For Members Only is published monthly by NCCBI when the General Assembly is not in session  



Executive Committee holds retreat
to develop economic growth strategy

Clearly determined to help improve the state’s economic climate, the NCCBI Executive Committee has directed the association to focus on three public policy issues that will grow jobs and incomes. During a day-long planning session held at Womble Carlyle in Winston-Salem, the Executive Committee concluded that the surest way to grow the state’s economy is to improve government efficiency, reduce corporate and personal income tax rates and to inject new thinking into economic development.

“While we clearly do not yet have the answers to the difficult questions facing our state, we have begun to focus on some of the issues that we believe can curtail some of the erosion to our state's economy,” said Chair Sue W. Cole of Greensboro, who convened the first-ever planning retreat by the Executive Committee.

“We plan to continue to work in a nonpartisan way to effect positive change in the legislature. We plan to keep you, our members, informed of critical issues and we hope to help get you more involved with your legislators from a grassroots perspective.”

Using noted management consultant Dave DeVries as a facilitator, the Executive Committee focused on ways NCCBI can play a strategic role in improving economic conditions in the state. After several hours of discussion as a group and in breakout sessions, the committee members decided NCCBI should concentrate on the three critical issues over the coming three years.

Below are the specific recommendations the committee made on each of the three issues:

Government Efficiency: The governor has taken several positive steps to improve government efficiency, including creating the Business Council on Fiscal Reform. Jim Hyler, past chair of NCCBI, and Bill Coley are co-chairs. They and other NCCBI members make up the majority of the council. The Fiscal Reform Council should focus initially on identifying ways to reduce the actual cost of delivering services. The initial focus should not be which services are delivered but rather the cost and efficiency of delivering existing services. Resulting cost reductions can then mean decreases in taxes or more services, or a combination of the two.

The Fiscal Reform Council should place the highest priority on resolving problems associated with the state's Information Technology programs. State government spends nearly $1 billion a year on IT related programs. There have been tens of millions of dollars of cost overruns. Most changes can be made by the administration and will not require the approval of the legislature.

The governor needs to give the Fiscal Reform Council permanency and staffing support, perhaps an executive director, in order to make it effective. The council does not currently have the staff to support its important work.

Tax Policy: North Carolina's corporate income tax of 6.9 percent is third highest in the South and much higher than most of our neighboring states. The marginal personal income tax rate is 8.25 percent, the 8th highest in the country and highest in the Southeast. According to Fluor, North Carolina's business tax burden is 3rd highest among 14 Southern states. To make the tax system fairer, the Executive Committee recommended:

· The 2005 General Assembly should reduce the corporate income tax from 6.9 percent to 5.9 percent. That would take North Carolina from highest among neighboring states to second lowest and fourth lowest in the South.

· Reduce the highest personal income tax rate from 8.25 percent to at least 7.75 percent. The reduction in tax revenues would be compensated by greater government efficiency, further study of tax fairness, and successful economic development.

Economic Development: The Executive Committee felt NCCBI needs to be more of a catalyst for change in the operation of the state's economic development program, including the advocacy of:

· More personal involvement of the governor in the business recruitment process.

· More targeted recruitment of "new economy" companies, such as biotech.

· Performance incentives for business recruiters, including possible use of private funding.

· Continued refinement of the incentive program to maximize dollars while ensuring fairness to companies and counties.

· Bringing together the House and Senate leadership and Governor toward developing a strategic jobs plan for North Carolina.

“We clearly do not yet have the answers to the difficult questions facing our state,” Cole said. “But we have begun to focus on some of the issues that we believe can curtail some of the erosion to our state's economy. We plan to continue to work in a nonpartisan way to effect positive change in the legislature. We plan to keep you, our members, informed of critical issues and we hope to help get you more involved with your legislators from a grassroots perspective.”


Last two area meetings coming up soon
Only two more stops remain on this year’s Area Meeting tour, and the NCCBI staff is looking forward to those events in Burlington and Pinehurst on Oct. 14. The previous 17 meetings have been well attended and members particularly seemed to enjoy chatting with each other during the networking portion of the meeting. Their questions and comments sparked some interesting discussion during the question-and-answer periods. Pictures from the meetings are being published in the North Carolina Magazine.
 
