Maybe the Most Bogus Poll Ever

I don't need to tell regular readers of this blog or anyone paying attention to my campaign for governor how fundamentally opposed I am to the state's policy of so-called corporate incentives. But now the NC Association of Economic Developers has gone and paid for what is maybe the most ridiculously one-sided poll I've ever seen. And to top it off the mainstream media, for example the News & Observer, has gone and regurgitated the press release telling us that everybody loves incentives.

This comes on the heels of the state being strong-armed again by Goodyear (they only got $26 million in subsidies to begin with) to reduce its cost of importing rubber through NC ports and Bruton Smith's demands of the state, Concord and Cabarrus County for about $70 million in incentives, give or take a little, not to close the Lowe's Motor Speedway track. Sock it to 'em Bruton. You deserve every penny of taxpayer money that you can shake 'em down for. Of course WRAL news does its puff piece about how NASCAR's whole future rest on the taxpayers adequately subsidizing ole Bruton. No wonder the economic developers are giddy about their poll results. Give the public a cooked up question coupled with a gullible media and how can you lose.

However,the conclusion that really caught my attention in the poll was headlined: "Electorate Backlash Against an Anti-Incentives Candidate". The message I get from this is that they're trying to fire a warning shot across the candidates' collective bows and the candidates better all jump on board the corporate give-away ship. And you, Orr, are going to get drubbed by the electorate unless you mend your ways and cave in on the incentives issue.

Well, those folks must not know me very well. First, I'm not changing any of my positions or beliefs because some poll says my position isn't popular. And besides I firmly believe that the rank and file voter is with me and over the next five months leading up to the primary, you can count on me to keep pounding my argument that we need to change our policy of corporate give-aways. I may win or I may lose but I'll sleep better knowing that I have fought the fight to bring fairness and sanity to our economic development policy.

A Constitutional Body Blow

The constitutional rights of North Carolina citizens took a full body blow yesterday with the Court of Appeals decision in the Dell incentives case. While an adverse ruling was not unexpected, the flawed reasoning of the three judge panel sends a chilling message about just how little taxpayers can rely on the courts to protect their rights guaranteed by the N.C. Constitution.

Without launching into a legal dissertation let me try and summarize what the ruling means. One constitutional theory was that the subsidies to Dell did not conform to the uniformity requirements of the Constitution. The Court said that the taxpayers had no standing...in other words no right to even challenge that use of tax dollars. The reasoning was that they were not in the class potentially injured by the alleged violation. The bottom line is that virtually no one, other than perhaps another giant computer manufacturer, could challenge the subsidy. And since that would never happen, then the government has a free pass on handing out money to individual companies without fearing a challenge to the uniformity of the grant.

Secondly, the Court said that the long standing second part of the test to decide whether a tax expenditure was for a public purpose as required by the Constitution, was met as a matter of law, as long as government said it was for a public purpose. The court held that the trial court didn't need to conduct an inquiry based upon evidence that the $300 million subsidy to Dell benefitted Dell primarily rather than the public. Since the General Assembly and the local governments said their intent was to benefit the public, that's all it took and the taxpayers could forget the opportunity to show otherwise at trial.

There were other aspects of the ruling but those two particularly make the point that the court is simply going to let government do whatever it wants when it comes to so-called economic development. The limitations placed on government by our state constitution have been virtually eliminated by this opinion. It's now fully open season on spending your tax dollars by handing out grants and breaks to the favored major corporations. The governments and big business PR machine can crank it up even further because there's nothing out there to stop them. That is unless the Supreme Court ultimately reviews the case and puts some constitutional limitations on the practice or unless the voters decide they've finally had a enough and elect candidates who are willing to step up and limit the practice.

Economic Development Reforms Presented

Yesterday marked our first major presentation of proposed reforms in how state government goes about the peoples' business. Our press conference unveiled our extensive set of recommendations on how we go about conducting economic development in North Carolina. While there's no secret about my opposition to the current system of giving away hundreds of millions of dollars to a select group of large international corporations, it's incumbent on any candidate to not just say what's wrong but tell voters how we can do better. The focus of the proposals is to provide greater openness, accountability, and fairness to the system of economic development. I encourage you to go to our web site and read, analyze and comment on our proposals.

