$150M for Scout site overruns rejected. SC Commerce might get probed instead
Budget writers in both chambers of the South Carolina General Assembly have now each said ‘no’ to the Department of Commerce’s request for an additional $150 million to cover cost overruns in preparing the Scout Motors site for construction.
The Senate Finance Committee released its budget proposal Wednesday and, like the House, did not include money to help Commerce pay for site preparation cost overruns for the Scout Motors site.
Instead, the committee included three provisos in their spending plan, one of which calls for a review by the Legislative Audit Council and Office of the Inspector General on how the cost overrun happen. Provisos are one-year laws attached to the budget that direct how money is spent.
“There’s a lot to this in regard to what contributed ultimately to $150 million,” said state Sen. Tom Davis, R-Beaufort, who oversees the economic development spending for Senate Finance. “It was the committee’s thought that we needed to have an objective assessment on all the aspects that gave rise to $150 million so that we have an understanding and a learning experience as to how to correct that going forward.”
Department of Commerce Director of Communications and Marketing Dorothy Weaver said the agency remains committed to discuss the $150 million in cost overruns.
“The budget process is ongoing, and we will continue to work with the General Assembly to help resolve the issue and keep our commitment to prepare the site,” Weaver said in an email.
“S.C. Commerce has had numerous briefings, conversations and meetings with legislators about the funding and the timing of the project over the course of the last approximately 18 months, and the offer remains open to members of the General Assembly who would like to ask questions or require additional clarification,” Weaver added.
The full Senate is scheduled to debate the annual spending plan during the week of April 21. After Senate approval, the budget then returns to the House for its second consideration where House members could potentially reconsider and include money to help Commerce.
The budget will then go to an expected conference committee.
Senate budget writers decided they wanted limitations placed on the Department of Commerce following the overruns in the Scout Motors site preparation work.
The Senate Finance Committee proposed preventing Commerce from entering into open-ended incentive agreements, and requiring the agency to have specified incentive amounts in contracts to serve as an expenditure ceiling for any project.
Budget writers also want to restrict the amount of money Commerce can use to what’s appropriated in the current year budget to pay for completing the Scout site project.
In 2023 lawmakers approved a $1.3 billion incentive package for Scout Motors to bring its now $3 billion electric vehicle plant to Blythewood.
The state’s work included building a railway bridge over Interstate 77 to the Blythewood industrial park site, building a new I-77 interchange to serve the eventual factory, additional road improvements, electrical work, and water and sewer infrastructure.
It also included more wetlands mitigation work than originally budgeted by Commerce, after the Department of Natural Resources called to protect and restore more land in connection to the Scout Motors site project, the SC Daily Gazette reported.
Not only did Commerce’s request for the additional $150 million not get fulfilled, it’s also going to lead to increased scrutiny on the agency.
A provision pushed by the Senate Finance Committee calls for a review by the Legislative Audit Council and the Office of Inspector General of the $150 million figure and how it came about.
“There are other, I think, unanswered questions in regard to what gave rise to this,” Davis said. “It’s quite a complex fact scenario.”
Budget writers want to know about the adequacy of Commerce’s original environmental due diligence and consultant qualifications. They want to know when Commerce learned its mitigation package was not adequate and the action it took. The proviso asks about the decision to go forward with construction before the federal wetlands permit, and what was the itemized basis for road overruns, and what reforms are needed to Commerce’s project management.
It also would review whether the attorney general has any course of action against third-party vendors.
State Sen. Tom Corbin, R-Greenville, called the overrun a debacle that ate up the $70 million that had been built into the incentive package for cost overruns.
As part of the proviso included by the Finance Committee, Commerce also would not be able to spend money it receives for the $150 million cost overruns until a report is completed. That report would be due four months after the start of the fiscal year. Commerce also would need additional legislation approved in addition to the annual appropriation to spend money to cover the overruns.
“It’s an attempt to get a better understanding of how the $150 million overage came about. What are some possible ways of stretching payments out over time, and what are the lessons learned from it, so they can avoid something like this from happening in the future,” Davis said.
