House OKs Amazon deal

05/18/2011 3:20 PM

05/19/2011 7:49 AM

After a dramatic turnaround Wednesday in the House, the battle to win a prized tax incentive to lure moves to the state Senate, where the online retailer’s support has not been tested.

A 97-20 tally — aided by 49 legislators, mostly Republicans, who switched their vote — handed the Seattle-based company a real shot at receiving a five-year exemption from collecting state sales tax on each purchase by South Carolina shoppers. Last month, the House refused to grant the incentive on a 71-47 vote, which halted the project.

The vote came after Amazon sweetened its offer Tuesday night with an additional 751 jobs and $35 million more in investment, said Rep. Kenny Bingham, R-Lexington, who became the House point man in the high-stakes battle.

Amazon has committed to at least 2,000 jobs and a minimum of $125 million investment, Bingham announced on the House floor just before the vote.

One of the tipping points in the outcome was a private meeting between Gov. Nikki Haley and the House Republican Caucus just before Wednesday’s vote, according to several members who attended.

The legislators, who requested anonymity, said Haley and Commerce Secretary Bobby Hitt told them that Amazon’s decision to stop building a distribution center in Lexington County was not hurting the state’s economic development prospects. Amazon backers have contended the state reneged on a promise to adopt the sales tax exemption, which sent a message that South Carolina’s commitments were unreliable.

Rep. Tracy Edge, R-Horry, said several members of the caucus began sharing complaints from their local leaders that prospects were stopping or delaying investments after Amazon’s deal brokered by Gov. Mark Sanford’s administration last year was turned away.

“The stories and messages of lost opportunities were collectively what changed people’s votes,” Edge said, citing that five of Horry County’s six House members reversed their positions since the initial roll call on April 27.

In a statement after the vote, Amazon executive Paul Misener, said, “We thank the House for voting to bring jobs and investment to South Carolina.”

Critics, including some Tea Party members, have called the tax incentive an overly sweet deal that would come on top of a free site to build the facility, property tax breaks on equipment, job tax credits from the state and repeal of Lexington County’s ban on Sunday morning retail sales.

Brian Flynn, director of a group fighting the exemption, said House leaders employed “intimidation” to win by such a wide margin.

“Something is in the air to have swayed this thing so far,” said Flynn, director of the S.C. Alliance for Main Street Fairness. “That many people flip-flopping, there’s got to be some arm twisting going on.”

Bingham and other Amazon supporters said the online retailer upped its ante after Lexington County leaders said it would improve the chances of passage. A larger investment, including opportunities to open operations elsewhere in the state, would demonstrate a deeper commitment to the state.

“We asked them to give consideration to sweetening the pot,” Bingham said of conversations that began before the April 27 vote. “The more things that are on the table, the easier it is to make it work.”

On Tuesday night, Misener called him, Bingham said, describing the Amazon executive’s response as, “We understand what you’re asking, and here’s what we can do.”

The timing of when the Senate takes up the decision by the House depends largely on when senators complete work on next year’s $6 billion budget, several lawmakers said. It could be as early as next week or even if legislators are called back to Columbia after the session ends.

Senate leader Glenn McConnell, R-Charleston, would not predict the exemption’s chances, but he had not heard about any talk of filibustering the bill.

Those who fought for the exemption said celebrating will have to wait.

“This party ain’t over,” said Bill Banning, who chairs Lexington County Council’s economic development committee.

Opponent Flynn, whose organization is bankrolled by national retailers such as Wal-Mart, Target, Best Buy and Lowe’s, said he would not discuss his group plan to do to defeat the bill. “But we’re going to rally the troops,” he said. “We’re going to get the small businesses to start calling their senators.”

Whether the advertising campaign will continue is undecided, he said.

Sen. Nikki Setzler, a Democrat from Lexington County who supported Amazon, said he expects opponents will use any legislative device they can to defeat bill.

“We absolutely are going to work night and day to get it passed,” Setzler said.

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