The Palmetto Insider

Dillon County’s government features a legislator who is also a high school football coach. Oh, and by the way, he also is in charge of selecting the county’s school board. It just gets weirder. He’s one of a few South Carolina legislators who can single-handedly override a gubernatorial veto.

Read what Investigative Reporter Geoff Pallay learned only on The Nerve.

Today the Senate took action to fast-track legislation giving more than $100 million in taxpayer funded incentives to The Sembler Co., a Florida-based developer, for a planned shopping mall in Jasper County. The Senate voted to place the bill on “Special Order,” which means that the legislation is now in a top priority position to be taken up by the Senate.  All bills voted on under Special Order must be recorded votes.

Costs of the incentive package for the new development continue to be unclear: ranging from a low of $22.5 million to as much as $174.5 million in tax breaks over 15 years. If Sembler is anything like the Boeing package legislators approved in October, the cost to taxpayers is probably being underestimated. (Read here for why future incentives deals should be capped so the costs are known upfront.)

Lawmakers who support the incentive package for Sembler are pushing for the quick vote in spite of vocal opposition to the taxpayer-funded giveaway:

• The Policy Council and the S.C. Coastal Conservation League issued a joint statement raising economic and environmental concerns.
• A series of reports in The Nerve raised questions about the development, and the developer.
• The Beaufort County Council (which shares part of the land sited for the project) voted against the deal.
• An analysis by College of Charleston economist Peter Calcagno projected that the Sembler tax incentives are unlikely to benefit South Carolina’s economy, or create new jobs.
• Even the state of South Carolina itself—by way of a report by the state’s chief economist, William Gillespie—concluded that the megamall is unlikely to increase overall sales, but would instead shift sales from existing retailers

A decade of failed experimentation in government-driven economic development, or the fact that taxpayers are being asked to subsidize their competition, ought to be enough to dissuade lawmakers—but the real issue with Sembler is less about economics and more about corporate lobbying and political connections.

On Tuesday, Richland County joined the growing list (19 so far) of city and county governments that have put their check registers on line. Nice job Richland County!

We wondered in our Tuesday blog when the City of Columbia’s long awaited promise to post its check registers would be fulfilled. That day, interestingly enough, is today. Coincidence?  The immense power of our blog post? Sure, why not?

Welcome, Columbia, to the ranks of more-transparent governments.

Yet much more needs to be done. The state still has not enacted several important transparency reforms, including the Truth in Spending Act, which would require every state agency and local government to post their check registries online.

Does the South Carolina electricity market need privatizing?  The last time South Carolina approved electricity deregulation was in 1997 with House bill 3414.  Yet consider what Texas has accomplished in recent years through privatization.

According to information released by the Texas Public Policy Foundation, privatizing the electricity market has lowered consumer prices, increased reliability, and fostered consumer choice through competition.

• Data gathered from the U.S. Energy Information Administration (EIA) reveals a reduction in prices for Texas residents under a competition-based electricity market.  The report shows, “Today, the average competitive price is 8.71% below the national average.”  The national average refers to the national regulated average.

• Competition has also increased reliability.  For example, private electric companies trying to turn a profit build new generators as their customer base increases.  More generators mean more capacity for stored/reserved electricity.  Reserved electricity is quite valuable during unexpected heat waves that often occur in summer months, especially in Texas. The same would be the case in South Carolina.

• The competition-based market in Texas is far more popular than the regulated electricity market.  In fact, “Almost 82% of consumers have actively chosen competitive rate plans.”

If South Carolina were to follow Texas’s lead, privatizing could lower consumer prices by encouraging competition and increasing reliability/power reserves.

Moreover, by monopolizing the electricity market, the state is directly competing with would-be private entrepreneurs. If state leaders are serious about growing the economy and stimulating free enterprise, they might start by deregulating the electricity industry.

Richland County has become the 18th local government in South Carolina to begin putting its check register online at this link.

More than a year ago, the Policy Council launched the debate on transparency in South Carolina with a report on reforms needed to open government to the public and encourage accountability and transparency. The January 2009 report called for online check registers, a ban on taxpayer funded lobbying, on-the-record voting by legislators, and income disclosures for lawmakers and candidates for public office.

“When government spends people’s money, it’s just common courtesy to show them how it’s spending it,” said SC Comptroller Richard Eckstrom in a news release on the Richland County transparency effort.“Other governments in the Midlands and across the state would do well to follow their lead.” Eckstrom noted that he and the Policy Council worked together in the campaign launched last year to encourage local governments - cities, counties and school districts – to post details about individual expenditures on the Web.

For a list of local governments that have begun posting their check registers on the Web, go to: http://www.cg.sc.gov/transparency/.

Taxpayers are still waiting, and waiting, for the city of Columbia to fulfill its promise of on-line financial transparency. Columbia Mayor Bob Cole promised to embrace transparency—and vowed to be the first city in the state to place all its financial records on-line—in April of 2009.

South Carolina has been doling out incentives at a rapid rate – more than $1 billion over the past 10 years.

But what do we have to show for it? It’s hard to say, given the lack of transparency and accountability that overshadows such deals.

As indicated by a new SCPC report, Three Steps Toward Transparency, “Economic development legislation should be crafted in a deliberative manner subject to full public review and debate.”

