More Government Hands in S.C. Economy

April 14, 2010

Investigative Reports

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The NerveA 15-member committee controlled by the Legislature would dole out taxpayer money to promote economic development in 17 counties in the Lowcountry and Pee Dee under a state Senate bill.

The bill (S. 1323) sponsored by Sen. John Matthews, D-Orangeburg, and introduced March 25, would create the “I-95 Corridor Authority,” which would receive state funds “as appropriated by the General Assembly.”

The purpose of the group would be to “carry out economic development and educational improvement activities, which, in the opinion of the authority, will improve economic conditions in its member counties,” the bill says.

Matthews told The Nerve last week that to his knowledge, the proposed authority has no counterpart in South Carolina or the United States.

“One of the bigger problems the corridor has is that the school system is not prepared to meet the new needs of manufacturers and industry,” he said, noting that many of the brightest students leave the area after graduation. “It’s that long-term brain drain that’s killing us.”

Sen. Hugh Leatherman, R-Florence, one of the bill’s seven co-sponsors and whose Senate Finance Committee is now considering it, wants to funnel $3.5 million annually out of the Senate’s proposed 50-cent hike in the state’s cigarette tax to the authority.

His amendment, which passed the Senate on March 31, would use tobacco settlement money for unspecified “infrastructure improvements” in the corridor.

Interstate 95 runs through Leatherman’s Senate district. Leatherman was one of the main players behind a massive taxpayer-funded incentives package – worth at least a half-billion dollars – to bring a Boeing aircraft assembly plant to North Charleston.

Matthews said besides cigarette tax money and state general funds, the authority also would seek federal and private funds.

His bill doesn’t specify the types of economic development incentives that the authority could offer, though it would allow the authority to lease or buy and sell land, and to enter into contracts with individuals, businesses and private or public “entities” that are “considered desirable in the furtherance of (the authority’s) purpose.”

Asked if that meant the authority could provide taxpayer-funded incentives to particular companies, Matthews told The Nerve: “They would be given the authority to do a variety of things to go along with economic development. They would be doing things the state has done in the past.”

Matthews added that under a proposed amendment to his bill, the S.C. Research Authority (SCRA), a state-created agency identified as a key player in House Speaker Bobby Harrell’s “knowledge economy” pyramid plan, would be a “consulting entity” to the authority.

“They’re looking at the I-95 corridor as prime territory for biomass development,” Matthews said about the SCRA.

The bill mandates that the I-95 Corridor Authority “oversee the implementation of the recommendations” of the “I-95 Corridor Human Needs Assessment ” report published in December. That report was prepared by a North Carolina-based research company for Francis Marion University and S.C. State University, which, under the bill, would have one voting member each – its president or designee – on the authority’s board of directors.

“South Carolina’s I-95 corridor is a diverse and expansive region of 17 counties and nearly a million people, stretching from North Carolina to Georgia, ” according to the executive summary of the 189-page report by RTI International.

“Despite advantages, including proximity to the coast and major transportation routes, the corridor has long been under-developed. With that underdevelopment have come problems ranging from struggling schools to cyclical poverty to lagging health and social well-being indicators.”

The report, citing 2005 U.S. Census figures, noted that of the 17 counties, only Beaufort and Dorchester had median household incomes above the then-state median household income of $39,477, and that seven out of eight of South Carolina’s poorest counties were located along the I-95 stretch.

Besides Beaufort and Dorchester counties, the other 15 counties identified in the report are Bamberg, Calhoun, Colleton, Clarendon, Darlington, Dillon, Florence, Hampton, Jasper, Lee, Marion, Marlboro, Orangeburg, Sumter and Williamsburg.

Matthews’ bill doesn’t identify any counties, though it requires that the member counties either be “contiguous with I-95,” or be located within 30 miles of the interstate and have a population of fewer than 40,000 as determined by the 2000 Census.

Matthews told The Nerve that all of the counties identified in the RTI report would meet the criteria under his bill.

He said the report, which he noted was funded with state tax dollars, grew out of a legislatively created “blue-ribbon”panel that he chaired several years ago. Francis Marion University and S.C. State University selected RTI International, headquartered in Research Triangle Park, to bring more “expertise” to problems identified by the panel, he said.

The report identifies six “fundamental needs in the region,” including “creating a shared vision for the region’s economic opportunities, and aligning resources with that vision will allow decision makers to leverage greater state and national resources for investment in the corridor.”

“At the regional level, appropriate industry sectors for recruitment and retention can be more readily identified, and small business and entrepreneurs supported more substantially,” the report says.

It also says that Francis Marion University and S.C. State University should “continue to build their roles as regional leaders, expanding their outreach and community service activities.”

In addition to the presidents of those two universities or their designees , other board members would include:

  • The chairman, appointed by the member counties’ senators and representatives in a weighted vote.
  • Three members appointed by senators in the member counties.
  • Three members appointed by representatives in the member counties.
  • One member appointed by the Senate Finance Committee chairman – Leatherman.
  • One member appointed by the House Ways and Means Committee chairman – Rep. Dan Cooper, R-Anderson.
  • A president of a technical college located in a member county, appointed by senators in the member counties.
  • A president of a technical college located in a member county, appointed by representatives in the member counties.

The bill doesn’t identify who the other two voting members of the board would be, or who would appoint them. The board also would include six non-voting members, one appointed by “each individual Regional Council of Government” covering the member counties.

Matthews told The Nerve that a proposed amendment would fix the number shortfall on the board, though he couldn’t provide specifics.

The voting members of the board would govern the authority, which would, under the bill, “appoint officers, agents, employees and consultants; prescribe their duties; and fix their compensation.” Most of the board members’ terms would be for five years.

The bill would require the authority to be audited annually either by the state auditor or an “independent certified public accounting firm” approved by the state auditor.

But it doesn’t contain any “clawback” provisions, or requirements that companies repay any taxpayer-funded incentives should they not live up to their end of deals with the authority.

Matthews said the authority would “negotiate what they feel is a good and fair deal for the taxpayers of South Carolina.”

Besides Matthews and Leatherman, other senators who have signed onto the bill include Dick Elliott, D-Horry; John Land, D-Clarendon; Phil Leventis, D-Sumter; Gerald Malloy, D-Darlington; Yancey McGill, D-Williamsburg; and Kent Williams, D-Marion.

Most of the bill’s co-sponsors, who represent counties either in or bordering the proposed corridor, have not responded to a list of written questions submitted by The Nerve. Leventis acknowledged receiving the list but could not be reached for comment in time for publication.

Reach Brundrett at (803) 779-5022, ext. 106, or rick@scpolicycouncil.com.