HAS SOUTH CAROLINA’S GOVERNOR WRITTEN A CHECK HER ADMINISTRATION CAN’T CASH?
|| By FITSNEWS || “To borrow or not to borrow …”
That’s the question S.C. governor Nikki Haley must answer in the aftermath of the Palmetto State “winning” Volvo – whose Chinese owner Li Shufu is the latest recipient of a nine-figure crony capitalist handout courtesy of dirt poor South Carolina taxpayers.
Of course that hasn’t stopped our “Republican” leaders from doling them out like candy.
South Carolina’s up-front promise to Volvo is a whopping $120 million – most of it for infrastructure (and a highway interchange). There are additional incentives to come, but this is the amount of money the state must come up with to consummate its marriage.
Haley has previously said she doesn’t need the S.C. General Assembly to seal the Volvo deal. In fact her legislative liaison, Katherine Veldran, reiterated as much in text messages to state lawmakers this week.
Here’s the problem …
The state’s bonding capacity for “economic development” is nearing its limit. Haley has about $50 million she can play with, but that leaves a $70 million hole in order to complete the first phase of Volvo’s “incentive” package. Powerful S.C. Senate president Hugh Leatherman inserted this $70 million in a bond bill that his chamber was prepared to pass, but he removed the money once Haley said she didn’t need it.
That means Haley is in a box …
“She needs the General Assembly to pay down $35 million in debt to leverage another $35 million,” a legislative leader familiar with the ongoing negotiations tells FITS. “That means paying interest only for next five to seven years – a practice that was widely accepted in the mid-2000s but disbanded after the great collapse of 2008.”
Haley is bringing this “risky business” back, though …
After railing against deficit spending earlier this year (in contrast to her prior position) – Haley now wants to tap out the state’s economic development bonds by borrowing up to the limit and paying interest only to stay under the constitutional cap.
“Interesting that the governor who opposes all borrowing is actually for risky borrowing,” one GOP leader told FITS.
Very interesting …
Also interesting? If the S.C. General Assembly doesn’t take action to pay down the $35 million, Haley will be unable to deliver on her promise to Volvo.
“She is counting on lawmakers to do this,” one legislative leader told FITS.
Should she, though?
Haley has been belittling legislators all year – blasting them especially hard when it comes to deficit spending. And now, adding insult to injury, she’s telling them she doesn’t need their help to seal the Volvo deal – even though it’s abundantly clear she does.
We suspect lawmakers will approve the deficit spending, but if they decide not to … Haley could hardly blame them.
Again, we reject crony capitalist handouts on principle. They are patently unfair, and South Carolina’s escalating use of them to reward favored corporations at the expense of small businesses and taxpayers is killing our state’s consumer economy.
Also, the last time we checked South Carolina wasn’t supposed to engage in deficit spending for any reason … least of all to stroke a nine-figure check to a Chinese billionaire who is more than capable of subsidizing his own manufacturing facility.