South Carolinians have a right to know the details of pricey corporate tax breaks
When public employees meet behind closed doors with private corporations and commit to spend tens of millions in taxpayer dollars on a single project, that’s a recipe for mischief if not outright corruption.
That’s why at the very least the records of such negotiations should become public after deals are formally approved.
In many states the deals are public even before final approval, which allows taxpayers to see what they’re getting in return and hold companies accountable to their promises.
Hiding records
Yet in recent court filings and testimony the South Carolina Department of Commerce has made the outrageous claim that it can legally hide such records — even years after the deals are finalized.
This comes on the heels of a damning audit of the Commerce Department that found the agency is failing to verify job-creation claims — and that it cannot even determine if taxpayers are losing money on a given deal.
In other words South Carolinians have no way of knowing what they got in exchange from the companies they subsidized.
These new secrecy claims make it clear: Gov. Henry McMaster’s economic development agency is hiding critical data that every South Carolina taxpayer has a right to see.
No justification for secrecy
Seeking to justify this secrecy Commerce Secretary Bobby Hitt has claimed that South Carolina would lose deals if it discloses negotiations records after a deal is awarded.
There is simply no evidence — in any state — that such a claim is true; in fact, journalists and watchdogs have been examining such records for decades.
Take Virginia, where recruitment is led by a public-private partnership and anyone can request and see the files — and that includes email, meeting notes, memos and more.
When Marriott International approached Virginia in the late 1990s about possibly relocating its headquarters from Maryland, Virginia state officials made all related records public following the state’s unsuccessful bid.
The records suggested that Virginia had been used by Marriott to secure a more generous “retention” package from Maryland.
More recently Virginia has posted online its agreement online with Amazon.com for the “HQ2” project in Northern Virginia.
A cautionary tale in NC
In North Carolina, meanwhile, officials tried to hide bargaining details in 2004 after completing the largest deal in state history to provide nearly a quarter-billion dollars to Dell for a plant in Winston-Salem.
But the North Carolina Press Association and the John Locke Foundation successfully sued for disclosure of the records related to the Dell deal, and about 4,000 pages were released.
The records revealed that Dell officials sought to totally avoid paying any form of income tax — a demand that one Dell executive arrogantly justified by stating in part: “2,000 jobs — shouldn’t you be happy without any revenue?”
And, according to the records, some of the state’s negotiators were aghast at Dell’s request. “Who will pay the taxes?” one wrote.
Just five years after the lavish subsidies were awarded, Dell announced the Winston-Salem plant was closing; tragically the state was unable to claw back any of the tax breaks that Dell had already claimed.
In hindsight Dell’s interest in tax avoidance was an early warning sign.
Apparently Dell didn’t want to invest in North Carolina’s schools or infrastructure — and maybe the reason why it didn’t was because the company didn’t see a long-term future in that state.
We need to know
South Carolinians deserve to know the same.
They deserve to know if companies are avoiding paying their fair share for public services in our state.
Indeed — thanks to a recent study by the nonpartisan organization Good Jobs First — we know that school districts throughout South Carolina lost $423 million last year due to economic development tax abatements.
Under state law county governments give that revenue away, but they don’t have to disclose which company got how much — or even how many jobs these companies actually created.
South Carolinians also have a right to see the costs and benefits of these deals as they play out, sometimes for decades.
Compare the lack of information in South Carolina to what’s happening elsewhere.
North Carolina started disclosing company-specific information about grants and tax credits 17 years ago, and it discloses that spending online for all to see.
And Ohio has been disclosing specific deals online for an even longer period than North Carolina; that Midwest state began posting such information in 1999.
Meanwhile, South Carolina — with no information posted online — ranks among the worst states for transparency.
It’s our money
Secrecy and hidden taxpayer costs are fertile ground for waste and corruption.
Sunshine, as they say, is always the best disinfectant.
South Carolinians deserve full disclosure around taxpayer-funded deals negotiated behind closed doors.
They also deserve disclosure by both the state and counties on how past deals are working out.
After all, it is the public’s money that is being spent.
State Sen. Richard Harpootlian of Columbia represents the 20th District.. Greg LeRoy directs Good Jobs First, a nonprofit, nonpartisan watchdog group that monitors economic development incentives.
This story was originally published October 21, 2020 at 2:27 PM with the headline "South Carolinians have a right to know the details of pricey corporate tax breaks."