Among the white paper’s recommendations is the creation of a unified economic development report, released annually by the Department of Revenue. The report would detail all state and local expenditures for economic development, including targeted tax credits; and list all uncollected state and local tax revenues resulting from any tax credit or exemption provided by state or local governments.

While transparency opponents are likely to balk at releasing such information, several states have already created economic incentives transparency websites. According to a report by the Washington, D.C.-based organization Good Jobs First, Illinois, Iowa, Minnesota and Pennsylvania have the best disclosure websites.

As for South Carolina … we scored an “F.” When it comes to incentives transparency, the Palmetto State is the 4^th worst state; only Alabama, West Virginia and Wyoming score worse than South Carolina.

Some of the Good Jobs First report’s findings and recommendations:

“Many of the states disclose only projected costs but not actual benefits. That is, they provide information about deals as they have been awarded, but they do not report outcomes of the deals over time (such as jobs actually created).

“In addition to moving toward full transparency about the subsidies awarded, states should do more to monitor the performance of subsidy recipients—the outcomes of the deals— and disclose those results to the public.

“Given how much easier it has become to post information on the Web, we also recommend that state disclosure data be updated quarterly, instead of annually.”

Many of those similar proposals are outlined in the Policy Council white paper. But they are ideas you won’t find in the massive economic development bill, H 4478.

The question, though, is why not? If state-driven economic development is such a good idea, then our political leaders should have no qualms showing the public just how well their money is being spent. Transparency is a win-win, Unless, of course, the powers that be already know that economic incentives are not working – except to benefit themselves and their friends.

It seems the South Carolina General Assembly has had no problem thinking up wacky ideas this week.

First is a proposal “that would mandate that gold and silver coins replace federal currency as legal tender in this state.”

First talked about in the SC blogosphere, this idea made its way into the national news and surely provided many folks across the country with some good laughs.

Next is a bill that would ban alcohol sales on Christmas and Thanksgiving Day.

This idea will likely anger eggnog drinkers and those who enjoy spirits on these two holidays. But it’s a good complement to another proposal that confirms that while it should be illegal to sell alcohol on Sundays, paying a fee to sell alcohol on Sundays makes it OK.

And just yesterday, the House of Representatives passed a bill that would ban secret compartments in cars. That’s right, no compartments or fuel tanks other than those installed by the car manufacturer.  This bill was introduced last session, as noted in our Best/Worst review of property rights legislation. The intent of the bill is obviously to discourage drug smugglers, but the act of creating a secret compartment in itself should not be illegal.

These three ideas kicked around by the General Assembly this week may be humorous, but there is nothing funny about lawmakers playing around with our personal freedoms. To read more, click here.

With all of the Boeing and Sembler talk, the hottest topic of conversation recently has been economic incentives packages.

Yet there’s actually very little information out there on exactly how much of our tax dollars the government has been doling out to private companies.

Take, for instance, the Boeing deal. Analysis by The Nerve investigative reporter Rick Brundrett found that the Boeing incentives package will cost at least $500 million to create some 3,800 jobs. Yet, notes Brundrett, “The true total cost to taxpayers remains unknown – and may never be known because of state privacy laws.”

But don’t state taxpayers deserve the same level of disclosure that would be afforded to any private investor? – that is, a clear accounting of how much such deals will cost and what the return on investment will be.

According to the Policy Council, the answer is yes. A report issued today argues for greater transparency in the economic incentives game the state has been playing with taxpayer dollars. Here are four specific ideas recommended by the white paper:

1)      Requiring any incentives legislation to be introduced as standalone legislation that receives a recorded vote

2)      Requiring a formal application process for businesses seeking incentives

3)      Requiring a detailed, dynamic cost-benefit analysis of proposed incentive packages

4)      Requiring an annual report that details all economic incentives agreements and their cost to taxpayers

Thus far, the process of granting economic incentives in South Carolina has been akin to handing money to a broker, asking him to invest, and never asking what stocks are purchased and how they are performing.

The Policy Council’s recommendations would foster greater transparency, enabling taxpayers to at least determine whether such economic incentives deals are working as promised. Our guess is that they’re not. But if they are, state leaders should welcome the opportunity to shed additional light on their endeavors to make South Carolina more prosperous.

The State newspaper has a story in today’s edition about a groundbreaking ceremony for the South Carolina Research Authority-USC Innovation Center.

The Columbia innovation center is one of three such sites SCRA is building.

In the article’s last line, SCRA Chief Executive Bill Mahoney is quoted as saying: “No taxpayer money will be used to build the state incubators.”

Beyond the fact that in the 1980s the General Assembly gave SCRA $500K and approximately 1,400 acres of undeveloped state land – property the entity has sold off for many, many millions of dollars over the years - a simple glance at the artwork accompanying The State’s story indicates that at least some tax dollars are almost certainly going toward the SCRA-USC Innovation Center.

The rendering shows that underneath the SCRA moniker is the logo for the University of South Carolina. And, according to the FY 2009-10 budget, USC was allocated more than $900 million in total funding, including more than $140 million from the state’s General Fund.

So unless USC is allowing its name and logo to be used free of charge by SCRA (which seems implausible given the manner in which the school jealously guards its brand), one can reasonably assume that, contrary to Mr. Mahoney’s assertion, there are indeed tax dollars being used at the Columbia innovation center.