N.C. weighs pros, cons of incentives again

0 Comments | Leave a Comment

Incentives are back in the news. Do they work? Are they worth it? How much is too much?

There are few easy answers, as illustrated by two debates concerning separate incentives packages on opposite sides of the state.

Charlotte learned this week that Chiquita plans to merge with a company in Ireland and move Chiquita’s world headquarters from Charlotte to Dublin. This, less than two years after the state, Charlotte and Mecklenburg County came up with a $22 million incentives package to bring Chiquita to North Carolina in the first place.

Officials in Wilmington, meanwhile, are anxiously awaiting the results of a study that examines the role incentives play in keeping the film industry in North Carolina.

A preliminary report suggests that local and state governments recoup $1.50 for every dollar they offer in incentives to the movie-making industry. But Republican lawmakers in the N.C. General Assembly have made no secret of their skepticism. And several other states already have curtailed incentives for Hollywood.

All of which brings the subject of incentives back into the conversation about economic development in North Carolina.

In the Chiquita case, at least, the government entities involved sensibly put together a “clawback” provision that would recoup incentives money from Chiquita if the company fails to meet the conditions it agreed to when it made its decision to come to North Carolina. Determining whether that’s the case is the kind of issue that often lands in a courtroom. But at least Charlotte, Mecklenburg County and the state have something to fight for.

And that might be the best lesson to take from the incentives game. It takes big bucks to make a bid for a player the size of Chiquita. Better make sure there’s a built-in disincentive just in case the player decides to leave the game later.