In South Carolina, Columbia attorney Burnie Maybank is the quintessential man with a plan when it comes to mining state government for baskets full of handouts in the form of economic development incentives.
Incentive. Webster’s dictionary defines it as “something that incites or has a tendency to incite to determination or action.”
What’s so bad about that, right?
Well, consider: In this context, we’re talking major money – hundreds of millions of dollars – out of the pockets of taxpaying South Carolinians: mom and pop shops on low margins; college students on borrowed thousands; working parents on overstretched hours.
They make their way in the economy as best they can, playing by the same rules of the road.
But not so with recipients of economic development incentives. No, for them, the landscape of competition is dotted with bonus resources parachuted onto it by state government in a politically driven distortion of the marketplace.
What’s your flavor? Job development credits? Sales tax exemptions? Grants from the proceeds of bond sales?
Yes, in some cases the purveyors of “free money” are not reserved to Washington, D.C.
Thus the picture starts to come into focus: Better to understand incentives as freebies, giveaways and corporate welfare – all in a day’s work for many businesses just doing what they do, but getting rewarded for it out of the public treasury in the incentives game.
To understand the political dimensions of it, picture a politician at a ribbon cutting, all basking in accolades for bringing jobs to his or her district.
For his part, Maybank is not a politician, but he is the consummate insider in this game. Arguably more than any other individual in the Palmetto State, he is the man who helps companies cash in on these state-sanctioned advantages.
Maybank is to obtaining economic development incentives in South Carolina what The Keymaker is to navigating The Matrix.
Maybank knows the game inside out, and his expertise in the system speaks for itself:
- He is a member of the economic development team at the high-powered Columbia law firm Nexsen Pruet.
- He is a former two-time director of the S.C. Department of Revenue.
- He co-authored South Carolina Tax Incentives for Economic Development. Weighing in at a hefty 260-some pages, it is a Department of Revenue publication that functions as the bible of state largesse for companies. “The Department of Revenue would like to thank Burnet R. Maybank III whose vision was the genesis for this project,” the acknowledgements section of the manual says.
- He has helped negotiate many incentive deals in the state, including some of the largest and most controversial.
“That’s the bulk of my practice,” he says, “that and state and local (government) tax controversy work.”
Maybank is so schooled in this arena that he has been tapped to serve as chairman of the Tax Realignment Commission. Known as TRAC, it is a special panel the General Assembly created and tasked with scrutinizing virtually all of the state tax code and recommending to lawmakers ways to reform it.
That includes myriad sales tax exemptions and other kinds of special-interest tax breaks.
TRAC is continuing its work and is expected to issue a report detailing its recommendations this fall, possibly in November.
Sen. Hugh Leatherman, R-Florence, appointed Maybank to TRAC.
Leatherman is chairman of the Finance Committee, which exercises jurisdiction over most if not all incentives-related legislation in the Senate.
If Maybank’s dual roles as the king counsel of incentives deals and the chairman of TRAC strike you as a bit, well, confusing, you are not alone.
Indeed, of late the situation has attracted the attention of certain legislators, and some key ones at that. In fact, GOP Sen. Harvey Peeler of Cherokee County, majority leader of the Senate and a member of the Finance Committee, was perhaps the first lawmaker to express concern about the matter.
The underlying question: Do Maybank’s dual roles present a conflict of interest for him?
He says they don’t.
Nevertheless, Peeler voiced apprehension on the subject during a Jan. 28 meeting of a Finance subcommittee he sits on. At the hearing, the panel approved one incentives bill connected to Maybank and was slated to take up another but ran out of time and rescheduled a vote on it.
The legislators began focusing on Maybank’s dual roles after The Nerve started reporting on the issue, beginning with a series of stories this site published in January based on an investigation it conducted into an unprecedented incentives package the Legislature gave the Boeing Co. to build a 787 assembly plant in the state.
In an almost unheard of vote, lawmakers unanimously approved the package by cramming it through a special legislative session in October. A goodie bag of state bonds and tax breaks, it will cost South Carolina taxpayers an estimated $400 million in principal and interest for the bonds alone.
That’s free money for a multinational aerospace corporation that generates billions of dollars in annual revenue.
Demonstrating his legal chops in the courtroom, in 2008 Maybank helped Blackbaud Inc. successfully sue the Department of Revenue to receive hundreds of thousands of dollars in disputed job development credits. Blackbaud is a large software development company in Berkeley County.
Maybank also counts among his clients two corporate heavyweights seeking welfare payouts in the two bills that were on the Finance subcommittee’s Jan. 28 agenda: the Florida-based Sembler Co., a big-dog retail developer in the Southeast, and the Institute for Business and Home Safety, a nonprofit insurance industry group.
Spreading money around the State House to lobbyists and Republican Lt. Gov. Andre Bauer, Sembler is seeking state sales tax refunds to subsidize an upscale megamall the company wants to build in the Lowcountry. Named Okatie Crossings, the mall would be located off Interstate 95 at U.S. 278 and S.C. 170, near the towns of Hardeeville and Bluffton.
The Institute for Business and Home Safety has designs on tax exemptions for a $27 million-odd facility it is constructing in Chester County in the Upstate region of South Carolina. The institute plans to use the site to test the effects of hurricane-force winds and other natural hazards on homes.
On Feb. 2, the subcommittee approved the Sembler legislation and the Finance Committee signed off on both bills.
During the proceedings, Maybank was on hand to address the lawmakers’ concerns about his dual roles. That resulted in a revealing question-and-answer session between them and him, as follows:
If the Legislature decided to debate a particular TRAC recommendation, Democratic Sen. John Land of Clarendon County asked Maybank, would he feel comfortable lobbying against it for one of his clients?
“Well I suppose it depends on what they were paying me,” Maybank deadpanned.
The room broke into laughter.
Maybank added that he does not lobby lawmakers; he only acts as an attorney for his clients.
Sen. Dick Elliott, D-Horry, inquired as to whether TRAC would consider bills passed this legislative session.
Land’s and Elliott’s queries referenced the possibility of TRAC examining new tax breaks that Maybank himself played a role in crafting.
“We haven’t thought about it but that certainly seems reasonable,” Maybank replied. He qualified that answer by saying that the commission is looking at the tax code as it existed at the end of the legislative session last year, not pending bills or laws to be.
Sen. Darrell Jackson, D-Richland: “Wouldn’t it be better to wait ‘til the TRAC Commission report comes out before we pass another (tax break)?”
Maybank: “I don’t know that the Senate has ever awaited any report from an advisory committee before taking action.”
Jackson: “Let me say this, though, Burnie: I would agree. But I don’t know if we’ve ever had a commission like this one before. This is not like a study commission on obesity or a study commission on high blood pressure or something. This is very important to the operation of the state.”
Leatherman: “Sen. Jackson let’s see if I can help you a little bit. This same legislation passed both bodies last year, and got tied up in (another) bill. So, don’t know if that helps you or not.”
Maybank concluded by saying he does not believe that a conflict could never exist for him. If, for example, TRAC were to review a Sembler provision, he said, “That’s a clear conflict of interest.”
But his work as a lawyer does not conflict with his duties as TRAC chairman, Maybank said. “I think a conflict of interest goes the other way,” he said. “What you see me doing as chairman of the TRAC commission might generate a conflict, not what I do as a private sector attorney.”
Reach Ward at (803) 779-5022, ext. 117, or email@example.com.