Investing in Our Economy

Our number one priority this session was to get North Carolinians back to work and support our small businesses, which is crucial to our economic recovery. We agreed on the need to: recruit jobs into the state and protect the ones we have; build a workforce to fit the needs of the 21st Century; invest in existing job development funds for new and expanding businesses and assist small businesses in creating jobs.

Our work has been rewarded with some of the best business ranking in the country. North Carolina was ranked as having the best business climate in the nation for the eighth time in nine years by Site Selection Magazine, we are one of only seven states to retain the market’s top AAA bond rating, and CNBC has declared our state “most improved” of the top five in its annual survey, “America’s Top States for Business”, elevating the state from 9th to 4th.

This year’s budget continues to build on our economic recovery and growth. Some of the investments we’ve made are below, a more extensive list can be found at my website by clicking here. You can also find the entire budget here.

$34 million – Small Business Tax Relief. The budget provides tax relief for 125,000 small businesses, most of which have fewer than 10 employees that employ 500,000 people in our state by lowering the cost of maintaining and adding jobs in North Carolina. The provision allows a refundable income tax credit to a small business equal to 25% of the amount it paid in unemployment insurance tax on wages paid to employees.

$12.5 million – Provides additional funding for the One NC Fund to enhance the competitive position of North Carolina when recruiting national and international business and industry projects. Three percent of these funds shall be used for small business expansion.

$6 million – Job Maintenance and Capital Development Fund, which includes $3 million for the Goodyear plant in Fayetteville. The Fund requires Goodyear to invest at least $200 million in capital upgrades to their facilities, maintain a work force of at least 2000 full–time employees and provide them with quality health care benefits, while abiding by stringent environmental standards. Since the Fund was first established in 2007 Goodyear has paid over $5.6 million in county taxes alone.

$5.75 million – Small Business Center Funding, including funds for FTCC’s Center.

$5 million – Provides funding to support the seven Regional Economic Development Commissions, including the Southeastern Commission for our area.

$5 million – Provides additional funding for the Biotechnology Center.

$4.6 million – Industrial Development Fund. 6 grants were awarded by the IDF in 2009, leveraging $733 million in private capital investment and will result in the creation of 1,000 jobs.

$3.13 million – Provides additional funding for the Rural Center’s Building Reuse and Restoration Program to strengthen the capacity of rural communities to compete for and attract new and expanding businesses. Funding for small-scale regional community development projects is also included.

$1.5 million – One NC Small Business Fund program, which provides matching grants to businesses that qualify for federal incentives funds.

$1.5 million – Provides funding for the Main Street Solutions Program. This program provides grants to active Main Street Communities and designated micropolitans with populations between 10,000 and 50,000 people. Grants are to be used to support downtown economic development, historic preservation initiatives, and other public and private improvement projects that will support small businesses and job creation.

$1.25 million to the North Carolina Military Business Center in Fayetteville and $950,000 to the Defense Security Technology Accelerator in Fayetteville. These centers are helping to create and expand our area’s rapidly growing Defense Technology business sector, bringing 21st Century industries and high-paying jobs to our area.

$1 million – Provides funding to the Rural Center to continue the Small Business Assistance Fund, via grants up to $20,000 in three areas: 1. Improving energy efficiency on the farm, developing new markets and developing new products.

$1 million – Appropriates money for matching funds for US Department of Energy grants to support energy research and green jobs.

$750,000 – Provides funds for small business loans for those who have limited access to credit.

$875,000 – Provides funding to attract businesses to locate operations in North Carolina and to increase the sale of North Carolina exports, including agricultural commodities.

$100,000 – Provides nonrecurring funding for the Indian Economic Development Initiative.

Economic Incentives

House Bill 1973 – Various Economic Incentives

  • Enhances the film production tax credits by increasing the per production cap from $7.5 million to $20 million, by increasing the credit amount from 15 percent to 25 percent of a company’s qualifying expenses, and by clarifying that qualifying expenses are subject to audit by the Secretary.
  • Creates a new tax credit for interactive digital media. Under the new credit, a taxpayer that develops IDM in this state is allowed a credit equal to a certain percentage of allowable expenses over $50,000. The percentage is 20 percent expenses paid to a participating community college or research university for services performed in this state and 15 percent for all other allowable expenses.
  • Extends the sunset for the credit for recycling oyster shells from January 2011 to January 2013.
  • Creates economic development incentives and favorable tax treatment for Eco-Industrial Parks located in counties that are not required to perform motor vehicle emission inspections.

