Senate Bill 575, Modify Corporate Apportionment Formula is heard on the House floor today.  This is the bill that changes the formula determining how much a corporation pays in taxes to benefit one company and lure them to start a new facility in NC – Apple. The company claims they get this benefit in other states and they will not come here unless we change our tax code to their specifications.  Legislators call this economic development, say we have to do this to be competitive with other states, claim the huge capital investment ($1 B, promised) by Apple makes it worth it, if Apple doesn’t keep their end of the bargain, the law is void, and we have to do it because of high unemployment and some say they’ll do anything to get jobs.
 

Rep Jonathan Rhyne (R-Lincoln) says, “well, at least we know what our price is – it’s’ $1 Billion”.  We will pass tax policy on a case-by-case basis to the highest bidder or biggest roller, not on what is good for the state and what is good public policy for all.  He says it?s? not fair to traditional industries, it says some play and pay by one set of rules but if you’re big enough or promise to spend a large sum of money, we’ll give you special treatment.  Lower rates for all not legislation on an ad hoc basis.  He suggests they turn the bill down and highlight the need for real, fair tax reform.  Every speaker says I don’t like it BUT…. shows our system is broken and this bill just doesn’t smell right. 

Rep Bill Owens (D-Pasquotank) and long time corporate welfare supporter, says until Congress passes a law outlawing incentives, North Carolina has to do this.
This company is not eligible for other incentive packages (Bill Lee, JDIG and One North Carolina) so we’ve had to come up with a new one.  Promises contractor and sub contractors and new jobs in building the Apple facility.

Rep Skip Stam (R-Wake) remembers the Dell and Google deals and how we were played.  Companies claim they won’t come unless we give into their demands.  Would they come anyway?

Stam proposes an amendment that
reduces the investment requirement from $1 Billion to $500 Million.  It might benefit companies other than just Apple. 
Rep Pryor Gibson (D-Anson) says the bill specifically goes after the $1 B investment and is not intended for anything less.
Rep Curtis Blackwood (R-Union) asks who would turn down a $500 Million investment in their district?

Gibson says it?s been complicated to change the apportionment formula and it?s taken a lot of time and they have to hurry up and pass the bill before Apple changes their mind.  If you don’t like incentives then you should be opposed to making more incentives available and oppose the amendment.

Amendment fails 35 – 77.

Stam asks where is the “but for” clause in the bill? Note: usually required in incentive bills: company is required to sign off on but for the incentive, they would not come or expand.   Gibson says it?s ?not in there.  The incentive is so narrowly targeted that the “but for” clause is not needed.

Rep Bonner Stiller (R-Brunswick) asks who owns the land that this computer farm and $1 B investment will be on?  Shouldn’t we be assured that there is no political pay off or leverage or benefit?  Gibson says he?s ?sure the Commerce Dept will take care of the smell test.  In a previous deal, there was a land purchase exchange benefit that a legislator brokered with promises of getting a bill passed.  Stiller wants to know who owns the land where the facility be located.  No one seems to know but we’re told to trust the Commerce Dept.

Nelson Dollar (R-Wake) asks how much transparency will there be in the contracts, etc.  Gibson says he’ll get the info.

Rep David Lewis (R-Harnett) asks if local governments will be asked to sweeten the pot with local monies to Apple.  Gibson says it would not affect any way that local governments could do.  Local economic development units correspond pretty well and he feels like locals would not be competing against each other but doesn’t answer the question if local governments will be giving additional money to Apple. Lewis asks if property tax reductions or credits may be used?  Gibson says maybe but that would be up to locals to make this decision.  In other words, local incentives may well be part of the Apple deal as well as the state incentive.

2nd Reading vote on the bill:  81 yes; 31 no

3rd Reading vote will be tomorrow and I?m sure the debate will continue.