Opponents question Haley on jobs, state-backed incentive packages

COLUMBIA - In June, Gov. Nikki Haley toured the factory of a gun manufacturer in Horry County, cameras and reporters in tow.

Company executives from PTR Industries presented Haley with a rifle, engraved with the state's Palmetto tree and crescent moon as well as the words "We the People" and "Shall not be Infringed."

Generous local and state incentives were a part of the deal, including a $350,000 grant from the state's "closing fund" and an untold number of job development credits, a type of incentive that allows companies reimbursements through tax rebates if they meet employment goals.

In PTR's case, the governor's good wishes and the state's incentives didn't immediately yield the desired results. About a week after Haley's visit, PTR laid off employees and cut salaries, according to media reports.

As November's election approaches, Haley's opponents hope to turn what is viewed as the governor's greatest asset - her efforts to improve the economy and lure manufacturing jobs - into a weakness. They cite, in part, state-backed incentives and an aggressive public relation's campaign they say has prized job announcements over results.

Still, the Republican from Lexington County can claim 57,000 announced jobs, a falling state unemployment rate and an enviable position in the governor's race as the heavily favored incumbent.

It is difficult to measure how the economic development deals that Haley touts in press releases or on her Facebook page have fared. The Commerce Department does not regularly track how many jobs its deals create, only what is promised. A review by The State newspaper of job announcements in 2011 and 2012 found that just over half of those jobs had actually been created so far.

Taxpayer money is not at risk, officials say, because contracts involving state incentives ensure that if a deal falls through, the state can recoup its money. Other tax breaks and reimbursements are based on companies' meeting announced employment targets that often are years in the future.

Because of that, Haley's opponents say that the public deserves to know how many jobs have been created during her tenure and how much the state has promised. One of Haley's opponents, independent Tom Ervin, is also asking if campaign donors influenced incentives.

The Post and Courier has identified at least nine deals where taxpayer-backed incentives, both from the state and local counties, were approved and announced by Haley's office but the companies appear to have sputtered afterward, according to local media reports.

A list provided by the Commerce Department this summer shows 230 companies have received some kind of tax break, tax rebate or grant out of 386 announced economic development projects, about 60 percent. Around $206 million in grants has been committed since 2011. Other tax breaks and rebates have not yet been tallied and the Commerce Department declined to provide an estimate.

Dollars the state can tap to ensure a business opens up shop or expands in South Carolina, called the "closing fund," has climbed from $5 million in the governor's first year to $45.3 million this year, according to House's budget-writing committee. That is an increase of 800 percent.

The amount of promised investment by companies would far eclipse any incentives, Commerce officials say. Announced projects total around $13.8 billion in investment.

Haley has also received campaign donations from companies and executives that have gotten state-backed incentives, campaign finance records show. The governor has received at least eight contributions - almost all of them for $3,500, the most allowed by law - from companies and executives in the six months before or after the state announced incentive packages for them.

Haley's story on the economy goes far beyond the incentives program, her allies say. Not all governors give executives a business card with their personal cell phone number scribbled on it, they said.

The governor said in an interview that conversations with businesses are only partially focused on incentives.

"We're going to do whatever it takes to get you to a resolution," Haley said she tells businesses. "Incentives is usually a very small percentage of the conversation we have."

Democrat Vincent Sheheen and independent Ervin, both running against Haley, say that they are not opposed to giving incentives to companies that want to create jobs in South Carolina.

But both said they want more transparency, including the progress of deals that received state-backed incentive money. "Right now the taxpayers are getting ripped off and nobody knows about it," Sheheen said. "If private businesses get incentives, we should hold them to a strict standard to deliver on them."

Ervin said it's hard to know whether South Carolina got a good deal or not. His campaign plans to hand out bound books at campaign-related events in the coming weeks highlighting what they see as issues involving economic development and jobs under Haley.

"It's important to have incentives available, but what we lack now is transparency and accountability in the way Governor Haley has picked winners and losers," Ervin said. "These decisions are made behind closed doors."

Ervin also said he questions campaign contributions given to Haley either before or after companies' received state support. Bridgestone Americas, McCall Farms, Nephron Pharmaceuticals, the InterTech Group, and Weber Automotive all received state or local support and gave dollars to Haley within three months of the job announcements. Three other companies - Michelin, Agru America and Sensor Electronic Technology - donated within six months of job announcements that involved incentive packages, according to job announcements and campaign finance records.

