Last week, N.C. State Senator Bob Rucho spoke to our board of directors about what we can expect in the next legislative session. To no one’s surprise, he said that the main focus will be on the economy and, more specifically, on creating jobs.
Although we all know it, the hard fact is that as tough as it was for the public sector this year, it’s going to be tougher next year. North Carolina, like many states, used the stimulus money to fund recurring expenses with the hope that things would turn around before the next budget cycle began. Although things have gotten better, the hole is simply too big to plug.
Now, don’t get me wrong. Our economy is on the road to recovery. We see it in our office as companies that had put expansion or location plans on hold are starting to get off the dime and make their moves. We see it in the decrease in layoffs and increase in hiring announcements. However, as Senator Rucho reminded us, North Carolina has a $3.5 billion budget shortfall, and the state constitution requires a balanced budget. So, it’s not going to be a pretty year.
The $64,000 question is how the General Assembly is going to raise cash and cut expenses. Raising taxes not only would be unpopular, but it would hurt the state’s competitive position.
One idea that has been kicked around for several years now is to restructure North Carolina’s tax code. Currently, about half the tax revenue comes from individual income tax. The two other biggest revenue generators are the state sales tax and corporate income tax.
With recent high unemployment and investment losses, the state saw a sharp decrease in individual income tax payments, its primary revenue source.
Sales tax collections also have fallen as consumers’ spending habits have changed and the tax structure didn’t. Currently, tangible goods are taxed, whereas services aren’t. Yet, we have become a service economy. According to Andrew J. Haile’s thoughtful article “A Time for Action: Reforming the North Carolina Tax Code,” in 2007, 45 percent of North Carolinians’ household spending was on services, while 31 percent was on tangible goods. To compensate, the state didn’t modernize its tax structure. Instead, it increased the sales tax, most recently in 2009.
Corporate income tax is an unpredictable revenue stream. “A Time for Action” reports collections ranging from 16 percent to 52 percent over a 10-year period, depending on the economy, laws and corporate tax strategies.
The tax increases that the 2009 General Assembly enacted are a short-term fix, but they don’t address the basic problem: North Carolina’s tax codes are outdated. We must modernize and simplify the state’s tax system. We must broaden the base in order to better reflect today’s economy. The result would be tax neutral, more equitable and more realistic, stabilizing state income. Most importantly, it would help make North Carolina an even more business-friendly state, attracting even more investment and jobs to our region.
Cameras don’t rest in Charlotte USA
It’s been a busy fall for independent film and commercial production in the region. Car companies seem to have been particularly drawn to the region. Volvo, Honda and BMW all shot commercials here recently, as did the N.C. Education Lottery. Nationwide is here now. Three independent films – “40 Fears,” Lovestruck Pancho” and “Returns to Grace” – also are shooting here now; “Redneck Roots” is in post-production, and “Pull in” is in pre-production. “The Trial,” which was filmed in Cabarrus, Mecklenburg and Union counties, will be on DVD November 9th and is available through Netflix. You can watch the trailer here.
Enjoy Bobcats action at a special Partnership price
Now that the Charlotte Bobcats are back in action, we’ve been hearing from quite a few people who have misplaced our announcement about reduced-rate tickets to select games. One of these is this Saturday’s game against the Orlando Magic. So, to catch the action or see a full list, click here. Enter the special offer code, BOBCATS, to get your discounted tickets. Directions on how to purchase them will be on the landing page.
The Charlotte Regional Partnership would like to thank the Bobcats, a Partnership investor, for working with us to offer you these discounts as a thank-you for your support.
Sustainable entrepreneurs have new funding source
Probably the biggest roadblock that sustainable companies face is financing. That’s about to change in Charlotte, thanks to the Michael Scott Mater Foundation. Through its Green Micro-Loan Initiative, the international nonprofit is getting ready to offer competitive six-month to two-year loans of between $1,000 and $20,000 to viable, environmentally friendly Charlotte-area entrepreneurs wanting to launch or expand their businesses. The foundation, which is headquartered in Charlotte’s South End, provides financial resources, work-force training, cross cultural exchanges and sustainable solutions that create opportunities for individuals and communities.
