COLUMBIA — The financial oversight board chaired by Gov. Nikki Haley approved her request Tuesday to borrow $123 million for infrastructure promised to Volvo Cars to secure its first North American plant.
The Budget and Control Board authorized borrowing the full amount, as Haley wanted, despite a windfall of additional revenue. A supplemental budget bill tentatively approved by the House later Tuesday would put $70 million of the surplus cash toward the incentives, so that $53 million would be borrowed instead. That would avoid the creative financing otherwise required.
Senate President Pro Tem Hugh Leatherman said he’ll try to get the Senate to agree.
“It bothers me that we have cash, and we’re issuing bonds that cost taxpayers,” he said.
Haley said she’s fine with partially paying cash.
“You can use that supplemental any way you want,” she said, adding that what the Legislature needs to focus on is passing a budget for the fiscal year that starts July 1.
As written, the financing method involves seven years of interest-only payments and a large final payment. The arrangement is necessary because the state’s approaching its legal limit for the kind of bonding Haley and Commerce negotiated into the deal.
It would result in taxpayers paying $87 million in interest over 17 years.
Haley said Volvo insisted on borrowing in a way that avoided the legislative process, after seeing the last Boeing deal get bashed.
“This was the only way Volvo wanted this to happen,” she said. She said Georgia would otherwise have won the plant.
A Volvo spokesman has declined to address whether the company cares how the state funds the promised infrastructure, saying only that it doesn’t comment on state finances.
The Boeing bill Haley references provided an additional $120 million toward that company’s expansion plans in North Charleston. The Legislature gave that bill final approval less than two weeks after Leatherman introduced it in April 2013. Asked to specify what Volvo officials didn’t like, Haley said some senators took the podium to oppose it, and no company wants to be talked about negatively.
The borrowing is part of the more than $200 million in state incentives promised to secure Volvo’s commitment of a $500 million investment and the creation of 2,000 jobs in 10 years. Officials have said 4,000 workers could eventually work there. The state is committed to paying for infrastructure that includes a new interchange off Interstate 26 and a road to the future plant in Berkeley County.
The approval comes weeks after Haley told legislators she didn’t need their help in negotiating an incentives package, a statement she made while opposing legislators’ borrowing proposals. Although economic development bonds bypass the Legislature as a whole, the deal still had to be approved by a legislative committee Leatherman chairs. The group granted approval two weeks ago, but only after much criticism of the arrangement.