The Palmetto Insider

The blog of the South Carolina Policy Council

Not Everyone Sees SC Selling Itself to Boeing as Positive

with one comment

for-sale-by-owner-signJudging from the reaction of state leaders, one might gather that Boeing’s decision to build a new 787 aircraft assembly plant in North Charleston is the best thing to happen to South Carolina since Gen. Sherman left the Palmetto State 144 years ago.

“Today’s announcement declares to the global business community that South Carolina is back in the game and open for business,” House Speaker Bobby Harrell said in a statement. “This is a great day for South Carolina and make no doubt, marks the biggest economic development announcement our state has seen in at least a decade.”

“Just as the similarly monumental BMW investment catalyzed a now extensive automotive presence across South Carolina more than 15 years ago, we believe Boeing landing decisively in North Charleston will spur on an already growing aerospace hub in our state,” Gov. Mark Sanford added.

The legislature unanimously passed a bill Wednesday granting Chicago-based Boeing sales tax exemptions for fuel, computers and construction materials for 10 years. The bill also authorizes up to $170 million in bonds to pay for infrastructure needed for the new manufacturing facility.

In all, the incentives package is worth $450 million, the Charleston Post and Courier reported, the largest in state history.

In return, Boeing must invest at least $750 million dollars over the next 10 years for real estate and personal property in a single county, and create at least 3,800 jobs.

Unfortunately, there was no substantive economic analysis presented to lawmakers or the public before the vote, which means there was no way to determine the short- or long-term cost to taxpayers, or the impact on business or unemployment in the state, as the Policy Council pointed out here and here.

The bottom line: While Boeing’s decision to expand in South Carolina is good news, South Carolina taxpayers will ultimately be the ones picking up the tab.

Calvin Blackwell, an associate economics professor at the College of Charleston, told the Post and Courier that he is skeptical about such incentives, especially when government competes for industry in a confidential setting.

“Generally, this is not a very good strategy for states to employ,” he said. “It’s a race to the bottom: who can provide the most goodies?”

Another downside, Blackwell told the paper, is that jobs created don’t necessarily go to current state residents, yet they are the ones who shoulder the impact to the tax base.

Other South Carolinians expressed doubts, as well. 

“This deal is like a mackerel in the moonlight that shines so pretty on the beach from a distance but when you get closer the more it stinks,” one individual wrote in the comments section of the Post and Courier’s story on the Boeing announcement.

Another asked, “What measures have we put in place to ensure that they create these jobs? What are the levels and pay of these jobs? Will they all go to SC residents? Why are we giving them $450 million worth of incentives for a $750 million return investment?”

“My fear is we gave away the store to get these jobs,” wrote another. “Surely it beats no jobs, but just how much of our soul did we sell to the devil to land this deal? How long will it take to get our $450 million back before we see any bennies? Are they committed to hiring Charleston area people for other than janitorial and low-level jobs?”

A commenter on The State newspaper’s report on the announcement was similarly skeptical: “With a low-interest loan, and no taxes, who wouldn’t come here? Why not give the same incentives to local businesses and local citizens?”

Advertisements

Written by Cotton Boll Conspiracy

October 29, 2009 at 3:10 pm

One Response

Subscribe to comments with RSS.

  1. […] And in South Carolina, conservatives are wondering just what they’ll gain by pandering to Boeing. ”In 2004, Washington state gave Boeing $3.2 billion in incentives, but the company chose to build their new plant in North Charleston,” the South Carolina Policy Council noted. “Clearly, there is no guarantee the company will reward South Carolina’s taxpayers down the road.” Possibly related posts: (automatically generated)Boeing Moving to South CarolinaBoeing Builds New 787 Plant in South CarolinaBoeing to Build 787 Dreamliner in South Carolina […]


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: