NC official: MetLife breaks could shut out others
RALEIGH, N.C. (AP) — North Carolina business recruiters say a historically outsized package of about $100 million in state and local incentives to get MetLife Inc. to move 2,600 jobs from other states to North Carolina could stall benefits to other companies or force lawmakers to loosen up the rules.
State Commerce Department emails released this week in response to a public records request by The Associated Press show recruiters knew their big offer to MetLife would consume a big chunk of the annual limits on how much state officials could promise companies relocating to North Carolina.
MetLife last month was awarded a Job Development Investment Grant worth up to $87 million, the largest in the history of the state's biggest discretionary incentive program. The grant allows the insurance giant to take tax breaks over 12 years if it meets hiring and investment targets.
"The size of this project would use more than $8 Million of the annual $15 Million project Cap. When the new administration is in place we will need to discuss the need to request an increase in the 2013 Cap for JDIG," Stewart J. Dickinson, a top state business recruiter, said in a December email.
Gov. Pat McCrory, who succeeded former Gov. Beverly Perdue in January, proposed a budget last month that would more than double the JDIG allowance to $32.6 million for the year beginning in July and $43.6 million the following year.
MetLife announced last month it would move 2,600 jobs from offices in Massachusetts, Connecticut, Rhode Island, Pennsylvania, New Jersey and California to Charlotte and the Raleigh suburb of Cary. Charlotte will become the U.S. headquarters for MetLife's retail insurance business and Cary will host a global technology and operations hub. Average salaries will be around $80,000.
Dickinson also alerted new Commerce Secretary Sharon Decker less than three weeks before the MetLife deal was announced that the $2 million McCrory was prepared to offer the company from the One North Carolina Fund would speed the fund's depletion.
Along with promises to other companies, the MetLife offer would push the tax breaks disbursed at McCrory's discretion to $13.5 million of the allowed $14 million, forcing any new business opportunities to wait until a new state budget in July replenished the funding, Dickinson said.
"At a point in the very near future we will have to tell prospective grantees that we cannot award their grants until after 7/1/2013," Dickinson emailed Decker.
Dickinson said in a February email the JDIG cap would be reached by mid-April. He did not respond to messages. Companies haven't yet been denied tax breaks under the recruitment programs because neither program has hit its cap, Commerce Department spokesman Josh Ellis said Tuesday.
The limits set in North Carolina law are designed to prevent the state from giving away too much to companies hungry for the biggest incentives, said Allan Freyer, a former economic development consultant and now a policy analyst at the left-leaning North Carolina Budget & Tax Center. The two incentive programs are designed to close a deal getting companies to move or increase jobs in North Carolina.
The limits are "not something that could just be waived at the governor's discretion. It would have to be passed by the Legislature," Freyer said Tuesday. "I think it's an open question whether or not the Legislature would do that."
While the two discretionary incentive programs are intensely negotiated by state business recruiters and consultants that big companies like MetLife hire to maximize deals involving new jobs, the millions of dollars they represent are a fraction of the tax breaks embedded in North Carolina law.
The General Assembly's Fiscal Research Division said in its newly released annual report that North Carolina gave up nearly $1.25 billion in economic development tax breaks last year. Sales tax exemptions accounted for nearly $690 million to farmers, manufacturers, loggers, fishers and artisan bakeries.
Another $37 million in standard tax credits available to growing businesses was claimed last year, the report said. MetLife was expected to qualify for nearly $1.4 million in job creation and investment tax credits for its Wake County site, newly released documents show. The Commerce Department did not provide an estimate of the company's credits for its Mecklenburg County site, but the amount was expected to be comparable.
McCrory is examining the state's incentive programs and other economic development policies as he works to revamp the state Commerce Department.
Emery Dalesio can be reached at http://twitter.com/emerydalesio.