Small businesses receive little help

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As recent report by watchdog organization Good Jobs First shows that small businesses in North Carolina only received 7% of the state's economic-instentive commitment from 2008-2013. The rest of the incentives are going to big businesses, who, according to Good Jobs First executive director Greg LeRoy, just don't need it. North Carolina also tied for the third-lowest state in dedicated money to small businesses, putting $1.33 million out of $26.38 million toward small business incentives. 

Read more at the Winston-Salem Journal

Just 5 percent of One North Carolina Fund incentive money went to small businesses from 2008 to 2013, according to a report released Tuesday by an incentives watchdog group.

Small businesses also represented 7 percent of recipients securing a state incentive commitment, according to the group, Good Jobs First.

“We believe there is a hypocrisy issue here for elected and economic officials who talk about small businesses in reverential tones, yet don’t walk the talk,” said Greg LeRoy, the executive director of Good Jobs First. “We knew the balance would be lopsided in the favor of larger employers, who in most instances don’t need the incentives, but this report really emphasized how lopsided.”

The One North Carolina Fund is considered as the lesser of the state’s two main performance-based economic-incentive tools. It does not require a minimum threshold for job creation and retention or capital investment. However, projects typically are required to meet or exceed a local wage level, and the One North Carolina Fund typically requires a local match of state money. Recipients rarely get more than $1 million in financing

Just 5 percent of One North Carolina Fund incentive money went to small businesses from 2008 to 2013, according to a report released Tuesday by an incentives watchdog group.

Small businesses also represented 7 percent of recipients securing a state incentive commitment, according to the group, Good Jobs First.

“We believe there is a hypocrisy issue here for elected and economic officials who talk about small businesses in reverential tones, yet don’t walk the talk,” said Greg LeRoy, the executive director of Good Jobs First. “We knew the balance would be lopsided in the favor of larger employers, who in most instances don’t need the incentives, but this report really emphasized how lopsided.”

Good Jobs First defined small businesses as those with 100 or fewer employees, that are independently and locally owned, and with nine or fewer establishments. However, the U.S. Small Business Administration defines small business as employers with fewer than 500 workers.

The One North Carolina Fund is considered as the lesser of the state’s two main performance-based economic-incentive tools. It does not require a minimum threshold for job creation and retention or capital investment. However, projects typically are required to meet or exceed a local wage level, and the One North Carolina Fund typically requires a local match of state money. Recipients rarely get more than $1 million in financing.

By comparison, the Job Development Investment Grant, or JDIG, program can provide up to hundreds of millions of dollars in incentives, typically tax credits received by the company after meeting capital investment and employment goals.

LeRoy said Good Jobs First chose not to include the JDIG program in the report primarily because of the job requirements that need to be met to receive incentives, such as 10 jobs in Tier 1 counties, 20 jobs in Tier 2 counties and 50 jobs in Tier 3 counties. Tier 3 counties are the 20 considered as most economically viable in the state.

“The JDIG program already overwhelmingly favors large employers,” he said.

North Carolina had the lowest small-business participation level of the 14 states researched, receiving only 13 out of 182 deals. The state also was tied for third-smallest in dedicated money, at $1.33 million out of $26.38 million.

Advocates for Independent Business, a coalition of 15 national organizations, said in a statement that “it’s stunning to see just how much state economic development programs are biased against locally owned businesses. We hope this report will be a wake-up call for state lawmakers.”

Michael Walden, an economics professor at N.C. State University, said the report shows “North Carolina isn’t unusual in focusing on large businesses.”

LeRoy said North Carolina is not alone in having elements of the left and the right finding common ground in opposing large incentive packages to larger employers, whether citing opposition to corporate welfare or saying that recent corporate tax rate cuts should be a big enough carrot for large employers.


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