Monday, October 24, 2011

Development finance: how to

We all know that everything cities and counties do is linked to the statutory authority afforded to them by the General Assembly. And like it or not, NC law says that it is OK to give grants and loans to spur private investment. Cities and Counties are granted this authority (in a very broad, by golly it’s almost unconceivable how much faith the statutes put in us) under G.S. 158-7.1 the Local Development Act.
Here’s the language:  “each county and city…is authorized to make appropriations for the purposes of aiding and encouraging the location of manufacturing enterprises….and locating industrial and commercial plants…or OTHER PURPOSES (what purposes dear lawmaker? Well, you decide what that means, Miss local government)  which, in the discretion of the governing body…will increase the population, taxable property, agricultural; industries, and business prospects of any city or county.”
That’s wide-ranging authority, for sure!
But hold your horses. The Constitution of the state- you know, that little document that governs the structure and function of state government. The highest legal document there is. The one that subjugates all other NC law. King of the mountain, if you would. So, while the statutes are broad and allow you to “other purpose” your development incentives, the constitution isn’t so blasé with tax dollars. It specifically states that the power of taxation can be exercised  for public purposes only. And that our local governments can contract with and appropriate money to any person, association, or corporation for the accomplishment of public purposes only”.
So what does this mean? We've got to follow both the constitution and statutes..but they say two different things...can't I just pick one. Tthe answer is NO!
The next few post will center on how a local government can incentivize economic development. And whats really getting me…the answer I really want to know…when can a local government offer cash incentives for economic development? Or can it?

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