Submitted by fake consultant on Sun, 02/11/2007 - 10:06am
It is always a surprise when you begin to write one story and end up writing another, and that is the situation we have today.
Originally this was to be a story set in the future, but it turns out the future is now.
Here’s the deal: while watching the Super Bowl (love the mouse commercial!), I was considering the economic consequences of a flooded Miami, seeing as the ocean level is projected to rise over the next century, and Florida isn’t.
Specifically, I was thinking about what will happen to the economy of the state when you can no longer transfer real estate because the property is uninsurable.
In my mind, there would be a sort of tipping point where the State would have to look for outside assistance for their collapsing insurance situation, perhaps even seeking some sort of Federal bailout.
Just read this morning's Wall Street Journal article Wal-Mart Cuts Taxes by Paying Rent to Itself, which is about WalMart's use of Real Estate Investment Trusts (REIT) to reduce its state taxes including those due right here in the Old North State. (If you can get to the online version, there are some documents relating to the Wal-Mart case in NC.) The article leaves you with the distinct impression that Wal-Mart isn't the only company in North Carolina doing this kind of thing with REITs.
Here's a couple of excerpts from the story:
The arrangement takes advantage of a tax loophole that the federal government plugged decades ago, but which many states have been slower to catch. Here's how it works: One Wal-Mart subsidiary pays the rent to a real-estate investment trust, or REIT, which is entitled to a tax break if it pays its profits out in dividends. The REIT is 99%-owned by another Wal-Mart subsidiary, which receives the REIT's dividends tax-free. And Wal-Mart gets to deduct the rent from state taxes as a business expense, even though the money has stayed within the company.
Last week, Smithfield foods announced an agreement with the feds over a new union election. This on the heels of another walkout at the plant after another immigration raid. Not a great time for an election one might think.
Union officials say the election can't move forward, pointing out that there are still cases pending charging unfair labor practices (like the unfair practice of threatening or attacking workers engaged in legal protests). The feds seem to agree. The last few elections were a nightmare. Throw into this one even more volatile immigration politics and and the recent history of raids and actions.
The Land & Water Conservation Commission wrapped up its work with the adoption of a report that asks the legislature to provide for $1 billion in additional funding for conservation needs.
The commission's recommendations include additional incentives and funding for conservation, including farmland and working waterfront preservation. Some of the ideas, which the commission will forward to the General Assembly, have made the real estate and homebuilders lobby uncomfortable. Ag-related issues have also drawn the interest of the state's farm bureau.
The preferred method for raising money is through state bonds, which means anyone interested in the idea of Land for Tomorrow should pay particular attention to an upcoming report from State Treasurer Richard Moore about the state debt and what we might be able to afford. As reported earlier, a lot of folks are cueing up for bonds.
Looks like 2008 is shaping up to be a big year for a bond referendum. Already there are efforts to build the case for bond money to fund the Land for Tomorrow effort, and President Bowles and the UNC System Board of Governors continue to talk about "Bond II"—some kind of followup to the $3.1 billion approved by voters in the last millennium.
Now, a coalition of school and business leaders have combined to push for bonds for school construction. According to a Charlotte Observer story, the group says local governments and lottery money aren't enough to cover the $9.8 billion in construction needs:
Talk this morning about Toyota adding a new Southern plant to its North American factories, with a mention of a site in NC.
From the WSJ:
Toyota Motor Corp., coming off fresh market-share gains and a steep drop in sales by its Detroit competitors last month, is poised to turn up the heat further on the Big Three by naming a site in the Southern U.S. for its eighth North American assembly plant as early as this month, people familiar with the matter said.
Toyota has narrowed the site search for its eighth plant to three to five locations and could announce its choice as soon as this month, the people familiar with the matter said. Among the five locations are Chattanooga, Tenn., and Marion, Ark., they said. Others mentioned by people familiar with the matter included a location near Alamo, Tenn., and a site in North Carolina.
Carolyn Terry runs a sewing machine at a small apparel factory in the heart of town. She's had her workweek cut to three days. She's seen friends laid off from her company and others in this Montgomery County town of 1,400.
"There are so many jobs that have left our county," says Terry, 59. "There are a lot of people just hurting."
For voters such as Terry, the economy is a top concern heading into November's election.
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