The Area Meetings are a great opportunity for members to tell the NCCBI staff what’s on your mind, to make suggestions for association activities and to hear brief reports on what we’ve done for you in the past year in Raleigh and Washington. They also offer a chance for you to chat with Sue W. Cole of Greensboro, the U.S. Trust Company of North Carolina executive who is the first woman chair of NCCBI.

Brochures with complete information on the events and registration cards have been mailed to all members on two occasions. Please fill out the registration card so we’ll have an accurate count for the meal and a name badge waiting for you. Members also can register online through the NCCBI web site at http://nccbi.org/2003.Area.Meeting.Form.htm.  

There is no charge to attend an Area Meeting. All the costs are paid through the generous support of local hosts, who will be acknowledged and thanked at each event.

NCCBI News

Three credentialing organizations certify
continuing education credits for NCCBI seminars
Dozens of NCCBI members already have pre-registered to attend one of the legal seminars that the association will stage in a few weeks. We urge you to consider sending someone from your staff to one of the seminars and to act soon because the classrooms are filling up.

Meanwhile, three credentialing organizations have approved the seminars for continuing education credit: The North Carolina State Bar has determined that attorneys who attend the seminars will receive 4.5 hours of continuing legal education credit hours. The North Carolina State Board of Certified Public Accountant Examiners has determined that CPAs who attend the seminars will receive six hours of CPE credit hours. The national Human Resources Certification Institute has determined that human resources professionals who attend the seminars will receive seven hours of credit toward their PHR and SPHR recertification.

The seminars, which are tailored for business owners and the attorneys and CPAs who advise business clients, will train you on the latest developments and complexities in labor and employment law. NCCBI is staging these seminars in partnership with the respected law firm of Haynsworth Baldwin Johnson & Greaves. The day-long seminars will be offered Oct. 28 in Greenville, Oct. 30 in Raleigh, Nov. 4 in Charlotte and Nov. 6 in Greensboro. Registration is $225 for NCCBI members, $250 for non-members. Seminar attendees will receive expert instruction on complying with such complex topics as:

  Wage and hour issues;
  Discrimination;
  Family and Medical Leave Act;
  Overtime and recordkeeping;
  Americans with Disabilities Act;
  Negligent hiring, and
  Employment relationships.

North Carolina Chief Justice I. Beverly Lake Jr. will deliver the keynote address at the Raleigh seminar. U.S. District Court Judge Malcolm J. Howard of the Eastern District of North Carolina will speak at the Greenville seminar. U.S. District Court Judge Graham C. Mullen of the Western District of North Carolina will speak at the Charlotte seminar. U.S. District Court Judge Frank W. Bullock Jr. of the Middle District of North Carolina will speak at the Greensboro seminar.

The main presenters at the seminars will be Haynsworth Baldwin attorneys Thomas A. Farr and Gretchen W. Ewalt, co-authors of NCCBI’s new book, “The Employment and Labor Law Resource Guide.”  Seminar attendees will receive a free copy of the book, a $112 value, plus a notebook complete with copies of all the texts and graphics from the seminar.

”NCCBI is pleased to offer this high-quality educational seminar,” said President Phil Kirk. “The subjects are very timely and important and the presenters are experts in their field. Add the quality of the luncheon speakers and we hope you will agree this is a bargain you cannot afford to miss.”

Please watch your mail for the registration brochure pictured above. For more information on the seminars, and to register online if you choose, go to http://www.nccbi.org/ecommerce/.

NCCBI members receive a $25 discount for the seminars. To claim your discount when registering online, type the word “member” at the line that asks for your discount code.



NCCBI to lead campaign for project development financing

Because of its interest in economic development and jobs, NCCBI has agreed to play a leading role in securing passage next year of the constitutional amendment on project development financing. We’re beginning an informational campaign to educate voters on the issue. The story below answers many of the questions you and others may have about the issue.

Across America, in states big and small, communities are using a self-financing tool to build public facilities that help attract jobs and boost development and increase property values. But not in North Carolina. It’s one of only two states that have failed to implement local option project development financing.

“Local option financing is a winner for everyone involved,” said Richard Wiley, president of the North Carolina Economic Developers Association (NCEDA). “The financing turns marginal property into a moneymaker for communities and produces jobs without risk to the public. What’s not to like.”

