Senate Republican Leader
Senator Phil Berger
26th Senatorial District
Phone Number: (919) 733-5708
North Carolina Senate
Room 1026, Legislative Building
Raleigh, NC 27601 

FOR IMMEDIATE RELEASE 
September 12, 2007

Upon the request of Governor Mike Easley, legislators returned to Raleigh Monday to address the Governor’s veto of HB 1761, Job Maintenance and Capital Development Fund.  That bill called for Goodyear Tire and Rubber Company to receive as much as $40 million in payments from the state; Goodyear would be required to invest a minimum of $200 million in their Fayetteville plant.  The bill was passed by the General Assembly at the end of the recent legislative session.  Governor Easley cited a number of problems with the bill, including that Goodyear could lay off employees and still receive the state aid.  Monday’s session was scheduled for legislators to vote on whether or not to override the Governor’s veto.  Instead, Democrats spent Monday behind closed doors working out a deal to appease Governor Easley and save Easley and Democrat legislative leaders from the embarrassment of either the veto being sustained or overridden.

During the day Monday, Easley convened a separate special session for the purpose of considering a new incentives bill.  Democrats introduced that bill, House Bill 4, also titled Job Maintenance and Capital Development Fund, Tuesday morning.  The new bill would give up to $60 million in tax dollars to certain large manufacturers, but did not resolve problems with the original bill cited by Governor Easley in his veto message.  House Bill 4, rather than being more restrictive with grants of tax dollars, actually expands grant eligibility and spends more tax dollars and has nothing new to require that grant recipients maintain any certain level of employment. 

The bill passed in the Senate along party lines, with Republicans opposed and Democrats in favor.  Senate Republicans cited the hurried nature of the specially called session as being a poor forum for a reasoned discussion of such an important policy issue and the expanded nature of the incentives being approved as reasons for voting against the bill.  Republicans also contended that lowering taxes, providing adequate transportation and other infrastructure, improving schools, and creating an overall favorable business climate should be the focus of economic development efforts rather than expansion of expensive tax incentive and corporate grant programs. 

Republicans offered as a substitute for House Bill 4 an amendment to reduce tax rates for all North Carolina corporations – North Carolina currently has the highest corporate tax rate in the Southeast.  Democrat Lieutenant Governor Beverly Perdue ruled that an amendment for such overall tax reductions was “not germane” to a bill relating to job maintenance and capital development and no vote was allowed on the proposal.  

Senate Republican Leader Phil Berger (R-Rockingham) made the following statement:

“This new bill is not really much different from the vetoed bill except that now we are looking at spending $60 million rather than $40 million and now there are two intended beneficiaries in Goodyear and Bridgestone.  One of the amazing things about this is that Bridgestone asked for this deal several years ago and was turned down; now they will be eligible for grants of tax dollars for expenditures they made over a year ago and were planning to make anyway.  Draw your own conclusions, but this sure looks like a case of a large corporation being able to make state leaders open tax coffers and receive payment because another large corporation received such a payment.  If that is the case, where will it end?  You can be assured that there will be others in line with similar accounts of a need to modernize equipment or facilities, similar suggestions that job cuts will occur if help is not forthcoming and similar pleas from community leaders about the negative impact on their area if the corporation were to leave.  How can the state continue down this path without discriminating against most employers or without going broke?  It can’t, and we should not have taken this step.  There is a better way; that better way involves lowering taxes, improving our schools, treating all North Carolina businesses fairly, and providing for adequate transportation and other infrastructure. 

“Being here for the last two days, it is difficult to understand the Democrats’ priorities.  Our transportation and other infrastructures are deteriorating and in desperate need of attention.  Yet Democrats have done nothing to address that problem – which affects all North Carolinians.  In calling this special session for corporate incentives and passing this bill, Democrats continue to disregard urgent transportation and infrastructure needs and have chose instead to give away $60 million.  The people of North Carolina deserve better than this.”

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