Why NC lawmakers are betting $3 billion on professors, sewers and NASCAR in new state budget
Like most of North Carolina’s 100 counties, Lenoir County is shrinking. But local leaders are hoping to reverse the trend with a massive, taxpayer-funded cash infusion in the Lenoir city of Kinston.
The new state budget spends $350 million in taxpayer dollars for Kinston’s Global TransPark, an airfield and industrial site. The goal? To turn the investment into thousands of high-paying jobs for Kinston and the surrounding area by building the facilities needed to land a big military contract.
Next door in Craven County, an aircraft repair facility at Marine Corps Air Station Cherry Point is running out of space and needs to expand. It employs 4,000 people with an average salary that’s nearly double the area’s median household income, said Sen. Jim Perry, R-Lenoir. After meeting with the commanding officer at Cherry Point about the need for a second repair facility, Perry pushed hard to convince fellow GOP lawmakers to sign off on the TransPark funding.
“You’ve got an average salary of $70,000,” Perry said. “I mean, that’s just absolutely transformational for an area like Kinston. I did a lot of begging for this one.”
While the state budget always includes economic development funding, it doesn’t always take big swings. This year’s $30 billion budget does take a few high-dollar gambles, however, in addition to more typical economic development funding found in the state spending plan.
The $350 million price tag makes the Global TransPark upfit one of the biggest single items in the new state budget. Unlike most projects, the money is supposed to eventually be paid back, but only if the air park manages to land the aircraft repair contract.
Other funds spent in the budget will never be paid back — at least not directly. But state lawmakers are betting that the return-on-investment will eventually come in the form of job creation and corporate recruitment and retention.
Included in the new $30 billion state budget, which will become law Tuesday, is at least $3 billion for economic development. The main highlights include:
- $2 billion for water and sewer upgrades throughout the state.
- $500 million for NCInnovation, a new public-private venture partnership.
- $350 million for the Global TransPark.
- $130 million for megasites, large parcels of land meant to attract new factories.
“This budget is an economic development powerhouse,” said Randy Brechbiel, a spokesman for Senate GOP leadership.
North Carolina has been ranked the No. 1 state for business by CNBC for two years running. Brechbiel said Republican lawmakers wrote the budget intending to keep that streak going.
There are also pro-business policy changes such as cuts to franchise taxes, plus newly loosened permitting and environmental rules. Similar changes have also been included in other recent laws such as the annual Farm Act, which ended environmental protections for millions of acres of wetlands around the state.
The budget further tweaks rules for wetlands protections, prohibits cities from banning plastic bags and bans state agencies from trying to address climate change through cap-and-trade rules, or by joining regional climate initiatives.
Republicans say the changes will help existing businesses or boost future business growth, but the measures drew criticism from environmental groups.
“We are appalled by our legislative leadership's callous disregard for the budget bill's impact on all North Carolinians by exposing them to new and increased environmental threats, and by stalling our progress toward a clean energy economy,” the Sierra Club said in a press release.
The North Carolina Chamber of Commerce, the state’s primary business advocacy group, is mostly pleased with the new budget. Its top lobbyist Jake Cashion said the Chamber wanted the franchise tax to be eliminated, not just reduced. But he praised the billions of dollars for upgrading or building new roads, water lines and sewer capacity — the nuts and bolts needed to keep up with North Carolina’s fast-paced growth.
“The big takeaway from our perspective is the focus on infrastructure,” he said. “Between transportation investments, water and sewer, and other investments we think are important, we're excited.”
The health care economy
One of the biggest economic development investments in the budget will cost the state nothing.
Medicaid expansion is estimated to bring in more than $500 million every month — billions every year — to the state’s health care industry, once an additional 600,000 people suddenly have access to federally funded health care. The federal government will cover 90% of the cost, while hospitals and insurance companies will cover the balance.
The extra spending could equate to more clinics or hospitals opening up and creating new jobs, or at least more stability for struggling hospitals in rural parts of the state.
“Our stability is part of the stability of the region,” said ECU Health Medical Center President Brian Floyd.
ECU Health’s hospitals and clinics cover 29 counties in eastern North Carolina and employ 15,000 people. But they’ve been operating on thin margins, as have others. In recent years about a dozen rural hospitals across the state have closed. Floyd said Medicaid expansion might allow ECU Health to open new clinics or hospitals. At the very least he hopes he can shelve talks of which other clinics or hospitals might need to shut down.
Medicaid expansion also promises harder-to-quantify economic benefits. Nearly everyone who will qualify is employed, working a job that doesn’t offer health benefits. Some might currently be prone to missing work due to injuries, chronic health problems, substance abuse issues or other health factors — factors they should now be able to properly treat.
“Now they’ll be able to get preventive care,” Floyd said. “Now they’ll be able to afford their medication.”
Big risk, seeking big rewards
The budget’s biggest single project is NCInnovation. It’s an ambitious proposal that gets half a billion dollars over the next two years, much of it to soon be given to the state’s smartest people.
The idea behind NCInnovation — praised by JPMorgan Chase CEO Jamie Dimon, among other fans — is to commercialize the state’s brain trust, using grants aimed at turning academic research into successful start-up companies.