With solid bipartisan support, North Carolina’s General Assembly agreed. They passed legislation to establish local option financing in the state. The next step is to earn the support of voters in a referendum in November 2004. That’s a big step. In 1993 and 1982 voters turned down similar proposals.

Supporters are optimistic this time. “The last two times North Carolina hadn’t lost 150,000 jobs in a little over two years. The last two times the foundation of our traditional manufacturing and farming base in the majority of our communities wasn’t declining,” said Ellis Hankins of the North Carolina League of Municipalities. “We think people will realize we need every good tool that we can get to produce jobs.”  The League, NCEDA, N.C. Association of County Commissioners, NCCBI, and chambers of commerce are among those supporting the measure.

“We scheduled the vote for 2004 because we wanted time to educate citizens about the important economic development benefits of this proposal and its focus on job creation,” Hankins said. “We want people to clearly understand that this vote is about jobs.”

In the past, the primary objection has been that local governments could issue the bonds without voter approval, which is required for general obligation bonds.

Hankins believes the public is much more used to communities successfully using existing financing tools that do not require a public vote, than they were more than a decade ago. Also the proposed measure includes significant opportunity for the public to register its opinion, including a mandatory public hearing. In addition the Local Government Commission in the State Treasurer’s Office must give its approval to the financing after a feasibility analysis.

How Does Local Option Project Development Financing Work?
The municipality or county decides to use project development bonds to pay for infrastructure, such as water and sewer, street improvements or storm drainage to help attract economic development. When development locates on property served by that infrastructure the value of the property goes up, which increases the taxes collected on that property. The difference between the taxes on that property before and after development is used to pay off the bonds.

What’s an example?
Taxes collected on a parcel of land in one city are $50,000 annually. After the city improves an access road to the property a new retailer employing 100 people locates there. That increases the value of the property. As a result total property taxes on that land increase to $120,000. The $70,000 additional property tax from the new development is used to pay off the bonds used to build the access road. Once the bonds are paid off that extra $70,000 goes into the city coffers to pay for other services and hold down taxes. The bonus is that the new development will not only create jobs and higher property taxes. It also will generate an increase in sales tax revenues for the local government.

Will property taxes be raised to finance a new development?
No. Property taxes for everyone else will remain at the rate prior to the purchase of the bonds. The additional property tax revenue from the new private development is pledged to pay back the bonds. This is called self-financing. It allows local governments to grow their tax base without using their current revenues to pay for improvements.

What happens if the project fails? Do taxpayers bear the financial burden?
No. There are safeguards written into the legislation to protect taxpayers. Private investors who purchase the bonds assume all financial risks associated with the project.  

What types of property will be eligible to benefit from this economic development tool?
The law is written to give local governments maximum flexibility, subject to approval by the Local Government Commission in the State Treasurer’s Office. In other states the financing has been used for new industrial site development, redevelopment of existing industrial and brownfield sites and to restore blighted areas.

What type of jobs will be created through this financing?
Projects offering quality, well-paying jobs will be targeted. The legislation requires manufacturing jobs associated with this financing to be above average and meet specific wage and benefit requirements that the North Carolina Secretary of Commerce must certify.

Another Local Tool for Economic Development
For years adjoining counties have backed off doing joint economic development projects, such as developing an industrial park. Existing laws made it difficult for them to share the additional property or sales taxes that development would bring.

The 2003 General Assembly has removed those barriers with passage of the Multi-jurisdictional Revenue Sharing Bill. The act authorizes local governments to enter into inter-local agreements that spell out the respective shares of additional tax revenues from a new development.

The new law will be particularly beneficial to smaller counties that have been stymied in building the infrastructure to attract economic development because they couldn’t afford it alone. The bill also authorizes the joint efforts to include local option project financing.

For the five counties involved in the Kerr-Tar Hub the multi-jurisdictional legislation will make it easier to deal with the challenges of sharing ownership, costs and benefits, according to Rick Seekins, economic development planner with the Kerr-Tar Regional Councils of Governments.

“We needed something like that,” he said. “This gives us the flexible authority to create a joint governance group.”

Vance, Person, Granville, Warren and Franklin counties and economic development agencies are in the planning stages to jointly develop a technology park that will include linkages to the Research Triangle Park, RDU airport and other amenities. Several other multi-county development collaborations across the state are expected to benefit from the new legislation.


