By John E. Skavarla III, Secretary of the North Carolina Department of Commerce
In less than five months, North Carolina’s flagship business recruitment tool is scheduled to sunset. Since 2003, the Job Development Investment Grant program (JDIG) has played a key role in bringing high-wage jobs in manufacturing, financial services, life sciences, I/T and other industries to the state while supporting companies like Caterpillar, GE, Siemens Energy and many others as they grew existing operations here.
Governor McCrory’s NC Competes program extends this valuable job creation program through the end of 2019. It re-names JDIG as the Job Growth Reimbursement Opportunities, or “Job GRO” program, to more accurately reflect how these grants actually create jobs and attract companies while also resulting – by law – in a net financial gain for the North Carolina treasury. As lawmakers debate the merits of job-creation incentives, here are a few facts about the role JDIG plays in growing North Carolina’s economy.
- Reimbursements are not “hand-outs.” In fact, JDIG is a self-funded program that “hands back” a portion of increased revenues that result from the new jobs arriving and expanding companies bring the state. It’s not upfront cash and never has been.
- Companies must first perform. JDIG recipients must meet clear contractual requirements as to their payroll and capital investment obligation. Their annual reports are verified by the state Commerce Department as well as the North Carolina Department of Revenue before reimbursements are issued. They must also be up-to-date on all their state tax obligations. And there are “clawback” provisions for recovering funds if recipient companies leave North Carolina during the term of the agreement.
- Every community can benefit from JDIG. Opponents are quick to highlight the proportion of JDIG dollars that support projects in our metropolitan cities. With research universities, international airports and rapidly growing populations, major metros are magnets for the highest-wage jobs. But JDIG has proven itself effective in supporting projects in rural, suburban and urban communities alike. In fact, since 2012, the state has made 22 JDIGs in less economically advantaged Tier 1 and Tier 2 counties, about 35 percent of the total awards.
- JDIG spurs rural development. Architects of JDIG foresaw that metropolitan areas would see a larger share of new jobs and investment, wisely linking the program to the Industrial Development Fund – Utility Account as a means for financing upgrades to economic infrastructure in smaller, less affluent communities. With JDIG as its funding source, the Utility Account has awarded nearly $29.7 million for road, water, wastewater, rail, electrical and natural gas extensions in Tier 1 and 2 counties. Should JDIG sunset, this valuable resource for rural job growth ends with it.
- Competition is fierce. Anti-economic development forces suggest JDIG and the One North Carolina Fund merely pay companies that would have come to North Carolina anyway. Numbers indicate otherwise. An analysis of four counties – Cleveland, Cumberland, Pitt and Onslow – shows that there were 37 recruitment projects offered either JDIG, One NC grants or both since 2012. Just 12 of those companies ultimately chose to pursue their plans in North Carolina. Any number of considerations can lead a company to us – or away from us. Good sites, reliable infrastructure and talented workers get us to the finish line. Meaningful financial programs like JDIG and One NC put us across the finish line. Clearly, all these factors are important.
- Uncertainty is costing us jobs. After the tumult of the 2008 financial meltdown and ensuing years of anemic growth, the U.S. economy has begun to reawaken. Inspired by new technologies and falling energy costs, businesses – especially manufacturers – are ready to grow again. Many are attracted to North Carolina, still the South’s #1 manufacturing state. But the absence of clarity regarding JDIG’s future erodes confidence in North Carolina as a destination for new jobs and investment. As the global economy moves ahead, most companies cannot afford to wait. Some have already taken their expansion plans to competing states.
There are a host of important issues now on the minds of North Carolinians and their elected leaders. None are more important than jobs. JDIG has proven its value as a tool that can propel the state’s economy forward, benefitting all our communities. Meaningful, performance-based incentives like JDIG augment a vast array of assets, amenities and advantages that make North Carolina’s business climate the envy of most of the nation. By re-authorizing JDIG through stand-alone legislation, the General Assembly can help unleash the full force of our state’s economy.