Senate approves tax incentives to attract Boeing
Associated Press
Wednesday, October 28, 2009

COLUMBIA --- An economic incentive package that appears tailored to bring a massive Boeing assembly facility to North Charleston easily received key approval Tuesday in the South Carolina Senate.

The full Senate voted 44-0 on low-interest construction bonds and incentives that include a sales tax exemption on fuel used in test flights. To qualify, a company would have to create at least 3,800 full-time jobs and invest at least $750 million in the state over seven years.

"We've got an opportunity before us now ... to bring jobs to our people that are so desperately needed," said committee Chairman Hugh Leatherman, R-Florence.

The measure, which does not name a specific company, needs another perfunctory vote in the Senate before heading to the House. Legislative leaders expect to send the bill to the governor's desk Wednesday.

Boeing is deciding where to put a second assembly line for the 787 airliner, and Everett, Wash., also is competing. Sen. Robert Ford said leaders have told lawmakers not to discuss the company because the situation is too sensitive.

"Of course, for any district in the world, it would be a major, major employment opportunity," said the Charleston Democrat, whose district includes Boeing's existing North Charleston plant, which makes fuselage sections for the 787.

The five-part legislation, which expands existing law, includes sales tax incentives that would exempt fuel used in test flights and flights to transfer aircraft between plants. It would also exempt computer equipment purchases and allow a qualifying company to immediately pay no sales tax on construction materials, rather than wait for a 2011 phase-in.

It would ensure the company could negotiate with state officials to pay little corporate income taxes for 10 years -- to likely tie those taxes to in-state sales -- by deleting the minimum pay requirement. Current law allows the break for companies investing at least $10 million and creating 200 jobs, but mandates salaries be three times the state's per capita income, or $93,000.

The proposal would allow the state to issue up to $170 million of economic development bonds that would allow a company to build using a lower interest rate, making the project cheaper.

Mr. Leatherman said there is no cost until a company comes here. However, he said, according to a hypothetical analysis by budget officials, first-year payroll of a company bringing roughly 5,000 jobs could exceed $175 million.

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