Honda Deal Relives Old Issues on Incentives

Governor Mike Easley has recently announced the details of the Honda deal. According to him the state has contributed almost $2 million in terms of economic incentives just to encourage Honda to build its new plant in Alamance County.

With the new deal with Honda the producer of Honda engine mount, controversies on incentive deals like the once conducted with Dell and Google will surely surface again as critics claim that deals similar to these are likely to hurt the taxpayers in the long run.

The senate leaders have already consented to tackle the issue unfortunately the committee has never gotten the opportunity to sit down and talked on the issue. On his Honda announcement, Gov. Mike Easley has boasted the state’s ability to create new jobs.  He said, "We're trying to get the cost of business down and the education level of our workforce up. As of the latest numbers we just got, North Carolina has the lowest tax burden on business in the country."

The additional jobs that Governor Easley is bragging about is not without a cost and in this case, it cost the state around $2 million in economic incentives but then again comparing that to the $200 million plus deals given to Dell and Google, makes the incentive offered to Honda a small matter. These incentives provided to investors like Honda, Dell and Google usually includes inexpensive property taxes or no property taxes for 30 years which was by the way the offer made to Google.

According to the proponents it is vital to offer incentives to investors in order to compete with other states that are also using incentives to lure investors. They also said that it’s not going to be fair to businesses not get these incentives considering the benefits that they will be contributing such as the creation of additional jobs and of course helping in increasing the revenue of the state. Dell was given one of the state’s most lavish incentive deals---why? Gov. Easley didn’t mention the reason.

Senator David Hoyle (D-Gaston) said, "I wish Congress or federal courts would outlaw incentives. If they did, North Carolina would get all the jobs. People love it here they want to be here."

A committee was already set up by Senate President Pro Tem Marc Basnight and Sen. Hoyle that will tackle the issue but the committee has yet to meet. Hoyle also added that he plans to start up meetings after a budget is approved. He said, "I think they did backslide on it as the Baptists would say, and I think it's too bad they did. I think this is a problem that needs to be looked at very carefully."

In the case of Honda it will be offering 70 jobs that would have an average pay of $62,000 but critics are contesting those salary numbers. Representative Luebke said, "The manager will make 15-50 times more than the average worker, so we need to know what the average worker will make -- that's important."