Staff writer Richard M Barron is riding heard on our Dell coverage for Thursday’s paper. In case you haven'r heard, Dell is shutting down its Winston-Salem plant and letting go of more than 900 workers. A cast of thousands are feeding him information. Update: Click here for our story from today's paper.
From my particular notebook, here are a few things I found interesting:
State incentives flowed through a bunch of different places, but there are two main agencies: the Commerce Department and the Department of Revenue. The logical question to ask each of these folks today: So, how much did the company get of that $242 million we ponied up?
Commerce oversees JDIG grants and the like. Their answer: "We're still trying to make sure we have that information...we're still pulling it together," said Kathy Neal, an assistant secretary and spokeswoman for the agency. She also noted that all the performance-based incentives granted by the state have “clawback” provisions that would allow North Carolina to recoup its investment.
The Department of Revenue would be in charge of granting millions of dollars in tax breaks. Initially, a spokesman said they were working on researching on how much money went to Dell or any company got under the tax break. When I gently suggested it might be worthwhile to have that information ASAP, they pointed to two online documents: This one for 2007, and this other one for 2008.
For 2007, there were $492,175 claims processed, but of those, $385,696 were ineligible. That means only $106,479 were legitimately claimed under the credit? The only claim made in 2008 was also ruled ineligible. That suggests not a whole lot of money has gone out under that credit. It also suggests that if anyone was watching the data, state leaders might have had an idea the Dell plant wasn’t necessarily thriving.
Either way, those numbers reflect something far less than the $10 million to $20 million the company could have theoretically reaped under the deal.
So what's the answer to how much the state has put into Dell? Well, we don't know on the Commerce side. And if we assume that the one legitimate grant went to Dell, and that there weren't any payments in 2005 or 2006, then $106,479 might be the answer...but I don't have a great deal of faith in it yet.
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The General Assembly called a special session to vote up the bill (click here) that created the lion’s share of incentives for the company.
The vote in the House was 92-18 on third reading in the House. The vote was 33-15 in the Senate. Locally, Guilford County lawmakers backed the measure virtually unanimously:
In the Senate: All four members who represented parts of Guilford County voted for the measure. They were Republicans Stan Bingham and Phil Berger and Democrats Katie Dorsett and Kay Hagan.
In the House: Republican John Blust and Democrats Alma Adams, Maggie Jeffus and Earl Jones voted for the measure. Then-Rep. Steve Wood, a Republican, had an excused absence for the session. Then-Rep. Joannie Bowie was recorded as "not voting."
Hagan issued a statement today:
“I was very disappointed to learn today that Dell will close its facility in Winston-Salem.
“In 2004, state and local officials reached an agreement with Dell that included a generous incentive package to build the facility in Winston-Salem. In accordance with that agreement, the announcement today means that Dell is obligated to make substantial reimbursements to both the state and the city of Winston-Salem for its investments. I have been in touch with state and local officials, as well as Dell officials, and it is my understanding that the company will meet their obligations. Today’s announcement is a stark reminder of the economic and human impacts of this recession.”
Sen. Phil Berger also issued a statement today, although it was probably not as strong as it could have been since he voted for the Dell deal. Here’s part.
“It is also important that we take a serious look at and reconsider the various incentives programs which are now North Carolina’s dominant economic development philosophy and program. North Carolina will not be a national leader in job creation and retention through government officials thinking they can pick winners from losers in a dynamic free market economy. The sooner state government moves to reduce the overall tax and regulatory burden on our families and small businesses and concentrates state resources on core government functions like education, transportation and public safety, the sooner North Carolina will be in a position to see a real turnaround in the state’s economy.”
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Dan Gerlach, now president of the Golden Leaf Foundation, was a senior advisor to then-Gov. Mike Easley and one of the state’s leading negotiators on the deal.
At the time, luring Dell was seen as a way to bring in a high-tech manufacturer who could replace job losses in industries like textiles and furniture.
“This is not a buggy whip manufacturer,” Gerlach said at the time. “Computers will still be needed for a long time.”
Wednesday, Gerlach said he was most worried about the workers who lost their jobs.
“I am surprised because I thought it had a lot of potential,” Gerlach said. “But five years ago, I didn’t imagine the depths of the current economic recession…At the time, it had the potential to help a lot of people.”
Gerlach said that Dell’s announcement showed how important it was that all incentives deals be based on the company performing as promised.