NC House votes on Economic Development

The NC House voted today on the NC Competes Act, which is a bill which will increase incentives in the state.  The complete press release is below:

Today the North Carolina House of Representatives passed HB-117: NC Competes Act with a bipartisan vote of 84-24. HB-117 will now need a signature from Governor McCrory, who was an early supporter of the bill, to become law. The compromise with the Senate offers several targeted economic development tools designed and proven to spur job growth and investment in North Carolina.

“In March, the House placed job creation at the top of its list of priorities and passed the first edition of the NC Competes Act,” Speaker Tim Moore (R-Cleveland) stated. “I am very pleased we were able to reach a compromise with our Senate colleagues to move this bill – and our State – forward.”

“The passage of NC Competes is great news for North Carolina,” stated Rep. Susan Martin (R-Wilson, Pitt) on Wednesday. “In today’s global economy, we need a robust set of economic development tools in order to attract new companies to our great state and to effectively compete for expansion opportunities considered by our existing companies.  North Carolina is moving in the right direction. We have worked hard to create a pro-business environment; keeping taxes low, creating a fair regulatory environment, and investing in our workforce. The tools in NC Competes along with the tax policies and investments included in our budget confirm that North Carolina is open for business.”
Some key aspects of the NC Competes compromise:
1)       Allocates $20M continuous funds available for new commitments to invest in growing jobs in North Carolina. The bill increases the amount of JDIG (Job Development Investment Grant)  funds available for new agreements by making $15M available for high yield project. This is expected to translate to $500M in new investment and 1,750 new jobs for North Carolina.

 “The passage of NC Competes really sends a message to the world that North Carolina is a significant player. Once signed by the Governor, this legislation will give businesses the certainty they need to grow in our great state.”
-NC Commerce Secretary John Skvarla, III
2)       Exempts passenger air and commercial air carriers from paying sales tax on jet fuel.

Prior to this legislative action, North Carolina had the 5th highest jet fuel tax in the country, putting the state at a competitive disadvantage to retain and/or expand air services. Thirty five other states also exclude commercial jet fuel from tax.

 “We applaud the legislature for addressing the competitive tax environment in North Carolina and recognizing the importance of the airline industry to the state. The passage of this bill will ensure American’s operations at its Charlotte hub and eight other commercial airports in the state remain competitive.”
-Tracy Montross, American Airlines Director, Government Affairs-Government Relations
“We applaud members of the legislature for recognizing the value aviation brings to North Carolina’s economy, and taking action to encourage even more travel and economic development across the state. Lowering the tax burden on jet fuel will benefit millions of families and businesses who rely on air travel every day, while bolstering North Carolina’s long-standing legacy as the First in Flight state.”
-Sean Williams, Airlines for America VP, State and Local Government Affairs
3)       Data Center Infrastructure Act: Under current law, data centers pay 1% ($80 cap per article) privilege tax in lieu of a sales tax on certain equipment purchases if certain conditions are met: (i) $150M investment in Tier 1 or (ii) $225M investment in Tier 2 area over a 5-year period; $250M investment over 5 years to be exempt from sales tax on electricity. HB-117 creates an additional sales tax credit for data center equipment and electricity if $75M is invested over a 5-year period.

 “It is good to see the General Assembly and the Governor laying the groundwork for North Carolina’s economic future and encouraging investment in advanced infrastructure. Data centers are a vital part of a global, Information Age, cloud-based economy. This legislation helps ensure that our state continues to welcome next-generation information services technology.”
-Venessa Harrison, President, AT&T-North Carolina
4)       Allows the Department of Revenue to better prevent tax fraud by requiring employers to submit information on employee wages by January 31st. This will allow the Department to match employee wage data with returns being submitted, and better detect refund fraud and identity theft. Other states have implemented similar prevention language that has saved their respective states hundreds of millions of dollars.

 “The eNC-3 initiative puts North Carolina on the front edge of tax fraud prevention, a cornerstone to Governor McCrory’s commitment to protect North Carolina citizens.”
-Department of Revenue Secretary Lyons Gray
A shift to a single-sales factor, which was included in the first edition of HB-117, was incorporated into the state budget compromise that was signed into law last week.

Sarah Curry

Sarah Curry is Director of Fiscal Policy Studies at the John Locke Foundation.

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