Generous economic incentives have helped North Carolina win more than $2 billion in data center projects, including major new facilities for Apple, Facebook and Google. But with the state facing a $3.7 billion budget gap, legislators are targeting incentive programs for cuts that could impact the state's competitiveness.
The Republican-led state Senate voted last week to direct Democratic Gov. Bev Perdue to locate at least $400 million in budget cuts, along with up to $80 million in cuts from incentive programs used to bring new companies to North Carolina. The programs targeted for cuts include the Golden LEAF Fund and the One North Carolina Fund, which are among an array of funds used to structure incentives to data center operators.
"The proposed cuts to North Carolina’s jobs and economic development funds will damage our ability to recruit new jobs and to expand existing businesses in the state," Perdue said in a statement. "I am truly surprised that Senate leadership is considering taking North Carolina’s jobs money as a way to balance the budget. It won’t work – and what’s more, our people won’t work if we can’t bring new companies and new industries to our state. We have many hundreds of new jobs in the pipeline right now, and they depend on that money. If we don’t win those projects, those jobs go somewhere else. It’s that simple.”
Any reduction in North Carolina's ability to offer economic incentives could be good news for Virginia. The two states have competed for a number of large data center projects in recent years, including the Apple project and a Microsoft facility that was won by Virginia. Perdue noted the competitive threat posed by Virginia.
"Other Southern states, notably Virginia, have called for an increase in similar funds so they can take our jobs away," she said.
The cuts would affect future projects, and are not currently expected to impact incentives for companies that have already agreed to locate projects in North Carolina. There's more legislative action ahead before any cuts are finalized, but we'll continue to track this issue.