The Triangle area, home to several of the nation’s top research universities, is full of companies founded by professors. The best-known is SAS, the massive software company founded by a group of N.C. State University faculty members in the 1970s — including James Goodnight, the richest person in North Carolina, with a net worth of more than $7 billion in 2023, according to Forbes.
The leaders of NCInnovation think there are still many more ideas percolating on college campuses, waiting to be turned into profitable, job-creating companies.
“Other states have successfully used a public-private partnership model to harness innovation efforts from research universities so as to create jobs, to accelerate commercial opportunities, and to support the commercial growth and scale of emerging technologies,” the budget says. “North Carolina will benefit from similar efforts.”
The group’s board of directors includes UNC System President Peter Hans and multiple university chancellors, as well as banking, pharmaceutical and venture capital executives. That leadership could change, however. To get the $500 million in the budget, NCInnovation must agree to a number of requirements, including new oversight rules and letting state legislative leaders pick eight of its 13 board members.
Raleigh Sen. Jay Chaudhuri, D-Wake, said he thinks NCInnovation is a good idea in general, even if he’s a bit wary of putting so much money into a new and untested group.
Although a large sum, the $500 million the budget spends on NCInnovation is also barely one-third of the original $1.4 billion that Senate Republicans proposed spending on it. The $500 million price tag was a compromise with GOP leaders in the state House, who wanted to give the group just $50 million.
Sewer lines help the economy?
The budget makes a massive, $2 billion investment in water and sewer projects — important building blocks for any future development, whether residential or commercial.
When Republican Senate leader Phil Berger met with reporters after his chamber voted to approve the budget last month, he listed those projects as among the most important pieces in the budget, on par with state employee raises and Medicaid expansion.
“It’s something that’s needed … to be able to continue the growth that we’ve seen in North Carolina over the past several years,” said Berger, R-Rockingham.
Such projects are normally the responsibility of local governments to pay for. But the legislature often funds them from state coffers. Berger said it can be a way of helping small or poor communities that can’t afford such projects on their own.
Nearly all of the $2 billion is earmarked for places represented by Republicans in the GOP-controlled legislature.
The only major water and sewer project in any Democratic part of the state is the $78 million being sent to Siler City, represented by top House Democratic leader Rep. Robert Reives, D-Chatham. The tiny town is about to become the site of a $5 billion semiconductor factory for Durham-based Wolfspeed — another local company founded by an N.C. State professor. It’s set to begin construction next year, and expected to eventually create at least 1,800 jobs on site.
The factory could massively change the face of Siler City (pop. 7,700) if it comes to fruition — which the budget is trying to help happen. The $78 million is to be spread out among a few different efforts to increase the local water and sewer capacity. Michael Smith, president of the Chatham County Economic Development Corporation, said it’s needed not just for Wolfspeed, but also for the new houses that will likely be built in the area as new jobs flood in.
Plus there are another 1,400 shovel-ready acres next to the Wolfspeed site, still waiting to be developed by other companies. "The last thing any of us would want is to not have the capacity to help a major company come in,” Smith said.
Getting creative with the budget
In addition to the broadly focused economic development efforts like water and sewer improvements, there are also highly specialized efforts aimed at certain industries.
A proposal to legalize commercial casinos didn’t materialize in the end, despite a concerted push by top GOP leaders. But the budget does rewrite some of the rules for sports betting, which one legislative estimate says could bring the state an extra $70 million in annual tax revenue by 2027.
And for NASCAR, there’s potentially millions of dollars in tax breaks and refunds, the sort of broad corporate appeasement that airlines and shipping companies also benefit from. But there are also more creative efforts, like a state-funded grant of potentially millions to repave the North Wilkesboro Speedway — but only if NASCAR holds another race there in the next five years.
On Thursday, NASCAR President Steve Phelps drove up to the General Assembly in a car branded with the speedway’s logo to make an announcement: The NASCAR All-Star race would be returning next year to Wilkesboro and its formerly abandoned speedway.
NASCAR can now get the taxpayer-funded repaving grant, and Wilkes County — another shrinking, rural part of the state — will benefit from the visitors who’ll be spending on hotel rooms, restaurants and more. This year’s race brought a sold-out crowd of 35,000 people back in May.
Senate Majority Leader Paul Newton, R-Cabarrus, said GOP leaders made an effort to use communities’ unique pieces, like North Wilkesboro and its speedway, to carefully target the new budget’s economic development efforts.
"We want every one of the 100 counties here in our state to prosper economically, but every [county] has its strengths," he said.
Democrats question if GOP leaders truly want all 100 counties to prosper, noting that the billions of dollars of economic development funding are being sent almost entirely to rural counties represented by Republicans in the legislature — not the urban counties where most of the state’s population growth and economic growth are occurring.
“It’s definitely true that the budget spends a lot of money on infrastructure projects, which is good,” Chaudhuri said. “But urban areas really get ignored. This legislature needs to understand that what’s good for urban areas is also good for rural areas. Economic development is not a zero-sum game.”
