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Uncertainty Hangs Over Programs As State Budget Is Delayed

By Jenny Callison, posted Jul 16, 2015
As state legislators await the start of budget negotiations between the N.C. House and the N.C. Senate, the fate of several economic development-related issues remains uncertain.

The General Assembly, having already approved a budget continuing resolution to keep state government operating in the absence of an official budget for the new fiscal year, must appoint a conference committee to resolve financial and philosophical differences between the House and Senate versions of the biennial budget. House representatives were appointed earlier this week by House speaker Tim Moore. As of press time Thursday, Senate leader Phil Berger had not yet announced his appointments.

Film and entertainment grants
Currently, the House version of the biennial budget appropriates $40 million for each fiscal year for film and television incentive grants. The Senate budget proposes $10 million per year, compared to $10 million available in just the final six months of the most recent budget year that ended June 30.

“We basically have no update,” Wilmington Regional Film Commission director Johnny Griffin said Thursday, adding that with all the large issues needing resolution, such as funding for Medicaid, teacher salaries and teacher assistants, he does not expect film incentives to be at the top of the list of items to be dealt with.

Even if the House proposal prevails and the grant pool is funded at $40 million per year, that’s still a reduction from recent years, when the film and television industry qualified for tax credits of about $60 million per year.  

A shallower grant pool would make it a “real challenge” to market the Wilmington area to producers as does the continuing uncertainty about the incentive program in general, Griffin said.

“It’s a challenge to even have a conversation with clients. In past years by about this time, we would have had 80 to 100 inquiries [from projects] – scouting, asking for photographs or even just a quick phone call, with people reaching out to us. Currently, this year, we’ve had 18," he said.

“We’re still reaching out. I went to Los Angeles in early June, but people were asking ‘Do you have any new news on North Carolina incentives?’”

Even if the compromise budget does include more than the current level of grant funds, this year’s timing might be problematic, Griffin said. He has heard predictions that the state budget might not be approved until mid-August or even September, by which time film and television projects for 2015 would already have received approval from studios and would be underway.

Any new projects would likely not gear up until the first quarter of 2016, he said.

NCBiotech
The N.C. Biotechnology Center is a private, nonprofit organization headquartered in Raleigh with regional offices in Wilmington and four other cities. Its mission is to boost economic development through support of biotechnology research, business, education and strategic policy, according to its website.

The House version of the budget proposes $13.6 million annually for the 2015-16 and the 2016-17 fiscal years for the center. The Senate version essentially zeroes out state funding for it.

“When the Senate came out with their budget we were very surprised we were not included,” said center president and CEO Doug Edgeton in an interview last week. He said that if the compromise budget cut or eliminated funding for NCBiotech, “we would look at what we currently do and figure out what it takes to shut down.”

Edgeton noted that the center sustained a 27 percent funding in the last biennial budget, passed in August 2013. “We shut down our educational unit, which had been a distinct advantage for North Carolina, since we had the only one in the country.”

Since that time, he continued, other states, such as Georgia and Texas, have created biotech-related training programs.

Since 2000, Edgeton said, North Carolina’s investment in the life sciences through NCBiotech grants has paid off by boosting job creation in the life sciences by 30.9 percent, has had a positive impact on more than 600 companies and has increased economic activity to the tune of $73 billion.

Historic preservation tax credits
Resurrection of North Carolina’s historic preservation tax credit program, which the General Assembly allowed to expire at the end of 2014, is another area of disagreement between the House and Senate. The current Senate version of the biennial budget includes no money for the program, while the House version at least contains financial references to the program, according to George Edwards, executive director of Historic Wilmington Foundation. Edwards said that Gov. Pat McCrory maintains his support for program reinstatement.

Edwards said Thursday that his organization, like other historic preservation and downtown advocacy groups across the state, is still rallying its members to contact their legislators in support of renewing the program.

“I still think we’ll be in the ball game,” he said, adding that he has been told this may be an issue on which the state Senate may be willing to compromise, but the new program may look different from the former one, with perhaps more money for poorer areas, rehabilitation of old mills and other industrial buildings.

Unlike North Carolina, he added, neighboring states South Carolina, Georgia and Virginia have beefed up their historic preservation tax credits programs.

“We’re surrounded by all these Southern states who have seen a certain wisdom in historic preservation,” he said.
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