NC using flawed formulas to calculate benefits from give-aways?

According to a study by the N.C. Budget & Tax Center in a March 21, 2007, article by Jonathan Cox at the N&O, the method NC uses to estimate benefits to be gained from large give-aways to lure business to NC is flawed. This means lawmakers making key decisions to give away future income and tax benefits to companies in exchange for building in NC are based on misleading information that does not accurately predict the benefits of the deals.

"Instead of pumping millions of dollars into state coffers, some economic development deals might actually be costing revenue and hurting taxpayers, according to the study by the N.C. Budget & Tax Center, a non-profit group that advocates for the poor."

Read the complete article...

News and Observer
March 2q1, 2007
Jonathan B. Cox, Staff Writer

Report challenges N.C.'s incentives formula

State officials overestimate the benefits gained from companies that get rich incentives to expand in North Carolina, a report says.

Instead of pumping millions of dollars into state coffers, some economic development deals might actually be costing revenue and hurting taxpayers, according to the study by the N.C. Budget & Tax Center, a non-profit group that advocates for the poor.

At issue is a computer spreadsheet that Department of Commerce officials use to assess economic development deals. They plug in variables -- from the number of jobs expected to the amount of sales an operation will generate -- to determine whether future benefits will outweigh the costs.

The report says that the model is flawed and that officials too often use inflated assumptions that make projects look better than they are... Read more...