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Girls Gone Wild Video Series Is Tional $20 Million for the Project, but Only If It Went Looking for a Permanent Site to Produce the Contro- to Dare County

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Girls Gone Wild Video Series Is Tional $20 Million for the Project, but Only If It Went Looking for a Permanent Site to Produce the Contro- to Dare County • School Enrollment • Why Don’t Athletes Expected to Drop C A R O L I N A Graduate, NCAA Asks? Unplugging 911 Wireless Unlikely Conservative Volume 11, Number 6 A Monthly Journal of News, June 2004 Analysis, and Opinion from JOURNAL the John Locke Foundation www.CarolinaJournal.com www.JohnLocke.org Businesses, Politicians Turn Taxpayers Into a ‘Cash Cow’ Corporate government Incentives experts Ernst & relations officials learn how Young helped create law, to get economic incentives then get money for clients By PAUL CHESSER By PAUL CHESSER Associate Editor AND DON CARRINGTON RALEIGH Associate Editor & Associate Publisher workshop conducted in late March, RALEIGH led by experts in getting economic rnst & Young, the international firm Adevelopment incentives from state known best for its accounting ser- and local governments, shows that large E vices, has become a player on both companies are now banding together to sides of incentives policy in North Carolina. learn how to extract as much public money The company established a cozy rela- as possible from elected officials. tionship with state officials through an in- The seminar, presented during a por- centives bill it helped create in 2001, the tion of the annual three-day meeting of the N.C. Economic Stimulus and Job Creation State Government Affairs Council, taught Act. The Department of Commerce hired dozens of corporate government-relations Ernst & Young to study incentives in South- executives how to “Turn Your State Gov- eastern states, and its findings were a sig- ernment Relations Department from a nificant contribution to the new bill. It was Money Pit into a Cash Cow.” Michael Press, Carolina Journal illustration by Kim Pickering enacted into law in 2002. national director of Ernst & Young’s Busi- As the law was developed, Ernst & ness Incentives Practice, and Robin Stone, the “Cash Cow” seminar, and he wasn’t cash cow is a very cynical way to look at the Young also advised Time Warner Inc. on former vice president of state and local sure who did. 50 state governments,” Luebke said. “Many, how to extract incentives from the depart- government relations for The Boeing Com- “That title was not my choice,” he said. if not all of them, are acting in good faith ment, essentially working both ends of the pany, delivered the Microsoft PowerPoint- “It was part of a joint presentation.” with the corporate sector. issue. supported presentation March 26 in Savan- Asked who he thought the cash cow “It doesn’t surprise me that (businesses) At the time, the media giant planned to nah, Ga. represented in reality, Press said, “…the would come together to trade notes. But it create a campus of 1,100 employees in Char- “Cash cow? You got that right,” said corporation that’s providing jobs to the com- does strike me as cynical that the hard- lotte for its cable operations. The Charlotte N.C. Rep. Paul Stam, an Apex Republican munity — much the way the feedstock and earned and reluctantly paid taxes are there Observer reported that Time Warner’s project who serves on the General Assembly’s Joint the farmer provide an important commod- for the pickin.’” depended on legislative approval of the Committee on Economic Growth. “They ity. At the same time, Stam said businesses program and that the company could reap look at (government) as just turning on the “It’s kind of a partnership arrangement weren’t doing anything illegal. as much as $55 million in incentives. spigots.” and incentives are part of that partnership,” “They’re doing what’s completely nor- Media scrutiny, and an admission by a Comments drawn from the PowerPoint Press said. “There’s a lot the public gets out mal and natural,” he said. “They see a big Time Warner official that the company had document, which Carolina Journal shared of it.” pool of money and they’re advising their already decided to come to Charlotte, ap- with people interviewed for this article, Two legislators from opposite ends of clients how to get it. It’s proving to the parently thwarted the deal to get incen- reveal a cynical attitude and a willingness the political spectrum viewed the cash-cow taxpayers how ridiculous these (incentives) tives. However, the company announced in to “milk the system,” say two lawmakers terminology differently. programs are.” March 2004 that it would expand in Char- (including Stam) who were appalled by the Stam considered the cash cow to be the lotte, adding 350 new jobs. Time Warner government-relations presentation. state Treasury, and ultimately, taxpayers. Power points and power plays could receive up to $4.2 million in incen- “They play state legislators like vio- tives