RESEARCH TRIANGLE PARK – North Carolina’s incentive-laden package to lure a new Apple corporate campus was the “Worst Economic Development Deal of the Year” for 2021 as selected by the Michigan-based the Center for Economic Accountability.
Citing the commitment of some $846 million in incentives over 39 years, the Center declared the deal “goes further than any other that year to exemplify the massive wastefulness and ineffectiveness of state government subsidy programs.”
Known as CEA, the group launched in 2018 and calls itself a “nonpartisan and independent” that “works to advance economic opportunity for all by promoting transparency, accountability and free-market-based reform of state and local economic development initiatives across America.”
“As with all truly bad subsidies, North Carolina’s elected officials gave a big company a giant pile of money to do what that company was already going to do anyway,” said John Mozena, the CEA’s president, in the report. “A billion dollars is a lot of money for North Carolina’s taxpayers and communities, because that’s a billion dollars’ worth of public services not being funded. But for a company like Apple, which reported more than a billion dollars a day in revenues this past year, it isn’t anywhere near enough money to move the needle on a major site selection decision.”
The group says the incentives were not necessary in order to land the Apple campus and some 3,000 jobs on land it owns in RTP.
“Apple’s deal in North Carolina stands out for the way in which a state’s elected officials claimed that this massive public subsidy was necessary to attract the project to the state, despite the Research Triangle’s clear competitive advantages in business-critical site selection factors,” the CEA said.
But as WRAL News and WRAL TechWire reported recently, Apple’s decision is already having a big impact on the Triangle.
NCSU economist disagrees
N.C. State economist Dr. Mike Walden disagreed with the center’s analysis.
Walden helped create the economic data points used by the North Carolina Department of Commerce as it calculates economic benefits and costs of projects considered for project incentives.
The “key factors”
Among the “key factors” cited in selecting the Apple deal as “worst” of the year:
North Carolina’s Apple subsidy has a headline cost of as much as $846 million over the next 39 years, based primarily on a grant program that allows the company to effectively keep 90% of eligible employees’ state income tax withholding. The average tax revenue loss to the state will be more than $21 million per year. (For context, $21 million a year is more than the state spends on workforce-building programs such as technology solutions and distance learning programs through its community college system.)
With other local subsidies attached, including a 30-year 50% property tax abatement from Wake County, the final price tag for Apple in North Carolina could easily end up at more than a billion dollars. It is the largest subsidy deal in the state’s history, overshadowing the $387 million awarded to Centene Corp. just the previous year.
- Unrealistic “competition” claims
- Disconnection from actual site selection factors
- Ridiculous economic impact predictions
- A giant corporate recipient