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Report Finds NC Incentive Program 'Fails'

JDIG_Termination_By_County.JPG
NC Justice Center

Governor Pat McCrory wants lawmakers to give his administration more money to lure businesses to the state. The state’s main fund, the Job Development Investment Grant program, is nearly out of money. But, a new report from the liberal North Carolina Justice Center argues the JDIG program is ineffective. WFAE’s Ben Bradford joined All Things Considered host Mark Rumsey.

RUMSEY: Remind us, briefly, how the JDIG program works?

BRADFORD: The state offers a package of tax breaks for a company to expand or move to North Carolina. To get it, the company agrees to create “X” number of jobs and invest “X” dollars in salaries and other local spending. So, MetLife agrees to create 2,600 jobs and gets up to $87 million in tax breaks—that was a blockbuster.

RUMSEY: And so what’s the problem?

BRADFORD: I’ll let Allen Freyer from the NC Justice Center explain that. He wrote this report. It looks at every one of these contracts the state signed with a company from 2002 to 2013. Here’s what he concludes:

FREYER: Unfortunately, the JDIG program is better at producing splashy headlines about jobs than actually creating the reality of new jobs. In fact, 60 percent of all the JDIG projects the state has entered into since the program was founded in 2002 have failed.

BRADFORD: Freyer defines “failed” as the state either never paid out any money or demanded return of what it paid because jobs never materialized. And by the way, the conservative John Locke Foundation agrees.

RUMSEY: What’s been the reaction from the McCrory administration?

BRADFORD: Commerce Department spokeswoman Kim Genardo calls the report “sensational and biased." She says a little less than half of the “failed” companies actually pulled out during the recession. She also points out when that happens, they’ve generally already created some jobs, and the state still gets its money back. That’s happening with Chiquita, for instance. And actually—this is interesting—Freyer agrees.

FREYER:  North Carolina’s JDIG program is actually a national model for how to do accountability around incentives right. We’re one of the best in the country, the best in the Southeast.

BRADFORD: But, he says lawmakers would typically cut a program where 60 percent of what it works on doesn’t pan out. He’s not suggesting that, in this case, but has called for study of what’s worked and what hasn’t, before we give the program any more money.