State forming own stimulus package

The state's top lawmakers and business leaders are putting together South Carolina's own version of a stimulus package -- only without the money.

Instead, the so-called Economic Development Competitiveness Act aims to make it easier for expanding businesses to use state incentives, phases out the state's corporate income tax and improves the reward for employers who create new jobs.

The move could spur business owners to hire workers more quickly as the economy recovers, and for the most part involves tweaking existing programs. But it will come at the expense of some state and property tax revenues.

"This is the right bill at the right time," said George Wolfe, a Columbia attorney who oversees the economic development practice group for the Nelson Mullins law firm.

Wolfe was one of six business leaders assembled by House Speaker Bobby Harrell for an economic development panel. Their task was to pick through the state's existing laws, looking for ways to sweeten the deal forcompanies as they look to emerge from weathering the economic recession.

Their suggestions became a proposal that's now winding its way through the House. If passed, the Senate then could consider the legislation before summer adjournment.

For the Charleston area, the act would give the State Ports Authority control over an $8 million pool of tax breaks it can offer to port users that are boosting their business. The rule also expands how the breaks can be applied.

The act involves existing incentives "that we need to better utilize and better enable companies and industries and businesses to take advantage of," said port spokesman Byron Miller.

Another section fixes a flaw that will allow South Carolina cities and counties to team up to issue bonds worth roughly $287.6 million through a provision of the federal stimulus package. That bond capacity was made available in such small increments that few government entities have been able to spend it.

Pooling the money would make it more economically viable to offer bonds, which can raise money for public infrastructure projects and certain economic development projects.

The bill also would allow some companies to get a more generous per-employee tax break for new workers. The value of state's existing job development tax credits, which company executives can use to cut down on paying employee withholding income taxes, would be doubled, but the length of time employers have to claim them would shortened over time, balancing out the expense.

"In today's economy, South Carolina needs every tool available" to attract new companies, said attorney and panel member Burnie Maybank III, former head of the state Revenue Department.

Other deal-sweeteners in the act include:

• Extending the life of a popular tax break, formally called a fee-in-lieu of tax, to 40 years. Those agreements, which company executives negotiate with county officials, can last 30 years, factoring in an optional 10-year extension. The bill also would factor in depreciation into a property's value when figuring how much tax that business should pay; those tax payments are now fixed.

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• Expanding the ways that companies can spend what's called set-aside grant money. New or expanding companies can apply for that grant money, which amounted to $19 million last year, through a state Commerce board. That money was typically designated for site work, but the legislation would allow company executives to spend it on land purchases, pollution-control equipment and relocation costs for new, high-level executives.

• Requiring state Commerce officials to spend what's called the rural infrastructure fund on economic development projects. Lately, officials have been spending that pool of money on revitalizing the downtown areas of smaller South Carolina towns.

Reach Katy Stech at kstech@postandcourier.com or 937-5549.