This year’s budget (S897) Extends the sunset on the following expiring tax credits and refunds: (Section 31.5)

  • The tax credit for mill rehabilitation.
  • The tax credit for qualified business investments.
  • The sales tax refund for air passenger carriers.
  • The sales tax refund for motorsports aviation fuel.

HB 1829 – Renewable Energy Incentives

  • Extends credits for constructing renewable fuel facilities and biodiesel producers
  • Reinstates and expands the credit for a renewable energy property facility
  • Clarifies that real property donated for conservation purposes can only be used for those purposes

HB 1249 – Homebuilder Property Tax Deferral Changes – Modifies the homebuilders’ inventory property tax deferral program by allowing residences constructed by a builder and owned by either the builder or a business entity of which the builder is a member to qualify for the deferral.

Community Colleges

In recent years, North Carolina communities have experienced tremendous job loss, particularly in the manufacturing industry. This has resulted in an unprecedented number of people going to our community colleges to learn new skills and retrain for new jobs. Enrollment continues to soar at these institutions. In this year’s budget, we fully funded enrollment growth in community colleges to ensure that students are not denied services because of enrollment growth ($122 million for fiscal year 2010-11).  A well-educated and well-trained workforce benefits all businesses in this state, whether they are large or small.

The Small Business Center Network housed within North Carolina community colleges also plays an important role in assisting small businesses throughout the state. We allocated $5.75 million to the program this year so that it can help North Carolinians start and grow their own small businesses. Each community college in the state is home to a small business center, meaning that such a center is located within a 30-minute drive of almost all North Carolinians. Many of the services offered are free of charge.

The North Carolina Rural Entrepreneurship through Action Learning, or NC REAL, is a non-profit organization within the community colleges that helps encourage entrepreneurship and small business creation. NC REAL’s training programs and curriculum have helped thousands of people create jobs throughout our state. This year, we appropriated $263,300 for the 2009-10 fiscal year and the 2010-11 fiscal year.

We also continued to appropriate funds to the community colleges for the NC Military Business Center centered in Fayetteville so that it can continue with its critical work. The primary purpose of the center is to help small- and medium-sized businesses throughout the state that are seeking federal contracts, with a focus on military-related contracts. The center also helps highly-trained military personnel transition to civilian employment and recruits new defense-related businesses to the state. We appropriated $1.25 million in recurring funds for the center.

University System

The University of North Carolina is home to the Small Business and Technology Development Center. The center provides business consulting services and management education to growing small businesses. Although the main office is located in Raleigh, the center operates 10 regional service centers in 17 offices throughout the state.

The University system was likewise funded for full enrollment growth at $59 million dollars additional over last year and full financial aid as well.  The University system is an extraordinary economic engine in this state, accumulating over $1 billion in outside research grants and contracts last year.

Department of Commerce

The One North Carolina Small Business Fund within the Department of Commerce received $1.5 million this year. The program provides matching funds for businesses trying to obtain federal research grants under the Small Business Administration. Since 2003, through the One NC Fund the State has made 304 awards, totaling $71 million for the creation of 40,000 jobs and capital investment of $6.9 billion. In 2009, $8.5 million was committed to 40 grantees for job creation and retention of over 14,000 jobs and $550 million in capital investment.

In 2007, the General Assembly created the NC Green Business Fund. This fund was established to provide grants or loans to small businesses involved in a variety of “green” industries, such as renewable fuels or energy-efficient building technologies. Last year, we allocated $5 million of federal stimulus money to support this program.

The Business ServiCenter within the Department of Commerce provides information about state and local programs and resources to help growing small businesses. The center provides one-on-one consultation over the phone or in person about issues such as identification of business resources and licensing requirements and can also supply referrals to other state, federal, and local agencies. Much of this general information is also available online at Business Link North Carolina, www.blnc.org. The department also has a small business ombudsman, who assists in resolving issues with state agencies.

In these difficult economic times, my colleagues and I thought it prudent to authorize the Department of Commerce to administer the Small Business Jobs Preservation and Emergency Assistance Fund in the amount of $1 million (S.L. 2009-451, Sec. 14.3  - SB 202, Sec. 14.3). Money from the fund may be used for: (1) emergency bridge loans where clear ability to repay has been established but credit remains unavailable and (2) other purposes related to small business job preservation as approved by the department. The amount of a loan made to a small business is limited to an aggregate total of no more than $35,000. The small business is required to report on the costs of the project for which the loan is made to the department, and is subject to inspections.

