South Carolina agreed Tuesday to borrow up to $123 million for incentives that the state used to help lure Volvo to build its first North American auto plant in Berkeley County.
The state Budget and Control Board unanimously approved issuing bonds to pay for site and road work associated with the $500 million, 2,000-employee plant off Interstate 26, scheduled to open in 2018. The automaker could add another 2,000 employees by 2030.
Landing the Volvo plant won widespread praise. But the bonds — part of more than $200 million in incentives from the state, Berkeley County and the state-owned Santee Cooper electric utility — have generated controversy.
Issuing $123 million in bonds would cost the state $87 million in interest. The bonds also would include a large payment in their final year to help keep the state under its legal ceiling for borrowing on economic-development projects. The bonds would be issued next year.
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To save money, lawmakers have proposed using $70 million from a state budget surplus to pay part of the incentives package. Budget negotiations are continuing this week.
At the Budget Board meeting Tuesday, Senate Finance Committee chairman Hugh Leatherman, R-Florence, repeated he was bothered by borrowing money when the state had cash on hand.
However, Republican Gov. Nikki Haley, who heads the Budget Board, said Volvo insisted on the state borrowing the money to avoid potential legislative turmoil.
“If we had not done it this way, they would have been in Georgia,” Haley said, referring to the other state that was a finalist for the auto plant. “We did what the company asked.”