Panel approves borrowing $123 million for Volvo

Republican Gov. Nikki Haley won approval from 10 S.C. lawmakers Wednesday to borrow up to $123 million to pay for incentives for Volvo.

But the lawmakers rebuked Haley for insisting the money come from economic-development bonds that include years of interest-only payments.

“This is a horrible way of doing business,” said House Ways and Means Committee chairman Brian White, R-Anderson, citing the $87 million interest cost that taxpayers will pay for the bonds.

The lawmakers, members of the Joint Bond Review Committee, also criticized the governor, who sat in the front row watching their meeting, for opposing other borrowing proposals that legislators have made this year. “I got thrown under the bus a lot for a bond,” White said. “Now, it's OK to bond.”

Legislators tried to get Haley to agree it was OK to use part of a $300-million-plus state budget surplus to pay for the incentives, as proposed Monday by the House Ways and Means Committee. That committee recommended using $70 million in surplus money for the incentives, leaving roughly $53 million to be borrowed with economic-development bonds.

The Bond Review Committee asked Haley Wednesday to send a letter to lawmakers endorsing the use of surplus cash to pay for the incentives. Haley didn’t directly commit to doing so.

“I’ve done even more than a letter,” Haley responded, referring to a press conference that she held last week to urge legislators to use surplus money to reduce the state’s debt, to cut taxes or repair the state’s crumbling roads.

However, state Treasurer Curtis Loftis said late Wednesday that surplus money could go into the Volvo incentives, endorsing the idea. “The General Assembly is showing excellent leadership here in joining the governor and helping finance Volvo in a way that protects the taxpayers.”

Haley defended the borrowing plan for Volvo. The automaker is being offered $200 million in incentives, including land and other perks, to build a $500 million plant that will employ up to 4,000 in Berkeley County.

The company requested economic-development bonds to stay out of politics, Haley said after Wednesday’s contentious meeting.

“Volvo Cars wanted this process to be a certain way,” Haley said. “They wanted it through economic development deals (bonds). They did not want it to go through the Legislature. …We see that with big companies like this. They don’t want to be debated.”

How to pay for the Volvo incentives was being debated even before the automaker said May 11 it would build its first U.S. plant in the Lowcountry.

After S.C. Commerce Secretary Bobby Hitt asked for roughly $125 million for incentives, Senate President Pro Tempore Hugh Leatherman, R-Florence, included some money in an April draft of a Senate bond bill. But the incentives money was dropped from the Senate bond proposal, which Haley opposed, after the governor said she did not need the General Assembly’s help in paying for the Volvo incentives.

Lawmakers made it clear Wednesday they thought that statement was a mistake.

“You do need the General Assembly to bring industry to South Carolina,” state Rep. Chip Limehouse, R-Charleston, told Haley. “We do control the purse strings.”

Hitt told the panel Wednesday that the state has a contract with Volvo saying it would request $123 million for incentives from the Joint Bond Review Committee. If the panel did not approve that sum Wednesday, it would violate the state’s contract with Volvo, he added.

“I need the money starting as quickly as possible, not necessarily the issuance of the bonds,” Hitt said. “If cash is brought into the equation, then it could be netted out.”

Senate Majority Leader Harvey Peeler, a Cherokee Republican and Haley ally, moved the panel approve the borrowing request. “It’s too important to the state of South Carolina.”

The panel agreed unanimously.

This story was originally published June 3, 2015 at 12:06 PM with the headline "Panel approves borrowing $123 million for Volvo."