Since its beginning in 2003, the Job Development Investment Grant (JDIG) has committed $750 million in grants to 100 grantees, resulting in commitments of over $7 billion in investment and over 30,000 new jobs. In 2009 alone, JDIG entered into 16 grant agreements, which will result in the creation of over 5,000 new jobs and the retention of 6,000 existing jobs.

Industrial Development Fund – 6 grants were awarded in 2009, totaling $4.6 million. These grants leveraged $733 million in private capital investment and will result in the creation of 1,000 jobs.

Site Infrastructure Development – This program was designed in 2003 to attract large scale industrial projects. In 2009, Merck received $24 million under the fund for the construction of a facility in Durham that will manufacture flu vaccine. The grant agreement set performance targets of 200 jobs at average wage of $57,000 and investment of $166 million in construction and $90 million in machinery and equipment.  Merck has far surpassed all of those requirements.

Job Maintenance and Capital Development Fund – This program was created in 2007 to help retain jobs with existing manufacturers who were making substantial capital investments. Two grants have been awarded under this program – Goodyear in Fayetteville and Bridgestone in Wilson. In each case, the company has made an additional investment of at least $200 million and has agreed to retain at least 1,800 existing jobs at salaries at least 40% above the county average.  Appropriation here was $6 million this year.

Aid to Non-profits

The General Assembly provides funding to a variety of non-profits that help foster the growth of small businesses. These agencies include the Rural Center, the Golden LEAF, the North Carolina Biotechnology Center, the Community Development Initiative, the Institute of Minority Economic Development, and others. In addition to ongoing efforts that help small business gain access to capital, this year we appropriated $1 million to the Rural Center to assist existing small businesses. The Rural Center combined this money with funds from the Golden LEAF to develop an initiative in conjunction with the Self-Help credit union that will allow Self-Help to make loans in the amount of $27.5 million to small businesses.

Golden LEAF

In 1999, the North Carolina legislature created Golden LEAF to administer one-half of North Carolina’s share of the Master Settlement Agreement with cigarette manufacturers in accordance with the court consent decree between North Carolina and the manufacturers. Golden LEAF is a nonprofit organization devoted to the economic well-being of North Carolinians. The foundation makes grants throughout the state intended to help improve the state’s economy, particularly in communities that relied heavily on the tobacco economy.

The president of Golden LEAF, updated subcommittee members on the recent work of the foundation.  A total of 111 grants were awarded in 2009 totally $35 million.  Major initiatives of the Foundation include:

Community Assistance Initiative – the Community Assistance Initiative is a grant program that targets communities of need and provides direct support for projects that significantly enhance the quality of life for citizens within those communities by stimulating economic activity or providing assistance in overcoming barriers to economic transition or community progress.  The Initiative reserves $2 million for efforts in each county and works closely with community leaders in developing programs appropriate for the individual community.

Economic catalyst grants – economic catalyst grants assist eligible state, regional and local economic development groups with grants that lead to job creation in tobacco-dependent or economically distressed areas. Golden Leaf works closely with the NC Department of Commerce and other economic developers in awarding these grants. 4,300 jobs were created or retained in the 2009 calendar year with these grants.

Recent examples of this program include:

  • Domtar – The foundation worked with various economic development groups to retain the Domtar facility (paper manufacturing) in Martin County.  The facility is an important local economic engine and accounts for 20% of the tax base in Martin County.
  • Townsends – The foundation worked to retain a chicken processing plant in the state.  The efforts will ensure the retention of jobs not only at this particular plant, but also at other facilities and for poultry farmers throughout the State.

The Golden LEAF Opportunities for Work (GLOW) program was created to address some of the urgent job training needs North Carolina faces during the current economic downturn. GLOW was a short-term, non-degree workforce development grant initiative that supported vocational and/or technical training programs targeting identified employment opportunities in tobacco-dependent, economically distressed and/or rural communities. The expected outcome of projects awarded under this initiative is the eligibility of trainees for placement in permanent, full-time jobs requiring their new skills.

A recent example of success is in the aerospace manufacturing industry.  The Golden LEAF has played a pivotal role in the recruitment of Spirit Aerosystems to Kinston.  This facility is expected to begin operation in mid-2010 and will bring 700 jobs to this area.

In the foreseeable future, Golden LEAF will be involved in initiatives to:

  • Invest in broadband infrastructure with a major emphasis in Cumberland County
  • Green economy and health care
  • Increase accountability and transparency
  • Strengthen commitment to Community Assistance Initiative
  • Build STEM (science, technology, engineering, and math) education opportunities, again with a large presence in our county.