State incentives promised to Volvo were effectively secured with Wednesday’s support from the Joint Bond Review Committee, and who would have expected anything else? If there is one issue that South Carolina’s leadership can agree on, it’s bringing new industry and good jobs to South Carolina.
But members of the JBRC had a legitimate gripe over the way the administration handled the financing. And the House Ways and Means Committee has recommended a better way to pay for the state incentives for the Swedish automaker and its factory planned for Berkeley County.
The state would do better to use $70 million of an anticipated surplus to settle its obligations instead of borrowing the money under the administration’s plan.
The state currently doesn’t have enough borrowing capacity for economic development to pay for the full commitment to Volvo. So the administration would have the state pay interest, but no principle, on $70 million for five years.
That plan would unnecessarily cost the state millions in extra interest payments.
“We should not bond the project when we have cash on hand,” Rep. Chip Limehouse, R-Charleston, said Wednesday. “The interest savings alone by paying cash will be in the tens of millions of dollars.”
Rep. Limehouse and other committee members were clearly unhappy about being cut out of the economic development process for Volvo.
Ways and Means Chairman Brian White, R-Anderson, complained that the administration made the Volvo commitment without adequate financial resources and without consulting legislative leaders.
Rep. Limehouse added that the governor needs to be a team player on economic development. In this instance, collaboration was warranted.
The governor and her secretary of commerce typically take the lead in economic development, and they deserve much credit for their success with Volvo. But the Legislature has the lead role in funding state initiatives.
And the General Assembly still has the opportunity to follow through on the Ways and Means plan to pay $70 million — roughly the price of a needed highway interchange for the Volvo project — out of surplus funds when legislators complete their work on the budget later this month.
“We all love Volvo,” Rep. White said at Wednesday’s committee meeting. “We’re going to adhere to our commitment.”
And the state’s leadership should agree that doing so in the most cost-effective manner is the best way to advance economic development — in this instance and in the future.