Pavlov’s Jobs – Commerce Buys Publicity, Gets Kudos

June 7, 2012

Investigative Reports

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a7c39bd1cd63b78e50ff103a84a12076The S.C. Department of Commerce is continuing its longstanding practice of paying for promotional services from economic development magazines that shower praise on the state.

The plaudits come in the form of awards and other forms of recognition, typically with no mention of often big taxpayer price tags for projects that prompt the accolades.

It all makes for a rosy picture of state government-driven economic development in South Carolina – a tale many state officials are eager to tell through the ubiquitous realms of social media.

Indeed, Gov. Nikki Haley and the vast majority of state legislators seem to be so fond of weaving this narrative that they plan to pour millions more taxpayer dollars into it.

In their budget proposals for the 2012-13 fiscal year that begins July 1, Haley and both the House and Senate doubled a fund the Department of Commerce uses at its own discretion to seal economic development deals.

The doubling would bring the agency’s deal-closing fund from $5 million this budget year to $10 million next fiscal year.

In addition, the House earmarked to the fund the state’s entire share of a national mortgage fraud settlement. The Senate cut $10 million out of the state’s settlement share for the deal-closing fund.

The state received $31.3 million from the agreement, minus 10 percent for legal fees, according to Mark Plowden, communications director for the State Attorney General’s Office.

That leaves about $28.1 million from the settlement for the deal-closing fund, plus the initial doubling of it to $10 million in the Haley and legislative budget proposals.

The House and Senate are working to finalize a budget to send to Haley here in the closing days of this year’s legislative session.

Potentially, then, that’s a total of more than $38 million for Commerce to spread around to companies from its deal-closing fund next fiscal year.

Like a ritualistic anthem, many Palmetto State politicians and government officials chant jobs, jobs, jobs from such corporate welfare.

And the public at large, well, they seem to buy into that rhetoric, more or less.

Yet as The Nerve has repeatedly documented, the pols and government people pass the buck and obfuscate when it comes to hard data showing how many jobs actually have been created – versus the number of jobs they “announced” would be created – what the average salaries of the positions are, and other vital cost-benefit details for taxpayers.

In the latest example of this economic development serial, the Commerce Department recently kicked out another $2,187 to Due North Consulting, the parent company of Trade & Industry Development magazine.

That expenditure brought the agency’s payments to the publication for promotional services so far this fiscal year to $9,000, and more than $17,000 since fiscal 2010, according to S.C. Comptroller General Richard Eckstrom’s state spending transparency database.

On a “National Recognitions” page on its website, Commerce notes awards from Trade & Industry Development for four “projects recruited by” the department with help from local economic development “allies.”

Three of the projects are receiving tens of millions of dollars in state and local taxpayer subsidies: ZF Group in Laurens County, Continental Tire in Sumter County and Bridgestone Tire in Aiken County.

Meanwhile, the dollar amounts involved in this Commerce-advertising-Commerce-awards circle get much bigger when viewed in the whole – at least $170,000 since fiscal 2008, according to entries in the comptroller general’s state spending database.

In addition to Trade & Industry Development, the Commerce agency spent that $170,000 with Area Development, Business Facilities, Site Selection, Chief Executive and Southern Business & Development magazines.

In the case of the latter, Haley press secretary Rob Godfrey mass emailed and tweeted in April about a glowing piece the periodical ran in its most recent issue. “Watch out world: The Palmetto is back,” the article was headlined.

Penned by the editor and publisher of Southern Business & Development, Mike Randle, the article begins in wistful nostalgia for the days of Commerce under Wayne Sterling, who led the agency in the late 1980s and early ‘90s, returning as its chief a few years later until 2001.

“There was a ‘scandal’ at the South Carolina Department of Commerce that the agency couldn’t seem to shake,” says the story in Southern Business & Development, which has brought home $9,600 in paid advertising from Commerce in recent years.

“From what we recall, it (the scandal) was centered on the amount of money Sterling and Commerce spent on golf and golf tournaments,” the article continued. “Yes, Wayne liked to play golf, but no one turned more deals on a golf course than Wayne Sterling did.”

The story goes on to laud a turnaround at Commerce under Haley and her appointed secretary to run the agency, former BMW public relations executive Bobby Hitt.

He is “not shy about revealing his old school economic development strategies” as a “big buffalo hunter,” the write-up says of Hitt.

A couple of paragraphs later:

“But let’s not forget that it was Gov. Haley who had the foresight to pick Hitt for the job. Nikki Haley, who at age 40 is the youngest current serving governor in the U.S., is wise beyond her years when it comes to the practice of economic development.”

Government-led economic development, it’s fair to qualify.

After all, Haley “gave out at least $70 million in incentives during her first 16 months in office,” The Associated Press reported recently.

You’ll find no mention of that in the Southern Business & Development dispatch, however.

The article cites the ZF Group, Continental and Bridgestone projects, along with a slew of others that include Boeing’s 787 Dreamliner plant in North Charleston.

But the story omits the many millions of taxpayer dollars that the state and local governments gave away in subsidizing those deals.

The piece addresses incentives in only once instance – a new discounted rate for industrial electricity being offered through state-owned utility Santee Cooper and the state’s 20-odd electric cooperatives.

In another recent example, Chief Executive in May ranked South Carolina seventh – up one spot – in the magazine’s latest annual rundown of the best and worst states in which to do business, based on the opinions of some CEOs.

The S.C. House Republican Caucus and Republican U.S. Rep. Tim Scott of South Carolina tweeted about that laurel from the magazine.

Seems that in the advertising world, there’s paid publicity – and then there’s “paid publicity.”

Reach Ward at (803) 254-4411 or eric@thenerve.org.