related to the expansion. Who is the ‘Cash Cow?’ lins,” he said. “They’re treating us like a The PowerPoint document (see graphic, Ernst & Young also negotiated with scam.” Page 3) obtained by CJ outlined several states in 2001 on behalf of The Boeing Com- Press told CJ in a phone interview that Stam rejected the idea that business principles for pursuing government incen- pany, when the airplane manufacturer the purpose of the presentation was to show “partners” with government. tives. Press implied that much of the pre- moved its headquarters from Seattle to participants that businesses need not view “There is no partnership,” he said. “A sentation was composed by Stone, who is Chicago. Boeing received a reported $63 their government-relations departments as partnership is two different entities that now director of legislative affairs for Re- million in incentives from Illinois, far sur- a necessary administrative cost center, “but share in some risk, rewards, and control. publican Gov. Bob Riley of Alabama. Stone passing offers from Texas and Colorado. rather as a source of value.” There is no sharing here at all. The govern- did not respond to telephone messages or Washington gave Boeing $3.2 billion in “This group (SGAC) gets together to ment is providing the money, and the busi- an electronic mail inquiry seeking com- tax incentives in June 2003 to assemble its discuss business that they have in common ness is getting it.” ment. new 7E7 Dreamliner, even though the com- and the issues they confront,” Press said. State Rep. Paul Luebke, a Durham The PowerPoint document began with pany has reduced its workforce in the state The workshop on incentives constituted Democrat, also was troubled by the since 1998, from 104,000 to about 53,000. about one-third of the meeting, he said. PowerPoint document. That bid won out over North Carolina’s Press said he did not create the title of “I think referring to government as a Continued as “Ernst & Young,” Page 3 $534 million package. CJ Best Single Change in NC Tax The John Locke Foundation NONPROFIT ORG. Contents 200 W. Morgan St., # 200 U.S. POSTAGE General Rate Cuts 61% Raleigh, NC 27601 PAID RALEIGH NC Targeted Incentives 39% PERMIT NO. 1766 Calendar 2 State Government 3 Education 6 Higher Education 10 Local Government 14 Books & the Arts 18 Opinion 20 % of NC Business Execs in March 2004 JLF Poll Parting Shot 24 C A R O L I N A Contents ON THE COVER lutions” that some educators say that might ers have paid more than $125 million in JOURNAL actually compound the problem. Page 7 monthly cell-phone surcharges since 1997. • A workshop conducted in late March, led Page 14 by experts in getting economic develop- • When North Carolina legislators dropped ment incentives from state and local gov- the high school graduation exit exam for • When the Federal Transit Administration ernments, shows that large companies are 11th-graders, they weren’t necessarily say- released its proposed fiscal 2005 budget in Richard Wagner now banding together to learn how to ex- ing that there should be no final require- February, there were plenty of disappointed Editor tract as much public money as possible ment for graduation. But with the four-year transit supporters in both the Triangle and from elected officials. Page 1 graduation rate at just 60 percent, they also Charlotte. Page 15 Paul Chesser, Michael Lowrey weren’t willing to see it go lower on the ba- Donna Martinez NORTH CAROLINA sis of one high-stakes test. Page 8 THE LEARNING CURVE Associate Editors • After originally announcing his intention HIGHER EDUCATION • A review of the book, An Unlikely Conser- to run for re-election in North Carolina’s vative: The Transformation of an Ex-Liberal (Or Karen Palasek, Jon Sanders First Congressional District, U.S. Rep. Frank • Student-athletes of colleges and univer- How I Became the Most Hated Hispanic in Assistant Editors Ballance withdrew from the race because sities have been placed under the micro- America), by Linda Chavez. Page 18 of health reasons. Page 4 scope recently by the NCAA in its attempt to increase graduation rates. Page 10 • Reviews of the books The War Against Chad Adams, Andrew Cline, Roy Cordato, Charles Davenport, • Gov. Mike Easley released his mid-bien- Excellence by Cheri Pierson Yecke, and Ge- Ian Drake, Tom Fetzer, Bob Fliss, nium budget term adjustments May 10, and • With the war on terrorism ongoing in Iraq nius Denied by Jan and Bob Davidson. Nat Fullwood, John Gizzi, said his proposal maintained his priorities and Afghanistan, graduates at some area Page 19 David Hartgen, Summer Hood, for spending discipline, creating jobs, and colleges heard firsthand from two individu- Lindalyn Kakadelis, George Leef, improving public education. Page 5 als who have been involved in policy deci- OPINION Kathleen Linder, Kathryn Parker, sions regarding Iraq and the Middle East. Marc Rotterman, R.E. Smith Jr., • Contrary to exaggerated claims by envi- Page 11 • Marc Rotterman agrees with Gov.
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