Economic Development News Briefs

The Joint Select Committee on Economic Growth and Development, a 20-member panel of House and Senate members, held its first meeting Oct. 3 to hear recommendations on ways the state can improve its programs to attract new jobs to the state. The committee will make recommendations to the full General Assembly next year. Legislators began by reviewing current economic news, almost all of it bad: the state’s jobless rate, at 6.5 percent in August, has been at or above the national average for the past two years. Textile giant Pillowtex and cigarette-maker R.J. Reynolds recently have laid off more than 8,000 workers combined. In all, the state had 32,000 fewer manufacturing jobs in July 2003 than a year earlier, according to the state Employment Security Commission. Panel members discussed tax breaks and other incentives to bring industry to the state, as well as the role of road and other infrastructure investments. But several speakers said national trade policy and cheap overseas labor are the root cause of the state’s decline in manufacturing. Gov. Mike Easley sent a letter to the committee urging the legislature to increase funding for his industrial recruitment fund.
 
GOJO Industries has chosen a site in Laurinburg to manufacture hand sanitizer, creating 250 jobs and a $10 million investment. GOJO Industries markets hand hygiene and skin care products, including PURELL Instant Hand Sanitizer, its signature product. The North Carolina facility, which is expected to be fully functional by January 2005, will over time hire 250 employees. The company will occupy an existing facility donated by Abbott Laboratories. GOJO Industries received $250,000 in One North Carolina money to be used for new equipment and building renovation.

Names in the News
Pickett Council named chair of Small Business Advisory Board
A new chair and vice-chair have been named to lead NCCBI's Small Business Advisory Board for the next two years. Rosemary Wyche, vice president of development and staff contact for the board, has announced that Pickett Council, vice president of Council Tool Co. in Lake Waccamaw, will serve as chair and Linda Staunch, president and CEO of Linda Staunch and Associates in New Bern, will serve as vice-chair.

"We are excited that these two small business leaders have agreed to serve in these important positions," Wyche said.

The Small Business Advisory Board was organized several years ago and is composed of 50 small business owners from across the state. It meets twice a year and advises NCCBI on various small business issues and interacts with business and governmental officials who present programs at their meetings.

Council previously served as vice-chair of the board and moved up when Steve Zaytoun, founding chair, became the treasurer of NCCBI. A native of Lake Waccamaw, she graduated with a B.A. in business management from North Carolina State University.  She served as director of marketing for ABC Corporate Services, a travel service and travel publishing consortium in New York City.  In 1995 she returned home to join the family business founded by her great-grandfather in 1886. Council Tool is believed to be the only remaining domestic manufacturer of striking tools. She is the president of the Carolina-Virginia Ramblers, a trade association; director of the N.C. Museum of Forestry, and a member of the NCCBI Board of Directors.

Staunch was a member of the senior executive team at Craven Regional Medical Center before establishing her own business in 1995. Her agency provides innovative public relations and marketing for a wide range of businesses, professions and organizations including health care, economic development, education and small business initiatives. She serves as a board member of the New Bern Area Chamber of Commerce, the Craven Community Foundation, American Heart Association for Craven County, Centura Bank, and the New Bern Military Alliance. She is president of the Craven County Affiliate of the North Carolina Community Foundation. She is a graduate of Peace College and the University of North Carolina at Chapel Hill and has a master's degree from East Carolina University. She is also a member of the NCCBI Board of Directors.


Kirk urges Burke County leaders to think big
NCCBI President Phil Kirk urged Burke County leaders "to think big, to think smart, and to work together" in his keynote remarks to the Burke Education Summit on Sept. 15 in Morganton. Sponsored by the Burke County Chamber of Commerce, Burke County Public Schools, Burke Alliance for Youth, Families and Education, and Western Piedmont Community College, the summit brought together 250 educators, public officials, and business leaders for seven hours of speeches, breakout sessions, and networking.

Other speakers included Bill Friday, president emeritus of the University of North Carolina; John Dornan, president and executive director of the Public School Forum of North Carolina; Howard Haworth, chairman emeritus of the State Board of Education and former secretary of the North Carolina Department of Commerce; Karen Ponder, executive director of the N.C. Partnership for Children; and Allison Ormond, North Carolina's teacher of the year.