Tomorrow I hit the trail again (having logged over a thousand miles last week in OrrForce One). We've got fundraisers in Hendersonville and in the Cane River Valley of Yancey County. There will be stops along the way in Charlotte and Gastonia, hours devoted to the quieter aspects of campaigning, and hopefully a little time for relaxation and contemplation of the beauty of fall in the mountains. After reading this afternoon about the untimely death of Bob McGehee, the CEO of Progress Energy, at age 64 from a stroke, all of this hard charging campaigning is put in perspective. I hit 61 this week and as anyone moving quickly towards being eligible for social security knows, we realize the need to value every day and every opportunity to do something good - for our fellow citizens and for ourselves.

The Band Wagon is Rolling

One of the reasons I entered the Governor's race was to make sure that issues like "corporate subsidies" were adequately debated and addressed. Little did I realize (thanks in part to the Goodyear boondoggle) that it would be so easy to get the other candidates to start jumping on the anti-incentives band wagon. In today's Under the Dome blog (I'm suppose to link to it, but haven't figured how to quite do that yet), Richard Moore states that he's concerned about the incentives game and thinks Congress ought to do something. And his cohort Bev, while waffling around on the issue at least is expressing some concerns. My question is, where have they been over the past eight years as millions have been given away to select big businesses?

While on our GOP side it looks like Smith and Graham are firming up their opposition to the great give away game. Nothing like polls showing public opposition to the likes of the Goodyear deal, to solidify what has been a fluid position. All these folks and any other candidates for public office are welcome to jump aboard this issue that we've been talking (and dissenting and litigating) about for years.

The question is just how much of this, particularly on the democratic side, is just rhetoric in response to polls and how much is actually based on conviction? While it's great to try and shift the responsibility for changing the system to Congress, there are many steps that can be taken at the state and local level to bring about true reform. Will any of these candidates have the political courage to actually do that? I've got my doubts. But that's the constructive part of campaigns in that there is a true opportunity for debate and deliberation about significant issues of public policy. Now if only the media will facilitate the debate and examination of candidate positions on issues such as "corporate subsidies", then perhaps voters will be able to make informed decisions in the upcoming elections rather than succumbing to 30 second sound bites.

Power Politics, Hypocrisy and Delusion

I have waited 24 hours to blog about the General Assembly's incredibly misguided action yesterday in turning the "terrible" Goodyear legislative subsidy into a "really terrible" handout. Having spent several hours at the Legislative Building being buffeted by the hot air being blown around by supporters of the "compromise" bill, I felt like I needed to head to the "Y" to be steam cleaned. During the course of the debate I periodically spent time with conservatives lamenting what was going on; then later spent time with the liberal contingency who sat shaking their collective heads as to what was transpiring. So how could this $60 million taxpayer handout to two giant tire companies, one owned by a Japanese company, take place when both conservatives and liberals opposed it?

First and foremost was the power politics of the Senate leadership in the form of Senator Tony Rand of Cumberland County. This original $40 million handout was in Tony the Tiger's district and he thought it was just greeeeeeeeeeeeeeat!!!! One could see the spineless democrats afraid to do what was right because of the fear that Tony might get'm. Secondly, and maybe most distressing was watching several liberals like Dan Blue and Deborah Ross, who have previously been opponents of these types of giveaways, trying to justify their votes to support the legislation. They knew what was right and then did just the opposite. Finally, there were the delusional supporters who I think actually believed this was good legislation. Frightening.

However, kudos go out to three brave democrats in the House who showed courage and adherence to principle. Paul Luebke, Jennifer Weiss, and Pricey Harrison are not only to be commended but deserve the respect of taxpayers across the political spectrum. And my hat is off to the Republicans who for the most part (a few misguided souls in the House went with the Democrats) stood up for what was right. This is to my mind a defining moment for the GOP who need to take this issue and take it to the public in the '08 elections to decide what was right.

