June 5, 2023

The Nerve

Where Government Gets Exposed

Sembler Tax Break Slows; Maybank Focus Grows

The NerveThe fate of a controversial proposed state sales tax break for a shopping mall the Florida-based Sembler Co. wants to build in Jasper County remains uncertain three weeks into this year’s legislative session.

With the measure blocked on one path in the General Assembly, proponents of the tax break are pursuing a new course in an effort to get it passed.

The proposal has become a flashpoint in a growing debate about state government’s role in economic development. It is true especially in regard to a habit lawmakers have gotten into of doling out corporate welfare in the form of subsidies and other incentives on behalf of South Carolina residents and businesses.

Last year, Sen. Greg Ryberg, R-Aiken, blocked the Sembler tax break. It was part of legislation that got hung up, largely because of Ryberg’s opposition, in a conference committee that was trying to work out differing House and Senate versions of it.

That logjam continues.

Explaining his stance, Ryberg wrote in an op-ed that the proposed Sembler tax break would amount to “$131.5 million of your tax money,” and, “I oppose taxpayer funding of common economic activities such as building a shopping mall.”

Pushing back, Sen. Clementa Pinckney, a Democrat from Jasper County who is championing the Sembler project and the tax break for it, recently introduced separate legislation to try to get it through the Legislature.

Pinckney says the development, dubbed Okatie Crossings, would create jobs and capital investment in an area desperately needing economic development.

And he points out that his legislation would not allow Sembler to get the tax break until and unless the company hired at least 1,000 people and invested a minimum of $100 million.

The Senate Finance Sales and Income Tax Subcommittee was scheduled to consider Pinckney’s bill in a meeting Thursday. But the panel ran out of time before taking it up and postponed action on the measure until Tuesday.

In addition to elevating the debate about state incentives, the would-be sales tax break for the Sembler project is raising more eyebrows about the role of a key player in several state incentive deals – Burnie Maybank.

A former two-time director of the S.C. Department of Revenue, Maybank is a Columbia attorney who helps negotiate many such agreements. The packages he has assisted in crafting include the one for the Sembler development, as well as an unprecedented batch of incentives the Legislature sped through a special session in October to buy a Boeing 787 assembly line for the Palmetto State.

Playing a new part in the public arena, meanwhile, Maybank is serving as chairman of the state Tax Realignment Commission.

Known as TRAC, it is a panel created by the General Assembly to scrutinize almost all of the state tax code. TRAC’s purview includes sales tax exemptions, which lawmakers have bestowed on everything from newsprint to sweet grass baskets made by local artists using locally grown sweet grass to proceeds from the rental of portable toilets.

TRAC’s mission? Recommend tax reforms to the Legislature.

Mayank says his chairmanship of TRAC and his work as an attorney for clients seeking tax breaks and other incentives does not create a conflict of interest for him.

But Sen. Harvey Peeler, R-Cherokee and majority leader of the upper chamber, says he is concerned about the matter.

Peeler’s apprehension became evident when the subcommittee rescheduled a vote on the proposed sales tax break for the Sembler Co.

That decision related to parliamentary procedure rather than public policy. Sen. William O’Dell, R-Abbeville and chairman of the panel, said the issue had to be deferred because the Legislature was about to convene and meetings by committees and subcommittees cannot be held while lawmakers are in session.

The panel did complete one piece of business before adjourning, however. And it was during that process that Peeler voiced his concern about Maybank.

With Peeler dissenting, the subcommittee voted 3-1 to approve a bill Sen. Creighton Coleman, D-Fairfield, is sponsoring. The bill would provide tax exemptions for a $27 million-odd facility under construction in the Upstate region of South Carolina by the nonprofit Institute for Business and Home Safety.

An insurance industry group, the institute is building a site in Chester County to test the effects of hurricane-force winds and other natural hazards on homes.

Coleman’s bill is on a dual track similar to Pinckney’s, as it too was part of the legislation that’s bottlenecked in the conference committee.

Responding to questions from The Nerve, Peeler said he does not object to the Upstate project.

What he is concerned about, Peeler said, is the fact that Maybank crafted the language of the tax exemptions for it and is serving as chairman of the TRAC. “I think he needs to come and clear those questions up,” the senator said.

Asked to address Peeler’s point, Maybank says the Institute for Business and Home Safety became one of his clients long before Coleman introduced his bill. “I would say it’s no conflict at all,” he says.

And just because he is head of the TRAC does not mean he must stop practicing law, Maybank says. “I’m obviously not having a whole lot of fun serving as TRAC chairman,” he says. “We don’t even get a per diem.”

While the Coleman-sponsored handouts from state government got a favorable report from the subcommittee, the panel’s decision on Pinckney’s proposed giveaways remains to be seen.

Reach Ward at (803) 779-5022, ext. 117, or eric@scpolicycouncil.com.

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The Nerve