Kirk called for a greater emphasis on more education for all in Burke County, citing the growing use of technology and critical thinking skills in jobs that formerly did not require even a high school education.  "Of course, not everyone needs a four-year degree, but there are few jobs which do not require at least two additional years of education in the community college system."

"Having a successful education system does not happen by chance or luck. It requires hard work and educators alone cannot assure successful schools. It takes everyone in the community."

He encouraged businesses to offer internships and apprenticeships and urged the schools to provide more career counseling, especially in middle grades.

"Continue to emphasize the need for education and make sure young people know the choices they have in terms of jobs and how to prepare themselves for these jobs," Kirk said.  Cynthia Callaway, vice president of institutional advancement at Western Piedmont Community College, introduced him.


Kirk speaks to local chambers of commerce
In speeches to the Brevard/Transylvania and Hendersonville chambers of commerce, NCCBI President Phil Kirk told the audiences that “North Carolina has enjoyed many economic development successes in the past, but must develop new strategies to succeed in the future."

Speaking to the Industry Appreciation luncheon, which also marked the 80^th anniversary of the Brevard/Transylvania Chamber, Kirk said, "The economic news has not been very good for North Carolina for several years." He cited the loss of more than 150,000 manufacturing jobs, the higher than national average unemployment rate, and severe state budget deficits.

He said NCCBI's top three priorities for the next several years would be the reduction of the corporate income tax and the personal income tax, more effective economic development, and efficiency in government.

"We are no longer competitive with our neighbors when it comes to taxes. We have the third-highest corporate income tax in the Southeast and the highest personal income taxes. We can reduce these two taxes without harming services by implementing more recommendations from the Governor's Efficiency Commission and through more effective economic development programs."

Kirk called for the federal government to enforce trade laws and regulations already on the books and to crack on down on illegal dumping and counterfeiting by China. "Government needs to set the example," Kirk said while criticizing state government in North Carolina for contracting with a telephone call center in India to handle food stamp inquiries.

He told both chamber groups that there are bright spots in North Carolina's economy.  "Agribusiness brought in $56 billion into our economy last year while tourism revenues jumped to more than $12 billion, making us the sixth most visited state in the nation with 43 million visitors during a weak economy. We must not take our military bases for granted and they brought in more than $7 billion. Because of the Golden LEAF Foundation, Governor Easley, the legislature, and the biotech industry, we have the potential to be the national leader in biotech. However, we have to work hard, we have to work smart, and we have to work together."

In Hendersonville, Bob Williford, president of the Chamber, and in Brevard by the chamber president, Beth Cardin, introduced Kirk.


Kirk substitutes for Tommy Lasorda at Cary chamber
The Cary Chamber of Commerce scored a coup when it landed Tommy Lasorda, former Los Angeles Dodgers' manager, as the speaker for its annual meeting on Sept. 17.  That is, until he cancelled the day before because of his wife's illness.

Chamber President Howard Johnson and former board chair, Steve Zaytoun, were in a near-panic so they reached NCCBI President Phil Kirk on the afternoon of Sept. 16 and prevailed upon him to serve as the substitute speaker.

"I was not too thrilled with showing up to speak to 400 people who were expecting to hear Tommy Lasorda," Kirk said.  "However, Steve Zaytoun is the treasurer of NCCBI and Howard Johnson is a member of our board, so what choice did I have?  Seriously, I was glad to be able to substitute for such a famous person." Kirk drove from Brevard where he had a luncheon speech.

In addition to speaking on several issues before the General Assembly and telling humorous things which had happened to him as he toured schools as chairman of the State Board of Education, Kirk also stressed the value and importance of leadership.

"We need leadership at all levels which knows success does not come by accident or luck, but leadership which knows the value of collaboration, communication, and partnerships," Kirk said.  "No one knows or practices this better than the Cary Chamber."

Continuing, he said, "We need leaders who have vision, leaders who believe in building rather than tearing down.  We need leaders who see opportunity rather than despair and doom and gloom.  We need leaders who do the right thing, not what their polling data or focus groups tell them to do.  It is time to move forward with vim and vigor."

Kirk was introduced by Zaytoun, and presented several gifts by Gary Ashworth, outgoing chairman of the Cary Chamber Board of Directors.

