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Chris Fitzsimon: Silence on budget indeed was golden for NC corporations

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One of the most puzzling things about the recently adjourned General Assembly session was the relative silence of the state’s corporate community for much of the five months the lawmakers were in Raleigh.

Officials with the North Carolina Chamber of Commerce and other business groups didn’t say much about the furious debate over cuts to public schools, community colleges, or the university system.

Not too many corporate executives weighed in on the decision to take $2 billion out of the state’s economy in the next two years by slashing Medicaid or the insistence by Republican leaders to deny federal low interest loans to community college students.

That silence marked a change from previous years when corporate leaders were outspoken advocates for public schools and higher education, understanding both that the quality of their work force was at stake and that the university system is a major economic engine that attracts research funding and other private investments to the state.

This year things were different.

A handful of individual corporate leaders signed letters urging lawmakers to keep the temporary sales hike in place to avoid firing teachers. Others spoke out publicly against the proposed elimination of Smart Start.

But overall the Chamber and most corporate leaders were quiet this year, at least publicly. Cynical observers wondered if the N.C. Chamber and other business groups didn’t speak out against the devastating cuts to public schools because they didn’t want to alienate the Republican leadership that was being so accommodating on other issues on the corporate agenda, like regulatory reform, the dismantling of the state environmental agency, and changes in the state workers’ compensation system.

The silence from corporate North Carolina continued even in the final stages of the budget debate, when Gov. Beverly Perdue vetoed the Republican spending plan because of the cuts it made to education at all levels.

Not long after the Republicans overrode Perdue’s veto with the help of five House Democrats, the cynics were proven right. In the last days of the session, the House and Senate approved legislation making it easier for multinational corporations that operate in North Carolina to avoid paying taxes by simply shifting income to other states or by charging its North Carolina operation for use of the company trademark.

Fiscal analysts say the legislation will cost the state more than $30 million a year and that is a very conservative estimate, since it’s difficult to predict how much in taxes the companies would have owed in the future.

It is also a direct slap at North Carolina-based companies who can’t take advantage of the loophole. Borders Books will get a tax break while the local book store down the street won’t.

There were rumors for weeks that Republican leaders and top corporate lobbyists were working on the legislation behind the scenes, but the plan did not emerge publicly until the last days of the session and some amendments to the bill were approved before officials with the N.C. Department of Revenue even had copies of them.

The rush was on for the massive corporate giveaway. The shenanigans seem to prove that the cynics were right.

The N.C. Chamber and other corporate leaders didn’t say much about deep cuts to public schools or massive layoffs in the university system because they didn’t want to upset their new best friends in control of the House and Senate.

Big money was stake, tens of millions dollars. And the plan worked. Silence was indeed golden for corporate North Carolina.

Chris Fitzsimon is director of NC Policy Watch