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Ernst & Young Plays Both Sides

Accounting firm advised state on incentives program, companies on how to tap it

Ernst & Young, the international firm known best for its accounting services, has become a player on both sides of incentives policy in North Carolina.

The company established a cozy relationship with state officials through an incentives bill it helped create in 2001, the N.C. Economic Stimulus and Job Creation Act. The Department of Commerce hired Ernst & Young to study incentives in Southeastern states, and its findings were a significant contribution to the new bill. It was enacted into law in 2002.

As the law was developed, Ernst & Young also advised Time Warner Inc. on how to extract incentives from the department, essentially working both ends of the issue.

At the time, the media giant planned to create a campus of 1,100 employees in Charlotte for its cable operations. The Charlotte Observer reported that Time Warner’s project depended on legislative approval of the program and that the company could reap as much as $55 million in incentives.

Media scrutiny, and an admission by a Time Warner official that the company had already decided to come to Charlotte, apparently thwarted the deal to get incentives. However, the company announced in March 2004 that it would expand in Charlotte, adding 350 new jobs. Time Warner could receive up to $4.2 million in incentives related to the expansion.

Ernst & Young also negotiated with states in 2001 on behalf of The Boeing Company, when the airplane manufacturer moved its headquarters from Seattle to Chicago. Boeing received a reported $63 million in incentives from Illinois, far surpassing offers from Texas and Colorado.

Washington gave Boeing $3.2 billion in tax incentives in June 2003 to assemble its new 7E7 Dreamliner, even though the company has reduced its workforce in the state since 1998, from 104,000 to about 53,000. That bid won out out over North Carolina’s $534 million package.

Carrington is associate publisher of Carolina Journal.