Get the Facts: Senate Bill 13

After being approved by both the state House and Senate, Senate Bill 13, the “Balanced Budget Act of 2011” now sits on Governor Perdue’s desk awaiting either her approval to make it law, or a veto. Many observers are speculating that Perdue will wield her veto stamp on SB 13, as she has been outspoken in her opposition to the bill, specifically the act of diverting millions in funds from Golden LEAF, the One North Carolina Fund and the Job Development Investment Grant (JDIG) fund.

This fact sheet examines the motives of Governor Perdue in being so defensive about the “economic incentive” funds many have labeled corporate welfare, and explains why some of the claims defending Golden LEAF are highly misleading.

Perdue Defending “Incentives” Money Because it Finances Her Re-Election Chances
The Governor referred to One North Carolina Fund and JDIG monies as “North Carolina’s jobs money.” [1]

• In reality, this is Perdue’s re-election money.
• Perdue loves these funds because they buy her positive press at ribbon-cutting ceremonies where she can claim credit for “creating jobs” – all at taxpayer expense.

Prioritizing Corporate Handouts Above Teachers, Small Businesses
Defenders of corporate welfare are quick to tout the alleged benefits of economic incentive funds. For every perceived benefit, however, there is also a cost. To ignore such costs is to be intellectually dishonest. Some costs that need to be considered regarding SB 13:

• How many teachers will lose their jobs if this money is not transferred to the General Fund?
• How many people lose their jobs – especially in small businesses – because of the unfair competitive advantage granted to the recipients of corporate handouts?

Misleading Claims About Golden LEAF’s Economic Impact
Critics of SB 13 have cited data provided by Golden LEAF showing that $10 million in Golden LEAF grants have “leveraged” more than $900 million in business investment.

A closer look, however, reveals that three-fourths (76%) of this investment total was made by just two corporations receiving Golden LEAF funds. Clearwater Paper ($260 million) and Caterpillar in Forsyth Co. ($426 million) make up the overwhelming majority of investment.

In these cases, it is highly suspect that the $1 million Golden LEAF grant each received was a relevant determining factor in their investment decision.

• Clearwater Paper received a number of economic incentive deals totaling up to $50 million. Several entities were involved in offering the incentives, Golden LEAF merely piled on. Other entities included: the One North Carolina Fund, JDIG, Cleveland County, the City of Shelby, Duke Power and Gardner-Webb University.[2]
• Caterpiller received tax breaks and incentive deals totaling up to $75 million. Once again, Golden LEAF merely piled on – contributing a tiny portion of the total deal involving several entities. Other entities offering incentives include: the City of Winston-Salem, Forsyth County, the One North Carolina Fund , JDIG, Duke Energy and Winston-Salem Business, Inc.[3]

Golden LEAF’s “Job Creation” Grants Make Up Only a Small Portion of its Funding Efforts
An analysis of the 105 grants awarded in 2008 by Golden LEAF shows that only 13 could be categorized as “job creation.” And of those, more than half were not unique or did not actually involve anyone being hired:[4]

• Four of the grant recipients also received funding from other state entities – most notably the NC Rural Center
• Three other grants did not involve actual job creation
  • One was a feasibility study
  • Another grant involved funds to a public library for technology to create a “Business Information Center”
  • The third went for developing a system to make wood more dense

Golden LEAF’s Grant Making is Highly Redundant to Other State Programs
Like all of Golden LEAF’s targeted “impact areas,” several other state agencies and programs duplicate Golden LEAF’s “job creation” or “economic development” efforts.[5]

These include:

• Seven regional economic development organizations
• Billions in targeted tax credits (article 3J, film incentives, etc.)
• Five economic incentive funds administered by state Commerce Dep’t
• Industrial Revenue Bonds
• Site and Infrastructure Grant Fund
• Industrial Road Access Program (through DOT)
• Rail Access Program (also through DOT)
• Appalachian Regional Commission
• Two categories of Community Development Block Grants (these consist of federal dollars being administered by the state Commerce department)
  • Economic development
  • Small Business and Entrepreneurial Assistance
• The North Carolina Rural Economic Development Center has several programs and spends millions every year on “job creation” programs
  • Economic Infrastructure Program – awards grants to “projects with the potential to stimulate business activity, job creation”
  • Institute for Rural Entrepreneurship
  • Microenterprise Loan Program

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