Please welcome these new members

New members of NCCBI include: ALCOA Inc., Gary Biviano, Knoxville; American Roller Bearing Co. of N. C., Ben Succop, Morganton; Benefit Service Co., Thomas Deloet, Winston-Salem; Brevard/Transylvania Chamber of Commerce, Elizabeth B. Carden, Brevard; BSCI Inc., Hon. Karen Ray, Mooresville; Carolina Biological Supply Co., Larry Gross, Burlington; Carolina First Bank, Larry Robertson, Wilmington; Danmark Group, Inc., Daniel M. Rakovan, Raleigh; Educational Foundation Inc., Blue Ridge Community College, Ann F. Green, Flat Rock; First Trust Bank, Bonny Templeton, Charlotte; Garner Chamber Of Commerce, Kevin Nelson, Garner; Global Warming Initiatives, Jim Haven, Raleigh; Key Risk Management Services, Joe W. Sykes, Greensboro; Lea, Rhine & Associates, PLLC, Jim Lea, Wilmington; Lumbee Nation Tribal Programs, Darlene Jacobs, Pembroke; Mitchell County Chamber of Commerce, Shirley Hise, Spruce Pine; N.C. Department of Transportation-Ferry Division, Charlie Utz, Morehead City; N.C. School of the Arts, Susan N. Booth, Winston-Salem; New Breed Corps., Louis DeJoy, Greensboro; Office of Frank Mitchell, Hon. Frank Mitchell, Olin; Olver Inc., Stephen Alexander, Charlotte; Patrick, Harper & Dixon LLP, Stephen M. Thomas, Hickory; Puryear Tank Lines, Inc., Donald Puryear, Wilmington; State Farm Insurance Co., David Stoller, Raleigh; The Old Clemmons School Bargain Mall & Liquidation Ctr., James Edgar Broyhill, Clemmons; Thomas R. Shepherd & Son Inc., Thomas R. Shepherd, Hendersonville; Williams Cos. Inc., Williams Medical Textiles Inc., Richard W. Williams Sr., Advance.

Text of Sue Cole’s area meeting speech

I want to begin my comments with a basic question. What is NCCBI? We are the largest business organization in North Carolina. We serve as the state chamber of commerce and the state manufacturers association. We are a nonprofit, nonpartisan, membership-driven association that listens to our members and then turns those ideas into proposals we advocate in the General Assembly and Congress.

We have been around since 1942 - that is 61 years that we have lobbied on behalf of business and industry. In the last decade we doubled our membership to over 2,000 members.

Our primary area of focus is lobbying to protect businesses' bottom line while investing in the future of North Carolina. We are deeply concerned about economic development, education, tax and fiscal policy, health care, tort reform, transportation, workplace safety, legal issues and environmental issues because each of these are interrelated and each serves North Carolina's future in a unique way.

So that is what we represent at NCCBI. Membership is the lifeblood of our organization. To those of you in the audience who are members, thank you. We appreciate your support. Steve Miller, our Vice Chair, also serves as membership chair. He and Rosemary Wyche have put together an excellent membership team for our current campaign. We have volunteer teams from Bank of America, NC Electric Cooperatives, PSNC Energy, Sprint, Piedmont Natural Gas, and SouthTrust Bank. To all of you, thank you for helping us to continue to grow our membership, providing NCCBI with the resources for continued success.

And speaking of resources reminds me of our award-winning NORTH CAROLINA magazine. Steve Tuttle and his staff do a great job and they are always open for suggestions for articles. We also thank our advertisers who continue to support the magazine and NCCBI each year. And while we are thanking people, let me add my words of appreciation to those of you who have volunteered to serve on our legislative policy committees, and to those of you who are members of our Young Executives Forum and our Small Business Advisory Board. You are what make NCCBI an effective voice for business and industry in this state. And last but not least, let me thank our Board of Directors, our Executive Committee, and especially Barry Eveland, our first Vice Chair, all of whom have dedicated their time and expertise to make NCCBI even stronger.

