Incentives pose tough questions

Published 8:01 pm Friday, September 7, 2012

By Scott Mooneyham

RALEIGH — When it comes to taxpayer-provided incentives for business, those provided to retailers make the least sense.

The reason: Retailers need consumers/taxpayers more than consumers/taxpayers need them.

Retailers have little leeway when building or renting stores. They go where the demographics and transportation infrastructure suggests they will see the most traffic.

People may do a bit of oohing and ahhing when the hot, new restaurant franchise or big-box retailer comes to town. That’s still no reason to throw tax dollars at a company to bring relatively low-paying service jobs to a community when it is needed by the retailer to expand its customer base and revenue flow.

Distribution centers built by retailers are a different animal, posing trickier questions for the government officials given the task of handing out cash and other inducements to  lure jobs to the state and its regions.

This entire business of business incentives is distasteful. But let’s set aside the broader question of whether state and local governments should even be handing out tax dollars to convince businesses to build here or there.

They have. They do. For the foreseeable future, they will.

So, if they do and will, are retail distribution centers the kind of thing that state commerce officials should try to lure with incentive dollars?

They recently did.

Gas station and convenience store operator Sheetz Inc. will receive up to $2.7 million from the state over the next 12 years if it meets employment and other targets.

The company plans to build a distribution center in Burlington. It is expected to employ 254 people by the end of 2018, and the company will invest $32.8 million in building the facility.

Based in Altoona, Pa., the company has been expanding into North Carolina for a few years now, with high-ceiling, nicely laid out stores that offer fresh-made sandwiches.

The distribution center will serve North Carolina, Virginia and West Virginia.

So, perhaps the company could have hopped further up Interstate 85 and built in South Hill, Va., or directly above Burlington in Danville, Va., along U.S. Highway 29. State officials had to be concerned that was a possibility.

Still, the decision probably isn’t sitting too well in some corners today.

Three large convenience store chains are headquartered in North Carolina — Pantry/Kangaroo, WilcoHess and VPS Convenience Stores. All three compete with Sheetz for business, and the news that the state has furthered that competition probably isn’t very welcome.

The jobs that will be coming to Burlington also aren’t going to be at the higher end of the pay scale, like those where the state doles out money for manufacturing or pharmaceutical jobs. Based on the projected payroll, those 254 jobs would average $29,133 in annual salary.

Nonetheless, it’s hard to say no when 254 jobs can be plopped on this stretch of highway or one across the state line.

It becomes even more difficult in these tough economic times, when your unemployment rate exceeds 9 percent.