Veto showdown averted as corporate welfare expands

Veto showdown averted as corporate welfare expands

- in Fitzsimon File

The General Assembly convened Monday afternoon to consider overriding Governor Mike Easley’s veto of a $40 million business incentive package for Goodyear. When the day ended, Easley’s veto was safe, but lawmakers were poised to approve an even larger corporate welfare package that despite some new wage and employment protections would give more public money away and set a troubling new precedent for business subsidies.

The House and Senate will reconvene Tuesday morning to take up the new subsidy package worked out during behind closed doors by legislative leaders, Easley’s staff and various corporate lobbyists.

Few details of the compromise were released Monday night, but the plan reportedly calls for $24.5 million in tax credits and grants for Goodyear if it modernizes its Fayetteville plant, $22.5 million for Bridgestone for its Wilson facility and several million dollars for a handful of unidentified companies.

House Minority Leader Paul Stam says the new plan is worse because it spends more money. Some progressive Democrats are upset because it marks a new direction for business incentives, spending tens of millions of public dollars on jobs that already exist. Current incentive programs are designed to attract new jobs to the state.

Stam and a courageous few Democrats are right and those aren’t the only problems and contradictions with the legislation and the special sessions that are considering it.

It is not clear if there will be any through discussion of the new corporate welfare proposal, but given Monday’s events, don’t count on it. The package was negotiated in secret by a handful of lawmakers and lobbyists and the details may change again before Tuesday morning.

There was talk of an Appropriations Committee meeting sometime Tuesday, but one meeting is hardly enough to consider a philosophical shift in corporate welfare, not to mention approving a bill that spends at least $50 million of public money.

The more sensible approach would be to let Easley’s veto stand and then let a planned study commission hold full hearings on the package and hear public comment and expert testimony so lawmakers have a complete picture of what they are considering.

Many legislators complained that they didn’t realize what they were supporting when they voted for the Goodyear legislation in the last hours of the summer legislative session. Rushing through the new corporate welfare package would be a more expensive repeat of the August vote.

All they have to do is heed the earlier advice of one of Goodyear’s lobbyists, former House member Chuck Neely, who signed on with the company August 31 to work the special session.

Neely sought the Republican nomination for Governor in 2000 and was quoted in the News & Observer about incentives, saying “In the game of state employees negotiating with corporations, the corporations hold all the cards. We give away public money to bring industry into the state … but it makes only a marginal difference. If we want to bring industry to this state, we ought to support education and transportation.”

Neely was right in 2000 and it is even more true when the state gives money to keep jobs already here, not recruit new ones. He could have added many items to the list of better ways to spend the money and one of them is housing.

A $50 million investment in the Housing Trust Fund would create jobs and help thousands of families facing a housing crisis. With the same money that’s going to corporations in the compromise plan, the Trust Fund could facilitate the construction of 6,000 affordable housing units, create 3,000 jobs and increase state and local tax revenue by $30 million.

And the money would benefit every community in the state, not handpicked industries in a few counties who can afford to hire the right lobbyists.

The original Goodyear package was unwise and the new compromise, even with more safeguards, is only slightly better.  The choices facing the General Assembly are not just to give money to one corporation or give it to five.

They still can reject the premise that individual companies deserve state tax dollars for jobs already here and instead save that money for investments that support the people and the institutions of the state, not the bottom line of a few multinational corporations.

About the author

Chris Fitzsimon, Founder and Executive Director of N.C. Policy Watch, writes the Fitzsimon File, delivers a radio commentary broadcast on WRAL-FM and hosts "News and Views," a weekly radio news magazine that airs on multiple stations across North Carolina.
chris@ncpolicywatch.com
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