Outside of Rowan

Supreme Court rules on Tax Incentive Case

The US Supreme Court ruled that eight taxpayers didn't have the right to sue over tax breaks given to DaimlerChrysler to attract a new Jeep plant to Toledo, Ohio.

DaimlerChrysler and local and state governments were sued over tax rebates allocated in 1998 as part of the package to get the plant. Toledo and Ohio gave the automaker $280 million in rebates and incentives in exchange for the automaker spending $1.2 billion to build the plant.

Legal Test of Dell Incentives Tossed

The lawsuit filed by Former North Carolina State Supreme Court Justice Robert Orr’s North Carolina Institute for Constitutional Law in 2005 challenging $279 million in state and local incentives granted to Dell Inc. to build a manufacturing plant in Forsyth County near Winston-Salem was dismissed by the Wake County Superior Court Judge Robert Hobgood.

In dismissing the suit, Hobgood found in favor of state and local governments and Dell, whose lawyers argued last week that the plaintiffs in the case could not challenge the constitutionality of the incentives because they have not suffered "a direct and irreparable harm." Hobgood further stated "attracting jobs to a community by public economic incentives provides a direct general economic welfare and benefit to the people of those communities."

The lawsuit asserts that incentives approved for Dell during a special session of the General Assembly in 2004 violate the commerce clause of the U.S. Constitution and some portions of the state constitution. Orr has appealed the case stating "this case was going up through the appellate system one way or another.”

Regional Cooperation Study from CRP

In a study commissioned to examine jobs moving from Charlotte to South Carolina, the Charlotte Regional Partnership found minimal impact. Charlotte lost 3,160 jobs in the last seven years as a result of businesses moving to York and Lancaster counties out of 622,928 jobs in Mecklenburg County.

“We're arguing over the wrong issue," says Ronnie Bryant, partnership president and chief executive. "Margin-sensitive businesses are always looking for low-cost facilities." Relocations to neighboring S.C. counties are part of a job decentralization that's to be expected in a growing market such as Charlotte, he says. For example, low-margin businesses will naturally seek to cut their costs by moving to outlying areas where land is less expensive and operating costs are lower, he adds.

The study recommends three steps for dealing with the divisiveness created by business relocations within the region:

Bill Lee Act Changes

The North Carolina General Assembly is considering legislation to change and reauthorize the Bill Lee Act tax credits. The Bill Lee Act is one of the more important development incentives including job credits, business property (M&E) credits and development zones.

The revised bill (House Bill 2170 & Senate Bill 1553) was developed by the House Select Committee on Economic Development and has been the product of over a year’s worth of work by economic development interests.   The Lee Act is due to sunset at the end of next year, and many lawmakers are reluctant to extend the tax credits without making changes to how they work. 

The bill aims to address some of the concerns raised by lawmakers, while at the same time providing an effective, easier-to-administer tool to attract and encourage expansions by businesses in all counties of the state. The goals include