This is reprinted with permission from The News & Observer of Raleigh.

North Carolina lawmakers voted this year to give up to $12.5 million a year in tax breaks for Apple so the computer giant will build a data center in Western North Carolina.

The vote sparked arguments about corporate handouts, but lawmakers said Apple offers the new-economy jobs that are critical to North Carolina.

Two months later, with less public attention, the legislature passed $10 million in tax incentives for a paper mill in Plymouth in Eastern North Carolina that will be converted to make diaper fluff. The mill is part of the traditional manufacturing economy that has been bleeding jobs in the state for more than a decade.

The contrasting votes were yet another sign that North Carolina is a state in the middle, pulled in multiple directions as it makes the transition from a rural state to an urban and suburban one. The struggle shows in much of what the legislature did this year -- in debates on issues ranging from tax reform to environmental protection.

"We are, on many levels, a state in transition," said Michael Walden, an economist at N.C. State University.

North Carolina is no longer primarily rural, but it is not yet fully urbanized. It's not a manufacturing state any more, and not yet completely high-tech.

When legislators try to push North Carolina to reflect the new possibilities, they often find themselves pulled back by old realities.

"Rural legislators go back to their districts and see people employed in the pulp mill or the textile mill," Walden said. "They see that a lot of those cutting-edge jobs are not going to go there."

Senate leaders this year began trying to overhaul the state's tax code, arguing that the early 20th-century tax laws do not fit a blossoming knowledge-based economy. The change would have lowered corporate, income and sales tax rates but expanded the sales tax to include a variety of services, such as auto repair and house painting.

"Our economy is changing, and we have to make the necessary adjustments so we can compete. One of those is, we need to have a modern, competitive tax structure that ensures a steady flow of income," said John McNairy, who owns a trucking company and John Deere dealership in Kinston and previously led what is now the N.C. Chamber of Commerce.

The reform stalled. Although McNairy argues it would help old industries as much as new, he said lawmakers worried about unintended consequences.

A similar conflict undergirded some of the environmental debates.

State officials, starting with Gov. Beverly Perdue, are increasingly pushing for North Carolina to develop a "green" economy. Legislators passed bills making it easier to install solar collectors, providing loans for energy improvements and expanding credits for investing in renewable energy.

A bill to establish a permitting process for windmills, though, failed amid fears of dotting the tourist-friendly mountains with the towering wind catchers.

"The mountain economy is based on the view. The tourism industry and second-home industry don't want windmills in that view," said Bill Holman, a former state secretary of environment and natural resources. He is now director of state policy at Duke University's Nicholas Institute for Environmental Policy Solutions.

North Carolina data show the population shifting from a slight rural majority in 2000 to a slight urban majority last year, but the state calculates the population differently than the U.S. Census Bureau. The census showed a 59 percent urban majority in 2000 that continues to outpace rural growth.

'A Lot of Ruralism Alive'

"It isn't urban like the Northeast, but we've created these sprawling metro areas," said Ferrel Guillory, director of UNC-Chapel Hill's program on public life. "Yet we remain, in our traditions and our historical legacy where there's a lot of ruralism alive."

Chapel Hill Mayor Kevin Foy, who leads the N.C. Metropolitan Mayors Coalition, emphasized that urban areas' share of newly created jobs also will continue to grow, even if the workers who hold them live outside the cities.

"Those trends point to a shift in where the state is going," Foy said. "The legislature is pulled in different directions."

Rural lawmakers long dominated the legislature and still hold sway, particularly in the House, where Democrats maintain a majority that has to hold together liberals, business-oriented members and the black caucus.

"They need us to get things passed," said Rep. Jim Crawford, a Granville County Democrat.

He acknowledged, though, that the base of power has shifted.

"The urban folks have certainly gotten control of the votes now," Crawford said.

The redistricting after the 2010 census is expected to give Charlotte and Raleigh a total of five additional House seats and two additional Senate seats.

That shift was seen when lawmakers banned smoking in bars and restaurants this year, with suburban and urban legislators making the difference. They represent constituents, many of them transplants from other states, unfamiliar with North Carolina's historical ties to tobacco and accustomed to smoke-free, chain restaurants.

At the same time, legislators whittled a proposed $1-per-pack cigarette tax increase to a dime, a nod to the dwindling ranks of tobacco farmers and cigarette plant workers.

Counties won legislation allowing them to boost the sales tax to pay for transit improvements, a win for metro areas. The House, though, approved a bill to make it tougher for cities to annex adjoining communities, a power that metropolitan leaders say they need to manage growth. The Senate did not take up that bill.

Urban Creep More Noticeable

Mecklenburg County is the state's largest urban center, but the Charlotte Chamber of Commerce factors in neighboring rural communities when it constructs economic strategies for the region. It's the same two-directional tug felt in the capital, said Natalie English, a senior vice president with the Chamber. It's also not a new conflict for lawmakers, said English, who previously served as the Chamber's lobbyist in Raleigh.

"This year might have been more obvious than in other sessions," English said. But as the population points to urban growth, "we'll start to see more of this struggle. As long as there are people in rural parts of the state, they will continue to have needs different from the [urban] majority."

The legislature must tend to both, said Mayor Brian Roth of Plymouth, home of the paper plant that plans to shift to supplying diaper fluff. He supports the cultivation of new industries but wants support for industries that have employed members of his community for generations.

Plymouth is proof that both are possible, he said. State money is not only expected to aid the paper plant but also to help expand the local airport, which made it easier to attract medical device manufacturer Micro Invasive Technology, Inc.

"It's not this or that," Roth said, "It has to be all of the above."