Politicians and other state officials privately crafted a $450 million incentive deal to land Boeing Co. on the promise of thousands of jobs and a multibillion-dollar economic impact, but the details of that deal could be kept from public view for the next year.
The largest incentive package ever offered in the state will be kept under wraps to give the state Department of Commerce and company executives time to sort out the details. State law allows those agreements to remain confidential until they're finalized, which could take up to a year.
Ashley Landess, president of the S.C. Policy Council, a Columbia-based political think tank, said backdoor government deals aren't in anyone's best interest.
"There is something fundamentally wrong in a system in which politicians shut the door when making decisions about (taxpayer money) and refuse to tell them what they are," Landess said.
An arm of the state Budget and Control Board has determined that Boeing's new 787 aircraft assembly line, which calls for at least 3,800 workers, not counting spinoff jobs from suppliers, will create a $10 billion economic impact during the next 15 years.
But without a breakdown of the exact tax breaks and incentives, it's impossible for outsiders, according to the Policy Council, to figure the real cost-benefit analysis of the deal.
Those details, Landess said, could reveal faulty assumptions in the state's analysis used to justify the multimillion-dollar tax breaks.
That $10 billion economic impact, for example, takes into account spending from Boeing's future 3,800 workers, Landess said. But if the plant's workers already live in the region and spend money at local grocery stores and movie theaters, she said, how much additional sales tax revenue is generated?
"The lack of transparency leads to a lack of analysis, which leads to a lack of having to prove the arguments they make," she said, referring to state officials.
Commerce Department spokeswoman Kara Borie said the one-year time frame gives companies an opportunity to amend the agreements before they are finalized and made public. Company officials, for example, might need to secure financing during that time or ramp up production to take advantage of certain performance-based breaks.
"One year gives companies time to lay the necessary groundwork," she said.
Boeing spokeswoman Candy Eslinger said "we're leaving it to the state to discuss the details ... at the appropriate time."
State Sen. Larry Grooms, a Charleston-area Republican who is running for governor, said releasing incentive details before the agreements are finalized could jeopardize the state's negotiations with other companies, which could ask for a better deal after seeing what another business got.
Early disclosure, he said, could give other states a premature glimpse into the state's job-recruitment strategy.
"I think the public has a right to know every detail of the incentives package, but you also don't want to give other states an unfair competitive advantage of knowing what the state is doing at this particular time," Grooms said.
House Speaker Bobby Harrell, R-Charleston, disagreed with the state policy, saying state officials should immediately release incentive details that aren't proprietary.
"I don't believe you need to have a time limit on releasing noncompetitive information at all," he said. "The only thing that (expanding companies) could be allowed to keep confidential is what competitors could use against them."
State lawmakers reconvened last week in a special session to tweak five state laws to Boeing's benefit. The legislation doesn't name Boeing specifically, but it makes certain incentives available to companies that generate more than 3,800 jobs and invest more than $750 million during a seven-year span. Among them are tax breaks on jet fuel purchases.
The state Board of Economic Advisors, an arm of the Budget and Control Board that is required to release tax revenue impact studies for legislation, released a statement that last week's law changes for Boeing won't reduce revenue for the general fund during the current fiscal year.
The board has not done a long-term study of the changes to show how the fund will be affected when Boeing's North Charleston facility is fully operational.
Michael Sponhour, spokesman for the Budget and Control Board, said the advisors board isn't required to analyze incentives packages offered to businesses.
"They're being asked to draft an analysis of a specific piece of legislation before them," he said.