State has capacity to borrow up to $120 million to attract Volvo

The S.C. Department of Commerce has the option of using economic development bonds to borrow close to the amount needed to lure Volvo to build a $500 million auto plant that could employ up to 4,000 in Berkeley County, state officials said.

Current capacity for borrowing ranges from a “conservative estimate” of $50 million to about $120 million “under more aggressive assumptions,” according to the S.C. Treasurer’s Office.

How much could be borrowed in bonds cannot be determined with precision until the final structure and terms of the bonds are submitted, according to the Treasurer’s Office. Factors that influence the state’s capacity include principal structure, interest rates and term, reduction or buy down of existing debt.

Economic development bonds would need approval only from the Joint Bond Review Committee and Budget and Control board. Borrowing a full $120 million would increase the state’s indebtedness, but would allow Commerce and the governor to borrow without needing approval from the Legislature.

Commerce Secretary Bobby Hitt late last month requested $125 million from Senate President Pro Tempore Hugh Leatherman, R-Florence, the Senate leader said last week. Leatherman said he included some of what Hitt asked for in a draft of a bond bill, which was approved last week by Leatherman’s Finance Committee.

But the senator said he took the money out of the bond bill after he heard GOP Gov. Nikki Haley say she did not need it.

Haley was outspoken against a borrowing proposal for state buildings earlier in the legislative session, likening it to running up the state’s credit card debt. The governor helped kill the bond proposal for colleges, technical schools and deferred maintenance in the House.

Haley said she did not approve of the projects or how House members went about the bond proposal. She said later it is OK to borrow for longer-term infrastructure ‘that’s not the normal course of business” like incentives for Boeing.

Haley has also said she would veto Leatherman’s $237 million borrowing proposal for buildings at technical schools, colleges and state armories.

That proposal could be amended to include incentives for Volvo, but would require approval from the General Assembly.