State Government
State Budget Boosts Economic Development
The $15.88 billion budget finally adopted by the General Assembly for this fiscal year increases spending by about $1 billion from the past year and by roughly $368 million more than was anticipated a year ago, most of it for education, social programs and economic development efforts.

Perhaps the most notable economic development issue in the budget is that it adds several categories of businesses to the existing list of those eligible for sales tax refunds on materials they purchase to build and equip facilities in the state costing at least $100 million. Chief among them are computer assembly plants, not surprising in light of Dell Computer’s reported interest in the Triad as the site of its mammoth new facility. Sales tax refunds would save Dell upwards of $1 million. Others added to the exempt list are aircraft-, auto- and semiconductor-makers.

Dell reportedly plans to build a 400,000-square-foot plant on 100 acres somewhere in the Mid-Atlantic region costing roughly $190 million and providing almost 1,900 jobs. The location of the new Fed Ex facility in the Triad is a major attraction for Dell.

The legislature gave the Triad another budget nod when it included a tax break for TIMCO Aviation Services in the budget. A special provision exempts from sales tax makers of aircraft parts and lubricants for commercial aviation – a description that fits TIMCO to a T.

In a nod to rural counties, the budget says eligible companies investing at least $50 million in Tier 1, 2 and 3 counties will be eligible for the sales tax refund. In Tier 4 and 5 counties, the threshold remains at $100 million.

As expected, the legislature agreed to expand the two-year-old and highly successful Jobs Development Investment Grants (JDIG) program. The budget contains provisions expanding from 15 to 25 the number of JDIG grants that may be awarded each year, and raising the maximum value of those grants from $10 million to $15 million. Other provisions will require JDIG applicants to submit copies of their state and federal tax returns and to give special consideration to buying goods and services from small businesses headquartered in North Carolina.

The budget contains a provision raising from $6 million to $7 million the total amount of qualified business investment tax credits a taxpayer may claim in a single year. Strengthening the tax credit will save investors $4.5 million this year, according to budget writers. Another provision in the budget offers a small cut in privilege and excise taxes amounting to $2.9 million this year.

The new state budget puts the Department of Commerce into the site development business. A special provision directs the department to create the Site Infrastructure Development Fund to acquire options on property suitable for a “large, regional industrial site that cannot be assembled by local governments.” Before now, the state often relied on large utilities like Duke Power or Progress Energy for such tasks, as was done when the state was courting Mercedes Benz several years ago. In a related matter, the budget authorizes Commerce to contract for the preparation of proposals and reports in response to RFPs for location or expansion of major industrial projects.

The budget directs the state Department of Commerce to create the position of Small Business Ombudsman to work with small businesses to ensure they receive timely answers to their questions involving state government. The ombudsman will have the authority to ask questions of state agencies on behalf of a business, to receive information concerning the status of a business’s inquiry, and to convene agency representatives to resolve issues raised by a business. The ombudsman will identify problems in state government related to unnecessary delays, inconsistencies between regulatory agencies, and inefficient uses of state resources.

The budget gives $1.75 million to N.C. Partnership for Economic Development, the umbrella organization overseeing the state’s seven regional economic development entities, a grant of $1.75 million that will pay for each one to formulate new strategic plans. With their $250,000 grants, each of the seven partnerships will be required to undergo a visioning process to determine their weaknesses and to assess potential strengths. Much emphasis will be placed on the clustering concept of economic development.

An eye-opening provision in the budget directs the state Department of Natural and Economic Resources (DENR) to establish one-stop environmental permit application assistance and tracking systems at all of its regional offices. Further, it directs DENR in most cases to approve such permits within 60 days. The provision directs the department to “provide to each person who submits an application for any environmental permit . . . to any regional office a time frame within which that applicant may expect a final decision.” It states that when a person applies for an environmental permit at any DENR regional office, the agency “shall provide to the applicant a good faith estimate of the date by which the department expects to make the final decision of whether to issue or deny the permit.” If the applicant has provided all the information requested by DENR, and if DENR has not responded within 60 days, “the permit shall be automatically granted to the applicant.”