We all agree that we live in a wonderful state. North Carolina is a large state blessed with a varied geography, superb natural resources, a pleasant climate and a quality of life second to none. And the great people of our state are among the best assets we have. However, a lot is in jeopardy if we don't act now to stabilize our state's future. I believe we are "off our game" in terms of economic progress. There's not a day that goes by without the headline in some North Carolina paper reporting the closing of a plant or the layoff of dozens, or even hundreds, of workers. In past recessions, textiles and furniture would always rebound once the economy turned. I believe this time is different. Many of the jobs in textiles and furniture have been shipped overseas. The tobacco industry is diversifying and changing in an effort to survive. In addition, many basic manufacturing and service companies have built permanent efficiencies into their basic business processes with little chance of the eliminated jobs ever coming back. My friends, we have a serious problem in North Carolina.

I am fearful that if business leaders and government representatives continue to look at things as we have in the past, our state will continue its decline in terms of jobs lost. And that is not the future we want for ourselves or for our children. Our state cannot afford an unemployment rate which has been higher than the national average for the past two years. We cannot afford to lose tax revenues from companies which go bankrupt or which move to other states because our corporate income tax rate is no longer competitive with our neighbors. Neither can we continue to lose individuals to other states because our personal income tax rate is the third-highest in the Southeast. Not only do we lose actual tax dollars but we lose the community service and philanthropic giving of many of our brightest citizens. Existing companies are not growing and we are not attracting new industry that can sustain our economy.

We are clearly faced with a set of complex, interrelated issues that have no easy answers. For the first time ever, the Executive Committee of NCCBI met offsite in a full day planning session led by an outside facilitator to begin addressing the role NCCBI can play in strategically looking at some of these difficult issues. We grouped three equally important issues together: Government Efficiency, Taxes, and Economic Development.

Let's look at government efficiency first. The Governor has taken several positive steps to address the area of government efficiency including creation of the Fiscal Reform Council. Jim Hyler, past chair of NCCBI, and Bill Coley are co-chairs and I and other NCCBI members make up the majority of the Council.

The Executive Committee made the following efficiency recommendations:

The Fiscal Reform Council should focus initially on identifying ways to reduce the actual cost of delivering services, whether the delivery is done internally or by outside parties. The initial focus is not to debate which services are delivered but rather the cost and efficiency of delivering existing services. Resulting cost reductions can then mean decreases in taxes or more services, or a combination of the two. In order for this to be accomplished, there should be some motivation on the part of the administration and the General Assembly to "invest" to gain long-term efficiency.

The Fiscal Reform Council should place the highest priority on resolving problems associated with the state's Information Technology programs. State government spends nearly $1 billion a year on IT related programs. Computers that should be able to talk to each other can't. There have been tens of millions of dollars of cost overruns. Most changes can be made by the administration and will not require the approval of the legislature.

· The Governor needs to give the Fiscal Reform Council permanency and staffing support -- maybe an Executive Director -- in order to make it effective. The Council does not currently have the staff to support its important work. In addition, the Fiscal Reform Council should be made permanent in order to achieve long-term success. Accountability and metrics should be put into place to report its progress to NCCBI, to the public and of course to the administration.

NCCBI should be a strong and vocal watchdog that informs its members and the public about programs and public expenditures that are examples of government inefficiencies and efficiencies.

Next, let's take a look at taxes. North Carolina needs a fair and balanced tax system. That is not the current situation. First a bit of background: North Carolina's corporate income tax of 6.9% is third-highest in the South and much higher than most of our neighboring states. The marginal personal income tax rate is 8.25 percent – the eighth-highest in the country and highest in the Southeast. According to Fluor, North Carolina's business tax burden is 3rd highest among 14 Southern states.

To make the tax system fairer, the Executive Planning Committee recommended:

· The 2005 General Assembly should reduce the corporate income tax from 6.9% to 5.9%. That would take North Carolina from highest among neighboring states to second lowest and fourth lowest in the South.

· Reduce the highest personal income tax rate of 8.25 percent. The first step will be to eliminate the quarter-percent increase imposed last year, but we believe further reductions will be necessary.

The lost tax revenues would come from government efficiency, further study of tax fairness, and successful economic development.

And that brings me to Economic Development. Let me point out that NCCBI is not responsible, nor are we staffed, for recruiting new businesses but rather for creating a business climate in which all businesses - both large and small - can flourish. The Executive Planning Committee felt NCCBI needs to be more of a catalyst for change in the operation of the state's economic development program, including the advocacy of:

· More personal involvement of the Governor in the business recruitment process.

