Editorial: Incentives game goes to court
Wednesday, June 29th, 2005
By Chris Fitzsimon
As commissioners discuss creation of a formal incentives policy for Rowan County’s industrial park — and, possibly, the county as a whole — they should keep a close eye on a North Carolina lawsuit with potential ramifications for the future role of incentives in local and statewide projects.
The suit, filed by former N.C. Supreme Court Justice Robert Orr on behalf of seven private citizens, challenges the king’s ransom of incentives approved last fall for computer maker Dell Inc. — $242 million in tax breaks and other gifts from the General Assembly and $37 million more from Winston-Salem and Forsyth County. The suit charges, among other things, that the incentives for the future Dell plant violate the interstate-commerce clause of the U.S. Constitution by giving Dell an unfair advantage over businesses outside the state as well as violating the N.C. Constitution’s stipulation that tax dollars can be spent "for public purposes only."
Orr, who heads the nonprofit N.C. Institute for Constitutional Law, says the recently organized institute targeted incentives for its first legal battle in the belief that they are an improper expenditure of public funds and enable corporations to play "one state off against another, one community off against another."
You’ll get little argument about that from local officials. As in other counties and cities struggling to create new jobs and spur growth, Rowan’s economic development and county leaders have criticized the growing use of incentives even as they’ve relied on them to help lure new companies or encourage the expansion of existing ones. They didn’t invent the game, but they feel forced to play it — until someone changes the rules.
Ambivalence about incentives doesn’t mean the county should forswear crafting a clearer policy on awarding them. It should, however, proceed with caution. The Keith Corp., which has contracted with the county to market Summit Corp. Center, contends that having a formal incentives policy for the business park is essential so that prospective tenants can know what the county will offer in the way of relocation assistance or other breaks. From a business standpoint, that makes sense. But from a taxpayer’s standpoint, the county should be leery of any policy that might lock it into longterm promises it might later rue. If the county adopts a formal policy, it should be written in the spirit of disavowing runaway incentives rather than kowtowing to corporate demands.
As for real reform in the incentives game, it appears increasingly likely that will have to come from higher authorities, compelled by growing citizen discontent and increasing legal challenges. It’s unfortunate that this is likely to be another instance where public policy is hashed out in courtrooms. But the Dell lawsuit indicates that’s where this game will be decided.
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