"It's something that needs to be looked into further," Ervin said. "We need to know the facts."

Haley called the attack "desperate" and said incentive packages are handled by Commerce Department staff.

"A lot of people are going to try to find fault with anything and everything we've done," Haley said. We're going to continue to fight for good high paying quality jobs. We're going to continue to win."

Haley's predecessor, former Gov. Mark Sanford - now the state's first district congressmen - said incentives prize out-of-state companies over homegrown businesses but create a political win for state leaders.

"The ultimate incentive is a competitive tax rate, a competitive legal environment, a competitive regulatory environment and a good workforce," Sanford said. "If you believe in limited government . then it's not about picking winners and losers."

Sanford said he's not opposed to incentives but believes that only certain major deals should garner them, such as North Charleston's Boeing. Incentives should be available for companies that can be the "beginning of the branch of a whole new tree," he said.

Some on the Republican Party's right believe Haley has betrayed her original conservative platform. In a 2010 Associated Press campaign story, Haley's view on economic development incentives was characterized as "apprehensive." Early on in her tenure, she opposed tax breaks for the online retailer Amazon and as a House member voted against incentives for the TV show "Army Wives."

Ashley Landess, president of the S.C. Policy Council, a small government advocacy group, said she has been surprised at the use of incentives under Haley. "It's one giant web of politicians deciding who pays taxes and who doesn't with secret deals behind closed doors, with no information released to the public," she said.

Talbert Black, leader of the Lexington County Campaign for Liberty, said in an interview that he is considering voting for Democrat Sheheen in November because he refuses to support Haley a second time. Black, a tea-party aligned group, organized fundraisers and helped get Haley grassroots support during the 2010 election.

The state's use of incentives doesn't align with the conservative government Haley promised, Black said.

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"I don't see much difference between a Haley and a Sheheen being governor," he said.

Haley said her approach to incentives has not changed.

"What I was always against and continue to be against is throwing money at companies," Haley said. "You have to look at the bigger story." She said she has pushed business-friendly policies and instructed agency heads that "time is money."

Haley's administration has particularly prized deals to lure companies to rural areas, officials said.

Element Electronics' CEO Michael O'Shaugnessy said in an interview set up by Commerce officials that his company opened up shop in Fairfield County in 2013. The company and Haley's office announced 500 jobs and are on target to employ 325 people by year's end, Commerce officials said. The company received a $1.35 million grant to help with infrastructure improvements and other tax rebates once they reach job employment goals.

O'Shaugnessy said incentives were necessary for him to bring his television manufacturing plant to South Carolina.

"I can tell you for certain there are 320 people in Fairfield County, South Carolina, (because of) the investment the state made in us," he said.

But other rural deals have not gone as well. NK Newlook, a store fixtures and retail interior manufacturer, announced a $5 million investment and 200 new jobs in Barnwell County in October 2011. The Haley administration called the project a "big win," but the Miami, Florida manufacturer was open for about a year before shutting down, Commerce officials said.

Marlboro County also had high hopes for one of its deals. Leaders hoped a firm called 5-Star USA and a custom maker of aluminum siding called ECAPS Corp. would create sustainable manufacturing jobs. The enterprise eventually sputtered, said Ron King, executive director of the Marlboro County Economic Development Partnership, despite local incentives that hoped to spur employment.

Rural areas continue to struggle, including double-digit unemployment in Haley's home county of Bamberg.

"How bad do you think she feels?" Commerce Secretary Bobby Hitt said. "How bad do you think I feel? They want their kids to have an opportunity."

Hitt said he is "willing to take risks" to bring manufacturing jobs to those communities.

Commerce officials say economic development takes time and people shouldn't rush to judgement.

Haley isn't making any apologies. "I'm always going to talk about celebrations because I've worked very hard to change the culture of South Carolina," she said.

Freddie Houston, chairman of the Barnwell County Council, said incentives can be important to lure companies. But other improvements are equally important. Barnwell's roads and bridges, he said, are too fragile and narrow for most companies to consider the county.

"If we don't improve the roads, the rest of it doesn't matter much," he said.

Reach Jeremy Borden at 708-5837. Thad Moore contributed to this report.

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