RALEIGH – No, that can’t be the reason, can it?
The Triangle Business Journal is reporting that the North Carolina Department of Commerce, having previously retained an independent contractor to analyze its William S. Lee Act tax credits, is now performing an in-house study instead. The paper characterized the latest analysis of the program as “little more than a recitation of data already in the public domain.”
In the past, UNC-Chapel Hill professor Michael Luger had performed the outside evaluation. His findings led to, among other things, stories from Carolina Journal reporting that nearly all of the jobs for which Lee Act credits had been taken would have been created in North Carolina anyway in the absence of the incentives.
Lawmakers from both sides of the aisle cited Luger’s research as revealing basic flaws in North Carolina’s policy on economic development. “The Lee Act is a colossal failure,” Rep. Paul Stam, R-Wake, told CJ. “Luger’s report should give the legislature the ammunition to terminate the program. A better economic development strategy would be to uniformly reduce taxes for all businesses.”
“We are simply wasting taxpayer dollars,” said Rep. Paul Luebke, D-Durham. “This points to the necessity of major reform sooner rather than later.”
The state’s goal in ending its contracting relationship with UNC-CH’s Luger, TBJ slyly suggested, may have been precisely to avoid such bad publicity in the future. “Foxy move, Jimbo,” said columnist Dale Gibson, referring to Commerce Sec. Jim Fain.
Perhaps that’s true, and perhaps the tactic will work in the short run. But it is hardly a viable long-term strategy, unless the department plans no substantive review or at least no public disclosure of the same. For instance, Luebke’s comment above, while it could well have applied to Luger’s 2003 report, was actually given in response to an internal Commerce Department survey released contemporaneously that showed that Lee Act tax credits rarely played a pivotal role in determining business decisions about where to invest or create jobs.
While state lawmakers seem quite willing, unfortunately, to approve massive incentive packages for individual businesses such as Merck and Dell, there is a fair amount of skepticism at the General Assembly and elsewhere in state government about the Lee Act credits. I doubt that Commerce can simply refuse to produce meaningful research on the program going forward, given the continuing interest of various parties. A more realistic worry would be that its work might never see the light of day if it is unflattering. About the 2003 Commerce report, for example, an official told us that “the survey was intended for internal use.” Hmmm.
Let’s chose to believe that the decision not to retain Luger or some other independent analyst for a 2005 report on the Bill Lee Act was motivated by something other than a government’s attempt to manage its PR. Maybe it was a cost-saving move. Or the request-for-proposal got lost in the mail. Or the powers-that-be are tired of people from Chapel Hill acting like know-it-alls.
Uh, a little help here – I’m running out of hypothetical excuses.
Hood is president of the John Locke Foundation.