Capacity for conventions to increase
The city of Gastonia is adding another venue for conventions interested in coming to our region. The city broke ground on a $10 million downtown conference center last week. The two-story, 29,000-square-foot Gastonia Conference Center will be on Marietta Street between Main Avenue and Franklin Boulevard. It will have a three-level attached parking deck with 160 spaces. City officials say the building will be large enough for them to attract numerous groups from across the Charlotte region for meetings and events. The project is being financed with limited obligation bonds that will be repaid with hotel occupancy tax receipts. The building is expected to open in fall 2011. Officials say they intend to seek LEED certification for the building, meaning it will meet national environmental-design and energy standards.
Locations, expansions, contractions
Citing Charlotte’s East Coast location, vibrant German community, skilled workforce and low business operating costs, The Bohle Group has made plans to open its North American sales, warehouse and headquarters operation in the Queen City. Bohle America Inc., as the U.S. subsidiary will be called, has leased 10,000 square feet in the Granite Commerce Center. Currently, the company’s North American distribution is handled from Germany. Bohle already has a presence in Charlotte. The German tool-maker for the glass processing and finishing industry has one employee in the office it established in Charlotte two years ago. That number will increase by five to meet current and anticipated new customer demand.
Novant Health, Inc. recently doubled the size of its distribution center in Kannapolis Gateway Business Park. The 100,000-square-foot space, which includes a medical equipment repair center, serves all of the health-care system’s hospitals, outpatient centers and physician offices.
Irwin Industrial Tools is calling its customer-service center home. The operation will relocate from Wilmington, Ohio, to its headquarters at NorthPointe Executive Park in Huntersville. The company will add 15 employees, bringing its total workforce to 135. In addition to Irwin, the facility will support Bernzomatic, Bulldog and Shur-line, two other Newell Rubbermaid brands. The move was spurred by the desire to increase the level of collaboration among other functional areas, boost product-marketing exposure and speed problem-solving.
The financial services sector continues to show incremental signs of recovery. California-headquartered Sperry Van Ness will be adding an uptown or midtown office and hiring eight brokers. The brokerage firm already has affiliates in south Charlotte, Cornelius and Rock Hill.
A new homegrown investment bank, Cerium Capital, is opening in Charlotte. The company will concentrate on technology companies with up to $100 million in annual revenue. In addition to mergers and acquisitions, the bank will offer services in capital raising, market intelligence and exit strategy planning.
Congratulations to Wayne Cooper, honorary consul of Mexico and chair of the North Carolina District Export Council (DEC). Under his leadership, the U.S. Department of Commerce has awarded our District Export Council the inaugural DEC of the Year Award. Wayne received the award October 25th in Detroit at the annual International District Export Council Conference. In selecting North Carolina from among the 60 DECs, the U.S. Department of Commerce sited the council’s “outstanding record of mentoring local new-to-export and new-to-market companies on exporting, and supporting President Obama’s National Export Initiative. The federal agency said the group’s work with local U.S. Export Assistance Centers is “critical to expanding U.S. exports and supporting American jobs.” You can read the International Trade Association’s full news release here.
Kudos also to Duke Energy, one of Site Selection’s Top Ten Utilities of the Year. It’s a well-deserved honor. Duke has been and continues to be a key partner in our economic development efforts. The company’s Site Readiness Program has been extremely instrumental in preparing locations for future business. In fact, Site Selection notes that over the last five years the program helped to develop 79 sites, preparing the way for projects that included Apple’s $1 billion data center in Catawba County, and the Institute for Business & Home Safety multi-hazard research center in Chester County. The IBHS recently had a nationally televised demonstration of how homes built under two standards held up in a category 3 hurricane. To read more or see the complete list of the Top Ten Utilities, visit www.siteselection.com/portal/.
Congratulations also go to Astrid Chirinos who today takes over as executive director of the Latin American Chamber. A principal of both Diverso Global Strategies and Calor Energy, Astrid, is actively involved throughout the Charlotte community and has worked with the Latin Chamber for about two decades.
Next week, we’ll be saying good-by to Kevin Gullette, Stanly County’s economic development director. Kevin, who will be moving to the Atlanta area, is a familiar face in Charlotte USA. He was economic development director in Anson County between 2003 and 2007 and, after a year in Virginia, headed back to the region to take on his Stanly County responsibilities two years ago. Kevin, we wish you well!
Have a great week!
Ronnie L. Bryant, CEcD, FM, HLM
President & CEO