Roy hits the nail on the head, as always with his Daily Journal today on the difference between economic development and sound economic policy focused on economic growth. As Roy explains, economic growth is better, cronyism takes us in the wrong direction.
Over the last several years the General Assembly is going in the direction Roy suggests. They have eliminated dozens of special credits and breaks, eliminated a 25% solar energy tax credit and reined in a flim flam film credit. Yay! As we await the final budget conference report, there are positive moves being considered. The Senate budget reduces the Job Development Investment Grant by $10M, (from $71.7M to $61.7). They also reduce the One North Carolina Fund by $417,883 (from $9M to $8.6M). As Roy points out, others have opined and extensive research confirms targeted incentives just don’t work. Lower taxes, fewer burdensome regulations, strong infrastructure and a skilled workforce are a better economic development tool. Reductions in subsidies and corporate welfare are a move in the right direction.
But we have to be ever vigilant. On the one hand you have NCGA leadership fighting back on incentives and on the other, you have some who propose new incentive programs, like a state new markets tax credit that was discussed a few weeks ago.
Considering Roy’s points and strong evidence that focusing on economic growth is working, when we hear discussions of backtracking to a focus on economic development scam games, it leaves us asking – What are they thinking?