Easley unveils incentives plan that hints veto of Goodyear bill

Gov. Mike Easley unveiled plans Wednesday to propose legislation next year that would create new incentives for large manufacturing companies looking to upgrade existing plants in North Carolina.

The announcement comes three days before Easley must decide whether to veto a bill approved by the General Assembly that targets only one company: Goodyear Tire & Rubber Co. Under the bill, the company could receive up to $40 million to renovate its Fayetteville plant.

The governor didn't mention the bill in announcing his so-called "American Productivity and Competitiveness Act of North Carolina," which would offer cash grants to existing industries that commit to modernizing their plants to make them more competitive. Local governments also would have to provide some of the incentives as well, Easley said.

The governor's budget adviser, Dan Gerlach, wouldn't say whether Easley planned to veto the Goodyear bill.

Easley had problems with the bill, which lawmakers approved shortly before the Legislature adjourned earlier this month. Critics questioned whether the state should give tax breaks or grants to Goodyear without it promising new jobs.

Some lawmakers, along with companies in other parts of the state, said other businesses should be able to seek similar incentives. The governor's proposal would address those concerns by offering grants to companies with large plants in economically distressed areas, Gerlach said.

There was no price tag to the cost of the program, in which companies with at least 1,500 workers in largely rural areas or small towns outside the thriving Piedmont. Easley wants legislators to consider the proposal in May when the General Assembly reconvenes.

"As our economy has globalized, our largest industries can now direct investments to areas of the country and the world where they can achieve the lowest production costs," Easley said Wednesday in a prepared statement.

"My plan will create a state program to partner with local governments and secure commitments from major anchor industries to modernize operations and enhance their presence in North Carolina," he added.

The bill targeting Goodyear would permit the state to give up to $4 million annually for 10 years to a company with at least 2,000 workers to invest at least $200 million in new equipment over five years.

The bill doesn't mention the company by name, but Cumberland County lawmakers who pushed the bill said it was designed for Ohio-based Goodyear, which has 2,750 employees at the Fayetteville plant and wants to increase production capacity to sell more profitable premium tires.

Sen. Tony Rand, D-Cumberland, said he doesn't know enough about Easley's plan to say whether it would satisfy the company.

Goodyear rival Bridgestone/Firestone, which operates a tire plant in Wilson and wants to expand, is interested in the grant program, Easley said.

Easley has until late Saturday to sign about 90 bills into law, veto them or let the proposals become law without his signature.

Easley's proposal would expand corporate incentives designed to lure new firms to the state and get existing ones to expand. Critics have sued over incentives given to computer maker Dell Inc. and Google to build in North Carolina, arguing the tax breaks aren't a lawful use of taxpayer dollars.

Elaine Mejia with the N.C. Budget & Tax Center, an advocacy group for the poor, said Easley's plan is an improvement over previous plans but still "doesn't address the fundamental question of if it's a good economic development strategy to be giving essentially cash grants to companies period."