in all of the employees. JDIG encourages, but does not currently require, the hiring of state residents to companies relocating to North Carolina. The bill was not amended to reflect that consideration.

The bill is likely to primarily affect Charlotte and the Triangle, but local economic developers say it could make the Triad more attractive from a cost of business perspective.

“This is for the big boys with deep pockets out there looking,” Tillman said.

“There won’t be that many corporations (to apply), but for those that do, it could represent several thousands of jobs overall.”

Co-sponsor Sen. Paul Newton, R-Cabarrus, said state Commerce officials have indicated the failure to raise the cap since 2012 has cost North Carolina opportunities at corporate headquarters projects.

SB820 comes shortly after Raleigh, and Charlotte and the Triad before it, failed to lure one of what proved to be two new 25,000-job corporate headquarters for Amazon.

The higher cap excludes “transformative” economic development projects. The 2018-19 state budget included lowering the qualifying criteria for such a project from $4 billion in capital investment and 5,000 new jobs to $1 billion and 3,000 new jobs.

A project that would have fit into SB820’s wheelhouse surfaced in 2015 when Mercedes Benz announced it was moving its U.S. headquarters out of New Jersey. Georgia offered $23.3 million in cost savings to coax 800 jobs paying an average of $78,000 to suburban Atlanta.

Analysts and advocates say SB820 could be a signal that legislators recognize that North Carolina must continue to be competitive with neighboring states with incentives even as they have touted the economic benefits from cutting the corporate and individual income taxes in recent years.

Some senators wanted the bill to require corporations to make a commitment to hiring North Carolinians for some of the high-paying jobs rather than bringing all of those employees with the move.

Allen Freyer, director of the Workers’ Rights Project for the left-leaning N.C. Justice Center, and several opposing legislators expressed concern that the bill is not written specifically to cover just corporate headquarters recruitment.

“By making permanent changes to all of JDIG in an effort to target one particular type of firm, SB820 opens the door to a massive range of unknown and unintended consequences down the road,” Freyer said. 336-727-7376 @rcraverWSJ

Load comments