Legislative wrap-up, election prognostication

by Kirk Ross

Barring any calamities, pressing federal mandates, acts of God or other compelling reason to reassemble, the legislature is not due back in Raleigh en masse until noon on Tuesday, May 13.

By then, the candidates for Council of State and the federal and state legislative slates ought to be sussed out. And, given the tilt toward a front-loaded presidential primary season, that race will be in full gallop as well.

While a federal cycle election doesn’t always drive the agenda in the General Assembly, this one, which features an open seat at 1600 Pennsylvania Ave., is much more likely to make waves on Jones Street.

Regardless of how that plays out the there’s already some indication of where the short session is heading. For starters, there’s the debate over corporate incentives and the state tax structure – two distinct issues that some want to roll up together in a major revision of how this state deals with corporate taxation.

A legislative study group set up after the Goodyear incentives veto imbroglio prepares to convene in mid-December amid a simmering debate among statewide candidates about the value of incentives.

When Site Selection magazine announced that the NC business climate was once again number one, Hampton Dellinger, who is running for the Democratic nomination for Lt. Gov., sent around a video noting that we shouldn’t be satisfied with being number one in business climate while schools, health care and other areas lag behind.

On the GOP side, Bob Orr, running against a couple of wealthy business types, has made incentive reform a keystone of his economic platform.

Both men are getting traction on this issue because of the odd coda at the end of the last session prompted by Gov. Mike Easley’s veto of a Goodyear incentives package.

The $40 million package aimed at keeping open the company’s Fayetteville plant reconfigured by the legislature to include an incentive for Wilson’s Bridgestone/Firestone plant as well. The deal has an estimated price tag of $60 million.

Now comes word that the shipping company that uses Morehead City to get rubber to the plants says they want a few million in port fee reductions or they move their operation to New Orleans.

Like the Google incentive package, which includes an exemption on taxes on the electricity for its new server farm in Lenoir, the port fee wrinkle is an example of ways that incentive plans are becoming more complicated and spreading beyond traditional tax breaks aimed at equipment purchases and plant expansion.

All the more reason to take a serious look at the subject. But while there is plenty to study, legislative action on incentives is going to be tricky in an election year. Business PACs will most certainly reward those looking out for their interests. At the same time, being too obvious or too generous or both risks a voter backlash.

The political demarcations are fuzzy as well.

Orr wants the deals to end or at least be seriously curtailed along with federal regulation to deal with the bidding war between the states. Meanwhile, Sen. David Hoyle, a Mecklenburg Democrat who is co-chair of the incentives study committee, recently said he’d like to take a look at reducing or eliminating corporate taxes altogether.

Both positions are tough sells within the parties, but the fact that such ideas are being kicked around should indicate that we’re far from consensus, let alone an answer.