For the record, the original bill was for $40 million for the Goodyear plant in Cumberland County to modernize. They and their supporters (and lobbyists) said they had to have that $4 million a year for 10 years. But it was such a bad bill that Governor Easley vetoed it. After the great compromise, Goodyear seemed perfectly happy to settle for around $2.5 million a year. And then Bridgestone/Firestone got around $23 million to help modernize its plant. Oops, they actually have already spent $60 million to modernize without expecting any subsidy, but what the heck let's help them out anyway. I would suggest that the CEO for Goodyear who makes a reported $17 million per year should explain to the taxpayers of NC why he couldn't kick in a little of his paycheck to help modernize the plant instead of asking the taxpayers of the state to do so. Oh, and maybe Goodyear could pay a little corporate income tax to the state (they've paid nothing for 5 years) to maybe help pay for some of the teachers we need, or mental health services, or fix a couple of bridges. Nah, why make those poor old giant corporations pay anything.

And let's not forget Governor "this is bad legislation" Easley who rolled over for the compromise and added $20 million more to the original bill for Bridgestone/Firestone. Once again politics has risen to new heights of hypocrisy.

While it was a dark day for North Carolina yesterday, it has given me one more great issue to campaign on across this state. And it has given the NC Institute for Constitutional Law another great case to take to court. So expect to hear and read a lot more about this issue...it's where the rubber meets the road.

Drawing a Line in the Sand

It's now been over a week since I last posted a blog entry so I'm making an effort to at least get something up for those of you out there actually reading this. The issue of the week has to be the special legislative session scheduled for tomorrow to consider the Governor's veto of the $40 million subsidy for Goodyear. Now my position on "incentives" in general is obvious but the Goodyear legislation goes beyond anything ever done in NC. It is sufficiently bad that even Governor Easley, champion of the big corporate give aways, couldn't tolerate it.

But in what is an inexplicable state of mind in the General Assembly, the prevailing wisdom is that the veto will be overturned. And what's worse, apparently a number of GOP legislators are willing to go along. What in the world is going on? We have a multi million dollar corporate subsidy for the protection of union jobs and to subsidize an international multi billion dollar corporation, and Republicans are going to go along? Is it the "get along, go along" philosophy or simply a lack of understanding about what's really at issue here?

Monday will reflect a drawing of a line in the sand for the GOP in the General Assembly on the issue of incentives. The members will either stand with small businesses and taxpayers across the state or with the large corporations playing our state leaders for suckers. It will be an interesting day.

Real Business Leaders Don't Beg for Handouts

John Hood of the Locke Foundation wrote a very nice op/ed piece today, calling on Governor Easley to veto the Goodyear $40 million legislative subsidy. Thoughtful and well written as usual, my concern is that even if Easley does exercise the veto (Does he really know how?) the administration will still try to come up with some kind of handout for Goodyear.

One recent business expansion in Durham by Square 1 Bank shows what real business leaders should do. The bank which started two years ago has its national headquarters in 16,000 square feet of the American Tobacco Historic District. It announced that it is expanding to 42,000 square feet and adding approximately 120 more employees. The bank which services the venture capital community around the country has grown its assets to over $700 million. "It's huge for the economy of Durham," said Rich Harris, the GVA Advantis broker who represented Square 1. "It's a major venture bank that could be in any city." "They could be in California. But they are here in Durham and choosing to grow here."

Now there's no doubt that had Square 1 executives wanted to shake down Durham and the State, then incentives would have been forthcoming. But no, this group of business leaders prefer doing in the right way - through their own investment and by not playing the government subsidy game. As to why Square 1 is here, its spokesman said, "...we love being here in North Carolina. There's a lot of great talent here."

