By Elizabeth Cook

elizabeth.cook@salisburypost.com

Remember Hungry Hungry Hippos?

Chris Chung, the state’s top economic developer, uses the children’s game as a metaphor for landing new business in North Carolina.

Think of the white marbles the hippos chomp up as new private sector investment, Chung told a Salisbury group Friday morning. Every state — or hippo — is trying to gobble up as many of those outside dollars for  their economy as possible. Otherwise, a state’s economy has no net growth.

North Carolina is competing with 49 other hippos for those marbles, Chung said. “Some of them are very, very aggressive.”

And the state may risk getting knocked out of the game early because of limits the legislature has put on economic incentives.

Chung traveled to Salisbury on Friday as leader of the new Economic Development Partnership of North Carolina, a public-private organization created last year to boost the state’s economy. He explained the partnership and its role to about 30 local business and community leaders gathered at the Gateway Building. The meeting was hosted by RowanWorks and organized by Robert M. Van Geons, executive director.

The partnership has taken over the marketing and business recruitment duties of the N.C. Department of Commerce to go after business more aggressively. As a private organization, the partnership  can supplement its $17.5 million in state funding with contributions from the private sector.

That leverages more resources to carry out the partnership’s five basic functions — business recruitment, existing business support, export promotion, small business counseling and tourism.

Chung said the state’s two biggest positives in business recruitment are its status as a right-to-work state and how well it does on business perception surveys. When people rank the best states for doing business, he said, over the past 10 to 20 years North Carolina has consistently made the top 10 and frequently is in the top five.

“That’s not anything you can buy,” Chung said. The ranking keeps North Carolina much more top-of-mind than many other states, he said

“That means we have a ticket to the game.”

To win, though, the state needs “tools” or financial incentives to improve the economics of the prospective business’ decision. Having a beautiful state with abundant resources is important, but in the end businesses go where they can put together the best economic package.

Chung said the $15 million cap the legislature has on the state’s flagship incentive program, Job Development Investment Grants, limits how competitive the state can be.

Called JDIG, the incentive program looks at income tax revenue generated by a new or expanding business and, once the jobs are established, rebates the company 50 percent of that amount. The annual grant can be given for up to 12 years.

If the company comes, the state gets the new business and new jobs — and income taxes from those workers, minus 50 percent for the period of the grant. If the company doesn’t come, the state gets nothing.

As long as the state rebates less than 100 percent of the income tax revenue, JDIG results in a net positive for the state, Chung said.

Gov. Pat McCrory’s administration has maxed out JDIG and asked the legislature to raise the cap. The state House OK’d tripling the cap to $45 million. State Rep. Harry Warren voted for the bill on the third and final vote; Rep. Carl Ford voted against it.

The state Senate has been less enthused. The current Senate proposal keeps the $15 million annual cap, allowing it to go up to $30 million if there is a “high-yield project,” with at least a $750 million investment and 2,000 jobs. The Senate version also adds $5 million in one-time funding to JDIG.

The bill, House Bill 117, is currently in the Senate Commerce Committee, of which both of Rowan’s state senators, Andrew Brock and Tom McInnis, are members.

Chung said of the states where he has worked in the past, Ohio’s job creation tax credit has no cap and goes up to 15 years. Missouri’s program rebates 100 percent of the created income tax for five years and has a $150 million cap.

Some in the legislature oppose such incentives, but Chung said such tools are necessary if the state wants to stay in the running for new investment.

“No state’s good enough to just sit back and wait for calls to come in,” he said.

Jake Alexander, sales director at Genan Inc. and one of the 30 or so people meeting with Chung, said the perception is that North Carolina has not been in the top three or five or 10 in announcements for new business recently.

Chung said North Carolina was on the list of states considered by Mercedes and Volvo, which each announced plans this year to invest $500 million in a new plant near Charleston, S.C. He doubted that Missouri or Ohio were on the list.

“Did we have the tools necessary to win that competition?” Chung asked. The state can still cobble together an incentive package with its other programs, he said. JDIG, however, offers the biggest potential incentive, and not being able to offer that definitely affected what the state could do, he said.

Are dollars the only determining factor, asked Steve Fisher, F&M Bank chairman, or can other tools be used?

Chung said deep water seaports are important to automakers, either to bring in supplies or ship out autos. North Carolina’s ports at Morehead City and Wilmington get bypassed for bigger ports in Charleston, Norfolk and Savannah.

The state could beef up its port capacity with infrastructure spending, Chung said. McCrory has proposed a $1.5 billion infrastructure bond that would spend $200 million on the ports.

North Carolina industries export about $31 billion a year in exports  — perhaps more — but often through other ports.

The Economic Development Partnership of North Carolina is not allowed to lobby legislators; it’s supposed to stay out of politics and policy. Chung said he hoped others would carry their concerns to legislators.

Greg Edds, chairman of the Rowan County Board of Commissioners, said after the meeting that he intended to engage local lawmakers soon.

“I understand in some regard how the legislature is trying to focus on bringing our state tax rate down to be competitive,” Edds told the Post. For a long time, the state had the highest taxes in the region.

Giving tax credits in targeted areas may ultimately force income taxes up overall, Edds said. When it comes to business recruiting, he said, “we seem to be giving up a tremendous amount of competitive edge.”