COLUMBIA — Gov. Nikki Haley was so coy during her 2010 campaign about whether she supported helping companies who locate in South Carolina that the chamber of commerce in this very Republican state took the unusual step of endorsing her Democratic rival.
But after Haley gave out at least $70 million in incentives during her first 16 months in office, the business group is now delighted with the governor.
“From the business standpoint, she’s probably been as big of an advocate as we could have asked for,” said Otis Rawl, CEO of the South Carolina Chamber of Commerce.
While running for office, Haley never came out against incentives, saying only that every proposal had to be evaluated on its own merit. But at the time, she was in the shadow of Gov. Mark Sanford, who had a much harder stance against giving companies money to locate and was an early Haley supporter. Haley’s economic motives were also questioned when she didn’t support a Sanford-backed proposal to exempt Internet retail giant Amazon from sales taxes.
But the governor’s results show her administration has not hesitated to offer incentives. A review of more than 50 public announcements of firms locating in the state and bringing at least 100 jobs since Haley took office in January 2011 show the state has offered more than $70 million in help ranging from tax breaks to grants.
Haley recently defended her use of incentives, saying much of the money goes to improving roads, technology or other infrastructure. She said they are just a small part of her broader plan to help businesses by lowering taxes, fighting off unions and decreasing regulation.
“I don’t think you just hand over a check to win someone over. I think you create a business environment that allows them to make money every day,” Haley said.
Continental Tire led the way with $31 million in state help for the 1,700 jobs it plans to bring to a new tire plant in Sumter County. NK Newlook, a company that makes fixtures and display cases for retailers, got $200,000 in incentives for a plant in Barnwell County that promised to hire more than 200 people.
The precise amount of incentives offered is hard to calculate because the numbers are sometimes kept secret. State Commerce Department officials said Freedom of Information Act requests for the deals made with companies would be reviewed in a lengthy process with the firms and state officials. And information deemed sensitive to their businesses would be redacted.
Not even Ashley Landess, president of the South Carolina Policy Council, knows how much is being spent. Landess believes incentives represent everything that is wrong in South Carolina, and she is willing to spend money to prove it.
She said the incentives amount to corporate welfare that hurts capitalism and competition and said the average person would be better off getting lower taxes and putting that money in their pockets.
She said if there was evidence offering incentives brought in more jobs with better wages, supporters couldn’t stop talking about it. But instead, she said it only helps a few people at the expense of most of the state’s citizens.
Landess has been disappointed with Haley’s willingness to use incentives not only for new businesses, but for firms like Michelin that have been in this state for decades.
Landess’ organization has hired three journalists to investigate state government and where it spends its money. She said it is absurd that a few politicians and a few companies are allowed to make private deals and then don’t have to prove if the money really did help.
“Politicians in South Carolina are destroying the private sector economy with these backroom deals,” Landess said.
Haley thinks that view is too simplistic. She said it is not like the state is just throwing cash at companies with no return, citing improvements in roads, water works and technology that these companies spend the money on.
“Mostly what we’re having to do is infrastructure. We’re not turning over checks. We’re making sure they have infrastructure in place in these rural areas,” Haley said.
A recent study by The Pew Center on the States also stirred up debate as the group found South Carolina was one of 25 states that do little to check the effectiveness of the money they spend on incentives. Sen. Mike Rose cited the study as he asked Commerce Secretary Bobby Hitt about a bill he has proposed to better evaluate incentives before they are offered and put in place a way to check if they bring about the changes they promise.
“There’s no structure for what we get in return and whether it hurts other businesses,” the Summerville Republican said.
Hitt disagreed with the study, saying South Carolina has a panel called the Coordinating Council for Economic Development that thoroughly reviews these deals.
“Increasingly companies are expecting states and localities to set the table. The expectation is that the infrastructure will be there, that they’ll be able to spend their money on capital, not pay to put their railroad in or the roads. So primarily what we do now is set the table,” Hitt said.
Nearly two years after turning their backs on Haley, Chamber of Commerce members are in love with her. Rawl said he gives her an “A’’ grade not just because she is willing to spend money on incentives, but also because her administration comes down on the side of businesses at almost every opportunity.
“I don’t think we really had a tiff,” Rawl said. “We just wanted to make sure we understood her economic plan and her plan for moving the state forward.”