Christopher Swope was GOVERNING's executive editor.E-mail: firstname.lastname@example.org
North Carolina is giving Dell Inc. $242 million worth of tax credits to open a computer plant. The city of Winston-Salem, along with Forsyth County, has thrown in an additional $37 million in incentives. In return, the computer maker is expected to invest at least $100 million in its new facility and create 2,000 jobs.
The area where the plant will go has been hard-hit by the recent closures of several textile plants. "We need to give people who are 40 or 50 years old, many of whom do not have a high school diploma, a chance to replace that income," says Dan Gerlach, a senior policy adviser to Governor Michael Easley. "To pass it up would be immoral."
Critics, however, say that the price per job--$140,000--is too high. Moreover, jobs at Dell's plant will pay an average of $28,000-- thousands of dollars below the amount state law typically requires for these kinds of deals. State Representative Paul Luebke, co-chair of the House Finance Committee, was one of the few lawmakers to vote against the package. "Years of work in terms of reforming these incentive packages so that they are giving the state the biggest bang for the buck was undermined because Dell drove an incredibly hard bargain," Luebke says.
Several lawsuits challenging North Carolina's Dell deal are expected- -using the same logic that inspired a federal court to throw out an Ohio tax incentive deal last year. Ohio is appealing that case to the U.S. Supreme Court. Meanwhile, business groups in Washington, D.C., are pressing Congress to explicitly validate the states' power to offer incentives.