Victor Skinner, The Center Square contributor

Top five projects will cost residents at least $316.1 million over the next 32 years

North Carolina was named State of the Year by Business Facilities magazine this week, though the distinction will cost taxpayers millions.

The corporate site selection publication ranked North Carolina first in the nation for the best business climate in its 2022 Annual State Rankings Report, citing the state’s taxpayer funded incentives for a wide range of industries.

"A succinct regional economic development strategy in recent years has propelled North Carolina, and 2022 was another banner year for the state in capital investment and jobs creation," Business Facilities Editorial Director Anne Cosgrove said on Wednesday. "Paired with world-class education and R&D resources, the support of incentives and programs from organizations at all levels for a variety of industries, including high-growth sectors such as electric vehicles, made the state our choice for top recognition this year."

The Tar Heel State, which also ranked in the top five for Tech Talent Pipeline and Foreign Direct Investment/Capital Investment, was previously recognized as Business Facilities’ 2020 State of the Year.

Business Facilities credits a bipartisan focus on "a business-friendly environment for a diversity of industries" for a steady stream of relocation and expansion announcements in 2022 that totaled $19.3 billion in investments, an increase of about $9.2 billion over 2021.

Those investments are expected to translate into a state record of 28,300 new jobs announced in 2022.

"Last year, the top five North Carolina project announcements for job creation were Vinfast (7,500), Macy’s (2,800), Wolfspeed (1,800), Boom Supersonic (1,760), and Eli Lilly and Company (nearly 600)," according to Business Facilities.

Those jobs, however, come at a cost to taxpayers, and state records show that despite the large incentives, many companies fall short of their job creation goals.

The top five project announcements cited by Business Facilities are expected to cost taxpayers at least $316.1 million over 32 years for Vinfast, $2.3 million over 12 years for Macy’s, $76.1 million over 20 years for Wolfspeed, $87.2 million over 20 years for Boom Supersonic, and $12.1 million over 12 years for Eli Lilly and Company, according to announcements from Gov. Roy Cooper.

Taken together, the taxpayer subsidies equate to about $34,000 per job, if they materialize. Recent reports show they often do not.

Data from an October Economic Development Grant Report shows that out of the 384 Job Investment Development Grants announced between 2003 and the summer of 2022, only 37 had been completed through the end of December 2020. Another 183 were currently active, while 85 were terminated with some funds dispersed, 68 were terminated with no funds dispersed, and 11 had withdrawn.

Only 37 grants completed grant terms and closed with funds dispersed, according to the report.

Critics of the incentives contend the taxpayer subsidies are unfair and ineffective, arguing the state’s low tax rate does far more to draw businesses to North Carolina than the government handouts.

"North Carolina is the nation’s most business-friendly state, but not because of these economic development projects," said Paige Terryberry, senior analyst for fiscal policy at the John Locke Foundation. "These projects are political tools. Politicians use billions of taxpayer dollars to choose winners and losers in our state.

"Moreover, the handouts are not a major factor for a business choosing to move to North Carolina," she said. "Instead, our favorable tax climate draws businesses to the Tar Heel State."

(2) comments

drewski

The irony of a Locke foundation pundit saying " political tools" brings me much joy.

Meanwhile, back in reality.. all states are offering the giant incentives mentioned. Can NC not offer them and be competitive?

Glad our low state wages are such a boon to big corporations considering us.

David Collins

Low state wages . General education level deficiencies of the locals might be a factor . If you notice that the areas in NC with really good salaries are areas where out of staters make up the lion’s share of employees . Of course , the cost of living reflects those high wages so it is a bit of a trade off . Think I will stick it out down here a bit longer . Be it ever so humble plus I can still pee behind a tree without some one calling the police . Unlike some other places .

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