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GREENSBORO — A plan to give public grants to small businesses in Guilford County was delayed this week to make sure the process would be legal.

Before Thursday, county commissioners seemed ready to approve a policy to give tax money to nearly any company here that increases its property value. The budget for 2009-10 set aside $1.3 million for economic incentives.

Instead, the commissioners tabled the discussion and ordered county attorneys to review the plan with policy experts from the UNC School of Government.

“While there is no way to say for certain how a court would handle this particular incentive policy, I believe this cash grant policy is problematic,” Tyler Mulligan, a UNC professor of public law and government said in an e-mail Wednesday.

In short, there were parts of the proposal that could run afoul of state law if contested in court.

After a draft policy appeared this month, board Vice Chairman Steve Arnold met individually with nearly every commissioner while the public examined the measure.

Some legal experts, such as former state Supreme Court Justice Robert Orr, questioned whether the plan would hold up in court.

Who receives the money and how it is distributed appeared too much like a tax abatement, he said.

Tax abatements — giving a break to select groups — are illegal in North Carolina.

Others praised the plan, calling it a boost for small business, including board Chairman Melvin “Skip” Alston.

There is some work left to be done on the policy, said Mulligan, the public law professor.

A major point made in his e-mail speaks to using public funds for public good.

The current proposal, he contends, makes it unclear whether all grants would benefit the public.

“The proposed policy could provide incentives for what some would consider odd priorities, such as a workplace fitness facility for existing employees,” Mulligan said.

Current incentive policies, which target larger employers such as factories and corporations, mandate job creation and large investments before a company receives public money.

The Guilford proposal for smaller businesses has no job requirement, and otherwise has minimal standards. Arnold and other commissioners argue the standard is low so small business could participate.

Arnold said the policy was sent to Mulligan at the request of Commissioner Paul Gibson.

Alston said recently a majority of commissioners supported the policy, but Thursday the discussion was tabled until UNC professors and county attorneys could look at the draft and refine the plan.

Commissioners will hold a work session on the policy at 1 p.m. Sept. 3.

Commissioner Carolyn Coleman voted against tabling the policy, citing private conversations Arnold held with individual commissioners.

“I’m wondering why we need a work session to discuss the same thing again,” she said.

If the plan is approved, it could be pioneering policy. No other county has a similar plan, according to the School of Government.

Contact Gerald Witt at 373-7008 or gerald.witt@news-record.com