Posted on 08/14/2003 3:18:41 PM PDT by jern
Thursday, August 14, 2003 7:38AM EDT
Basnight calls for overhaul Among his ideas: privatizing Commerce
By AMY MARTINEZ, Staff Writer
RALEIGH -- Arguing that North Carolina is not doing enough to put people back to work, Senate President Pro Tem Marc Basnight said Wednesday that he has an economic development proposal that, if passed into law, could shake up one state bureaucracy and lower taxes for businesses. Basnight's proposal, largely the result of a series of meetings with business leaders earlier this year, calls for a study into whether the state Department of Commerce would be more effective as a privately run organization. Basnight, the state's most powerful legislator, also said he supports lowering the state's corporate income tax a full percentage point to make North Carolina more competitive in the eyes of site-selection consultants and economic developers.
At 6.9 percent, the state's corporate income tax is the second-highest in the Southeast. A rate of 5.9 percent would move North Carolina to third-lowest, behind South Carolina and Florida, and cost the state $150 million to $160 million a year, he said.
Speaking with a group of reporters and editors at The News & Observer, Basnight said the measures are necessary to get North Carolina back on track as it struggles with some of its worst job losses ever. Two weeks ago, textile giant Pillowtex of Kannapolis closed five plants and eliminated about 5,000 jobs in the state after filing for Chapter 11 bankruptcy protection.
"We're getting burnt," Basnight said, pointing to recent economic development successes in Georgia and Virginia. "We're losing a lot of jobs, and we're going to lose a lot more jobs."
But the measures aren't likely to be voted on soon. That would take a special session of the legislature, and Basnight said he does not have buy-in from Gov. Mike Easley and House leaders.
"I think people need to meet and get a plan and agree to it before any special session is called," Dan Gerlach, the governor's senior fiscal adviser, said last week.
The state already is taking steps to get the economy moving again by maintaining funding for education, improving the state's roads and seaports, and keeping taxes low, said Gerlach, who could not be reached for comment Wednesday. This week, Easley signed into law a bill that would keep businesses from getting hit with a 20 percent increase in unemployment taxes next year.
"We're not laying off a thousand teachers like they are in South Carolina. We're not hiking college tuition 40 percent like they are in Virginia," Gerlach said.
Still, Basnight is considering asking Senators John Kerr, a Democrat from Goldsboro, and Fletcher Hartsell, a Republican from Concord, to lead economic development discussions between now and December. Although Basnight said he has a proposal worked up, he declined to release it, saying that could jeopardize negotiations with Easley and House leaders .
Basnight, a Democrat from Manteo, said North Carolina has been successful recruiting biotechnology companies, but it is not doing enough to attract other companies such as automobile manufacturers. As an example of what he thinks North Carolina ought to be doing, he pointed to other states that have bought tracts of land suitable for a large manufacturing operation and prepared them for development.
Basnight said one solution might be to privatize parts of the Commerce Department, which is charged with recruiting new businesses to the state. "Commerce can't work properly today because of the way it's structured," he said.
Commerce Secretary Jim Fain declined to respond Wednesday.
"We've not seen any details of the Senate's proposal. Therefore, at this time, we will not comment on the proposal or any aspects of it," Fain said in a statement.
Staff writer Amy Martinez can be reached at 829-4652 or amartine@newsobserver.com.
The proposal has some merit, which accounts for the lack of support from Gray Easley and friends.
The substance of the changes he proposes are sweetened by corporate income tax cuts that are phased in.
Republicans do not want to be sucked into supporting anything on the promise of a tax cut, even one that is put into the statutes and dated.
They have little reason to trust that any tax cuts won't be delayed, as they were this year. They've been burned.
Also, Basnight is actually vulnerable in this issue at home. 40 percent of the voters in his district are now in Beaufort County, where the economy is chronically grim, but patience is wearing thin. The real unemployment rate there is well over 12 percent.
Combined with a variety of other Omens, time for Basnight is finally running out.
However, rather than being outnumbered 10 to 1, the right candidate would be outnumbered three to one, which means a winning strategy is possible.
The value to the Senate Caucus of having a sound candidate to force the Pro Tem to spend his money at home is inestimatible.
As in all these races, the right candidate is all-important, and such a person would be required to combine a rare assortment of qualities.
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