COLUMBIA — South Carolina taxpayers have few resources to track whether companies receiving state tax incentives are keeping up their end of the bargain.
Company-specific tracking information could provide the public a clearer picture of the costs and benefits of providing public money to businesses to locate or expand in the state.
But the current incentive system is mostly a closed loop between companies and state government. Details on whether companies have lived up to what they promised in return for incentives are not easily available to the public and, in some cases, are exempt by law from disclosure.
For example, companies receiving state Job Development Credits and certain grants are exempt under state law from having to disclose payroll and investment detail information.
The Commerce Department said the use of incentives is vital for the creation of new jobs, and that accountability and accuracy are taken seriously.
But an analysis by The Post and Courier and recent reports by Pew and other nonpartisan groups make it clear that South Carolina does little to provide information on the effectiveness of its incentives programs, despite the large sums of taxpayer money involved.
“There’s a lot of public money being diverted to the private sector, so there’s good reason to have transparency on this,” said Philip Mattera, research director for Good Jobs First, a Washington-based nonprofit that promotes accountability in economic development.
Big money is indeed being committed in the Palmetto State, most notably to bring Boeing’s massive jet assembly facility to North Charleston more than two years ago.
An earlier analysis by the newspaper conservatively estimated the value of the incentives package given to the company at more than $900 million.
So what information is available for the public to decide whether the incentives for Boeing and others have been worth it?
When it comes to specific companies, very little — online or otherwise.
The Board of Economic Advisers, the state’s official economists, compiles an annual report that provides total tax credits and dollar amounts claimed under each tax-credit program since its inception.
Those tax-credit programs include some of the major incentives the state uses to entice companies to locate or expand in South Carolina, such as Job Development Credits and the Job Tax Credit Program.
But the report provides no breakdown by company.
The Coordinating Council for Economic Development helps put together state incentives packages. It also releases its own annual report to the General Assembly that details the yearly activity of the Economic Development Set-Aside Fund and the Rural Infrastructure Fund, both of which the council manages.
Grants from the funds are awarded to counties and local governments for infrastructure improvements, such as road widening and sewer line work.
Both programs are critical for landing new companies and expansions from companies already in South Carolina, the council’s latest report stated.
According to the council, the companies wouldn’t move forward without the funds.
Combined, the council awarded $36.1 million to counties and local communities from the programs in calendar year 2011.
But the council’s annual report breaks down where funding has been allocated only by county and town, and doesn’t include information on which company each grant is associated with.
And neither the council nor the state economic advisers’ annual reports include any details on the performance of firms awarded public money.
But a spokeswoman for the Commerce Department said accountability and measurement policies are in place to monitor incentives.
Amy Love said the programs the council oversees are performance-based, meaning they can’t be accessed by companies until job and investment targets have been met for a given time period.
For Job Development Credits — credits against withholding taxes — companies can’t continue to claim them unless they hit quarterly job and investment targets, she said.
But taxpayers can’t verify for themselves that targets are being hit or missed.
Companies’ payroll and investment information is exempt from public disclosure under state law.
Love said that makes sense because companies typically consider employment and investment information to be confidential and proprietary for competitive reasons.
Also blocked from release are audits the S.C. Department of Revenue conducts on companies claiming Job Development Credits at least once every three years.
Under state law, the Revenue Department can’t release company-specific information, which would show how much companies have received in tax exemptions and credits.
One key document citizens can access is an initial performance or revitalization agreement a company has signed with the state.
Still, those agreements can be accessed only by using a state Freedom of Information Act request.
For example, the Commerce Department late last month provided The Post and Courier copies of the state’s initial performance agreements with Boeing and Amazon in response to aN FOIA request.
Love said the agreements aren’t posted online because the state aims to be business-friendly, and posting the agreements would result in a higher public cost to recruit companies because existing deals “would become the floor for future negotiations.”
National groups have taken notice of how South Carolina tracks the performance of its incentives and tax breaks.
Mattera with Good Jobs First said it could be argued the state’s disclosure policies lead to more skepticism of its economic development policies.
He said neighboring North Carolina is an example of a state with far superior disclosure of incentives performance.
Last month, the Pew Center on the States released a report that found South Carolina is among a group of states that does little to analyze the effectiveness of its incentives program.
The consequence is that the states might not be spending wisely and getting the most value out of taxpayers’ commitment to companies, the report stated.
Love declined to directly respond to the Pew report, saying the state takes incentives accountability seriously.
She did, at one point, seek to downplay the report’s findings.
Asked to describe Pew’s interaction with Commerce staff in compiling the report, she said she received a single email from a Pew researcher and that the group might not have examined all the incentives reports the state produces.
But Jeff Chapman, the center’s research manager, said Pew actually spoke extensively with a Commerce official and officials from other state agencies.
He said Pew also conducted an exhaustive review of state agency websites over the year of research on the project.
“The contact with (Love) earlier this year was simply a last-minute contact to make sure we hadn’t missed something. We were wrapping up a loose end is all,” Chapman said.
Some South Carolina lawmakers also have made the state’s incentives transparency an issue.
A few have filed bills seeking to increase disclosure, but the measures have gained no traction in recent legislative sessions.
Sen. Tom Davis, R-Beaufort, a popular figure with the state’s tea party movement, introduced “The Economic Incentive Transparency Act.”
Among the broad range of new incentives rules the measure proposed was a requirement that a business receiving a tax incentive or subsidy would have to submit an annual report to the Revenue Department that includes a summary of jobs required, created and lost during the year.
The reports would be posted on the department’s website, the bill proposed.
Davis’ offering was assigned to a committee last year but never received any vote.
He said a more formal accounting of companies’ performance would allow taxpayers to see if their money has been well-invested and better enable them to hold companies responsible if they don’t fulfill their promises.
Reach Stephen Largen at 864-641-8172 and follow him on Twitter @stephenlargen.