Incentives for retail a bad idea

I step into the debate on the proposed incentives special legislation for a large new shopping center in Jasper County very slowly. I have known its developer Mel Sembler and his wife Betty for over 15 years, and they are first-rate people. Yet this is not about any one person. It is about our administration's continuing commitment to look out for the taxpayer. That is why it's vital you make your voices heard and support the decided stand taken by a number of leaders in the Senate, like Tom Davis and Greg Ryberg, who are trying to stop this unwise use of more than $100 million of taxpayer money.

If this special legislation goes through our state will:

1) Reset the clock on retail incentives.

Our administration fought alongside scores of small businesses a few years ago against similar special legislation that would have given $9 million to the hunting and fishing store Cabela's to come to South Carolina. It would have done nothing for hundreds of small and family-owned businesses, many of whom sold the exact same products — though they had been paying taxes for years or generations here in South Carolina. At the time, I wrote the CEO of Cabela's and told him I had hunted and fished all my life and in that respect would love it if they set down roots in our state. I just didn't think taxpayers should pay them to come here. If it had been done this way, taxpayer subsidies to Cabela's would have unfairly forced other small businesses to effectively subsidize their big box competition. The Jasper County bill now being considered in the Senate invokes the same flawed concept — though it dwarfs it in scale, given its $100 million price tag is more than 10 times that of the Cabela's incentives.

2) Reverse a long-standing tradition of not incentivizing retailers.

Representatives from the Tanger Company came to my office seven years ago asking for comparable incentives as they contemplated building a similar shopping center in North Charleston. They didn't receive the incentives they asked for, and yet they built anyway. I explained that as a matter of policy it had been decided years before I came to office that our state did not offer retail incentives because there was no 'but for' component to retail incentives. Put plainly, retailers come to capture purchasing power. If it's there, they come; and if it's not, they don't. In other words you could incentivize a manufacturing company to set up operations in one of our state's poorer counties, for example Hampton County, but no amount of incentives could entice a high-end retailer to do the same. If this bill goes through, Tanger, and many others like them, very well may be back in Columbia soon asking for the same incentives that Sembler receives. In fact, retail incentives in states like Texas have failed to live up to their lofty job and investment promises, and other states, including Georgia and Kentucky, have begun refusing to grant special state retail incentives to stores like Cabela's.

3) Reshuffle jobs among retail shopping centers in the area.

Few would support the claim that adding jobs in one retail center while you take them from another shopping center five miles down the road is a surefire road to prosperity. Yet there are no prohibitions in this incentives package from this indeed becoming the case. We believe it's important that, when thinking about economic development, we look more broadly than to what happens in one shopping center — and instead to the larger question of what happens to retail in the area.

4) Repeat the unfortunate tradition of allowing people in government to pick winners and losers in the commercial marketplace.

I have never been a fan of incentives because I don't believe a job from a big business is superior to one produced by a small business. Despite my personal views we do have existing statutes on the books, and in governing, our administration has used each of these tools in the existing tool kit. I have seen firsthand both the ways in which these incentives do and don't work.

Based on that experience, I believe adding a new category of incentives based on the needs of just one retail shopping center would not only be an immediate $100 million mistake, but also over time that it would bring with it costs and consequences far beyond this shopping center in Jasper County.

If you agree, now is the time to make your voice heard.

Mark Sanford is governor of South Carolina.