· More targeted recruitment of "new economy" companies, such as biotech.

· Performance incentives for business recruiters, including possible use of private funding.

· Continued refinement of the incentive program to maximize dollars while ensuring fairness to companies and counties.

· Bringing together the House and Senate leadership and Governor toward developing a strategic jobs plan for North Carolina.

As you can see, we clearly do not yet have the answers to the difficult questions facing our state. But we have begun to focus on some of the issues that we believe can curtail some of the erosion to our state's economy. We plan to continue to work in a nonpartisan way to effect positive change in the legislature. We plan to keep you, our members, informed of critical issues and we hope to help get you more involved with your legislators from a grassroots perspective.

Legislators need to hear from the business community. And we at NCCBI want to hear from you - our members and our prospective members - from your perspective, what can NCCBI do to best foster a positive business climate for the future. What are your specific thoughts regarding economic development, reducing personal and corporate income taxes and supporting government efficiency? We've supplied cards for your comments and questions, some of which we hope to cover in a Q&A this afternoon.

The Raleigh News & Observer published the following op-ed article by NCCBI Chair Sue W. Cole on Sept. 16 under the headline “North Carolina Could be Doing More”

North Carolina is a large state blessed with great universities, considerable business expertise, talented individuals and public leaders of both parties with a passion for economic progress. At few other times in history has our state needed more to draw on the innovation, experience and abilities of those great assets. Let’s hope the General Assembly’s new 20-member Joint Select Committee on Economic Growth and Development does so.

A lot is in jeopardy if we don’t act now to stabilize our state’s future. I believe we are “off our game” in terms of economic progress. We may have even fallen into the danger zone of believing our own press releases about having the nation’s number one business climate. The facts say otherwise.

North Carolina’s economic foundations of textiles, tobacco and furniture are a shadow of their former selves, hit hard by the globalization of production and slack enforcement of trade agreements in place. Pillowtex is a huge wake up call.

In 2000, Site Selection magazine said we had the nation’s third-best business climate. But that year we landed just one of the 20 largest U.S. industrial announcements. Virginia landed five. In 2001 and 2002 the results were similar. While we remained atop the business climate survey the largest companies were going elsewhere, including to our neighboring states.

But it’s not only new big companies. During the last two years 1,500 technology related companies in North Carolina have closed their doors. In past recessions textiles and furniture would always rebound once the economy turned. I believe this time is different. Many of those jobs have been shipped beyond our borders. Using technology developed in recent years, many basic manufacturing and service companies have built permanent efficiencies into their business processes with little chance of the eliminated jobs ever coming back.

Meeting these challenges will include such longer-term solutions as continuing improvements in our primary and secondary educational system, more retraining of workers and modernizing our infrastructure of highways, telecommunications, water and sewer capacity.

But some things don’t need to wait. Recently NCCBI’s executive committee examined some steps that can be taken almost immediately to make North Carolina more competitive for business location and expansion. They included:

·         More personal involvement by the Governor in business recruitment.

·         More targeted recruitment of “new economy” companies. The recent funding of biotechnology facilities was a good step. More incentives for research and development companies would be another.

·         Performance incentives for the state’s business recruiters, including possible use of private money to pay for those incentives.

·         Continued refinement of the incentive program to maximize dollars while ensuring fairness to companies and counties. UNC’s Dr. Michael Luger’s recommendations about the Bill Lee Act should be carefully considered as well as his review of the state’s economic development program.

·         Adopting a more competitive business tax system. North Carolina’s 8.25% personal tax rate is 8^th highest in the country. An extensive study by Fluor Corporation concluded that for the typical manufacturing company North Carolina had the third highest business tax burden in the South. Our corporate income tax is highest among our neighboring states. The assertion that North Carolina has a low tax burden is not based in reality. Many southern states with higher property taxes than ours also have laws on the books to significantly reduce those rates for up to 20 years for companies undertaking significant expansions or locations. In addition, for many new companies property tax is less a factor than it has been in the past.

One of the NCCBI executive committee’s recommendations – written several weeks ago -- was that the Senate and House leadership and Governor work together for development of a strategic jobs plan for North Carolina. We are pleased to see those leaders step forward.