Another company in High Point, New Breed, announced a major expansion several years ago. The company spokesman said at the time, "It has not been New Breed's policy to seek nor accept incentives. We believe it is our corporate responsibility to invest in our infrastructure, not the responsibility of tax payers." Hurrahh!!!! Thank goodness there are still principled business leaders out there who understand that corporate welfare is an embarrassing phenomena in our state and around the country. Let's hope Goodyear gets the message.

The Incentives Race to the Bottom Speeds Up

Critics of the corporate subsidies handed out by state and local governments has been often described as a "race to the bottom" as an ever escalating demand pushes for more hand outs. North Carolina has sunk to a new low with the special legislation in the recent budget that provides an estimated $40,000,000 in subsidies to Goodyear Tire & Rubber Company's facility in Fayetteville. What's particularly shocking about this deal is that the company is neither required to create jobs or even keep all of the 2,750 existing jobs. And Goodyear to the best of my knowledge hasn't even threatened to move to another state. It's just an "investment" in keeping them here according to one economic development guru.

There was a time not that long ago when incentives - or subsidies - were targeted only to major manufacturers to lure them to NC with the promise of major investments and new jobs. It didn't take too long before existing large businesses started threatening to move unless they were subsidized, then others simply started asking for handouts for expanding and adding jobs. Now we're handing out the tax breaks even if there is no threat to move, no creation of jobs or guarantee of retaining existing jobs. And the Goodyear deal is for just one company. The least the Legislature could do is help all businesses on an equal basis.

There is no end in sight absent a favorable court ruling in the Dell case or an uprising by the public fed up with under funded needs in the state while multi-billion dollar corporations get major tax loopholes inserted into the law and other sweetheart deals. North Carolina may not have reached the bottom yet but we're getting close.

The NC Google deal gets analyzed by BusinessWeek

The July 23rd issue of BusinessWeek takes an in depth look at the process by which the state along with Caldwell County and the Town of Lenoir got taken to the proverbial cleaners by corporate giant Google. The story outlines with great balance how Google set about taking advantage of the desperate economic conditions afflicting Caldwell County due to furniture manufacturing closures. I encourage everyone to read the story and then reflect on whether that is the way we ought to do business in North Carolina. This so-called "targeted incentives" issue will be a recurring topic in my campaign and on this blog. It's an issue that virtually every knowledgeable observer or participant in the economic development system (maybe except those making money off of it) agree either privately or publicly that it is bad public policy. Unfortunately, the lame rationale for all of this corporate welfare is that "everybody else is doing it, so we have to also."

There are several points I'd like to make that need elaborating on in order to give a more complete picture of what's at issue here. First, is the secretive process employed throughout the negotiations. The government officials were sworn to secrecy by Google officials and threatened when the press on one occasion ran a story about the prospects of Google coming to North Carolina. The sales tax break specifically for Google was slipped through the Legislature with no acknowledgement that it was exclusively for Google and with no meaningful debate or discussion. Land was acquired without telling the owners that the purchase was being made for corporate billionaire Google. The several hundred million dollars in subsidies for this one company was a done deal before the press or the public had any real knowledge of what was going on. While that might well be ok when businesses negotiate with each other, when it is the public's tax dollars, it is simply not acceptable. What goes on the back room rarely results in serving the public's best interest.

Secondly, what the story does not develop is the negotiating tool of continuing to threaten to locate the server farm somewhere else...like South Carolina or Iowa. North Carolina officials must not have realized that the same pitch was being made in those states and others and the same threatening game being played..."give us our incentives or we will go elsewhere." It's convenient now for those striking the deals and caving in to Google's demands to ignore the fact that in addition to locating a server farm in Caldwell County, Google also located server farms in South Carolina, Iowa and other states. Once again the game was played. Another corporate giant profits. And the tax payers and other businesses in the state lose. Google, whose 1st quarter profits in 2007 was in excess of $1,000,000,000 (that's a billion, friends) ends up not having to pay property taxes in Caldwell County while everyone else does. If this process doesn't make sense to you and it sure doesn't to me, then head back to our website and sign up to help. I'm the one candidate willing to take on this issue.