It’s a little disappointing that the Legislature agreed to offer a $115 million incentive package to the Carolina Panthers to build a new practice facility and move its headquarters a few miles south from Charlotte to Rock Hill.
Even after Panthers owner David Tepper threatened to keep the headquarters in Charlotte if the Legislature didn’t acquiesce to his demands, we weren’t completely convinced that the deal was off. Professional sports teams are notorious for playing governments against each other to extract concessions, and Charlotte apparently wasn’t playing the game. Even if the move was off, we were never convinced that it was worth anywhere near the $188 million in annual tax revenue and 5,715 jobs that the state Commerce Department claimed.
Even top Panthers advocates in the Senate acknowledged in a week of debate that the economic projections were a stretch — although not as much as Gov. Henry McMaster’s over-the-top assertion that luring a football practice field in our state would be as significant as Boeing or BMW. And as supporters kept reminding us, most of the incentive package was tied directly to how many new jobs come to South Carolina: If the Panthers deliver only half the promised jobs, they get only half the tax credits. Indeed, as supporters also kept reminding us, all the Legislature was really voting on was those tax credits — temporary tax cuts in return for new jobs.
Critics were simply using H.4243, which changes the tax definition of a full-time employee to include the Panthers players, as leverage to debate the truly questionable part of the package: $40 million up front to build an interstate interchange for the team. That didn’t need legislative approval; it’s the sort of thing the Commerce Department already has the authority to dole out whenever it sees fit. And that’s the problem.
Or at least the potential problem.
Maybe we’ll find out that the absurd assumptions the agency used to justify this project were an anomaly, and that it uses solid numbers to justify all of its other recruitment deals. Clearly, the department under Secretary Bobby Hitt has had some remarkable successes that have benefited our entire state tremendously.
Incentives also are an important tool in helping existing businesses grow and create jobs for South Carolinians. Maintaining a strong pro-business climate is crucial to the economy.
But we don’t really know whether everything has been a success, because the department keeps secret most of its incentives — and perhaps more important, the calculations that justify those incentives. The only reason we saw the assumptions behind the Panthers deal was that Mr. McMaster hoped that making them public would persuade the Legislature to agree to a change to state law that was needed to make the Panthers meet the tax-credit requirements.
In exchange for critics’ agreement to let the bill pass, supporters agreed to require the Commerce Department to produce an annual report of state economic incentives worth $100,000 or more; the House will still need to sign off on that before it can become law. That kind of transparency is a good start until the Legislative Audit Council completes a study, requested by a bipartisan group of senators, of all economic incentives going back 10 years.
For his part, Mr. McMaster says he welcomes the audit — he’d just like it to go back further. And the governor, long an advocate of government transparency, told us that he would support making the details of economic incentives public, with a few exceptions. That’s good news.
The reality is that we sometimes have to offer economic incentives to convince companies to move to South Carolina. But we need to make sure we’re giving out those incentives only when we really need to — and that we’re getting more in return than we’re giving away.