South Carolina newspapers have recently reported on legislation that provides taxpayer funds for a shopping mall in Jasper County. The developers of the mall, based upon their own projections, would receive the benefit of $131.5 million of your tax money. That provision led me to block the bill in the Senate. I oppose taxpayer funding of common economic activities such as building a shopping mall.
One article quoted several public officials who either expressed confusion at my stance or charged that I simply misunderstand the definition of economic development.
Optimal tax policy rewards all individuals, personal or corporate, in the same way and to the same degree merely by their engagement in the free market. Tax breaks should not be used to pick winners and losers.
The article also quoted one well-paid Columbia insider who has lobbied my office for this specific tax break. He asserted that I stood in the way of a deal that, "would bring 2,000-2,500 new jobs to the area."
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The only thing "new" about the jobs would be their location. Sembler, the developer of the proposed taxpayer-funded mall, produced a site plan dated July 2009 - or about two months after the well-paid Columbia insider told the General Assembly that this mall would bring "new retailers" and "new jobs" to Jasper County. It shows retailers like Marshall's, Sam's Club, Kroger and Lowes.
Nearly all of the retailers listed on the plan already do business within a very short distance of the proposed taxpayer-funded Sembler development. The current employees would simply drive 10 minutes more to work.
The fact is that Sembler plans to attract tenants from across town by using low-cost infrastructure, paid for by taxpayers, to undercut the other mall. This is taxpayer-subsidized piracy.
This piracy would not only cost state taxpayers tens of millions of dollars, half of which would come straight out of classrooms, but also cost Beaufort County taxpayers an untold sum if Hilton Head Village closed because it could not compete with the taxpayer-funded mall in Jasper.
My office has also learned that the Tanger Outlet Centers has plans to invest up to $40 million in the refurbishment of one of its centers in Beaufort County. Tanger undoubtedly now questions the prudence in investing its own money in competition with another company receiving taxpayer funds. If and when Tanger suffers the same fate as Hilton Head Village, then Beaufort County taxpayers will take an even larger hit.
The Sembler site plan, moreover, shows no evidence of "high-end" outlets. But even if the taxpayer-funded mall did house such stores, they too - with their taxpayer subsidies - would undercut retailers of such goods that already exist in Bluffton and Hilton Head, thereby destroying even more businesses with your tax money.
Legislation that leads to the eventual destruction of good existing businesses, whatever their product lines, is the definition of "picking winners and losers," and that is no business of politicians.
The cost to the taxpayer likely will not end with the giveaway of their money. Similar giveaways this year have met lawsuits in Arizona and Wisconsin. Arizona courts have struck down one such deal, and the others are pending. The plaintiff in Washington County, Wis., has said that his lawsuit "has everything to do with using taxpayer money to subsidize a for-profit company in order to lower its costs on a retail project."
When South Carolina businesses ruined by tax incentives for Sembler sue the General Assembly for unfair trade practices, guess who pays for that - you. You pay to fight the suit and you pay the penalty when the plaintiffs win.
Finally, awarding tax incentives for a shopping mall simply because the developer hired expensive Columbia lobbyists only further violates my duty to taxpayers. I doubly oppose special tax breaks for those who simply can afford the high price of lobbyists.
The Columbia insiders who peddled this deal in the General Assembly made claims that no one now can verify. They traded on their relationships to tap into your money.
This is not a story about economic development and new jobs. It is a story about power politics, insider deals and economic piracy, all at taxpayer expense.
The sum of this tale is that a well-heeled developer hired well-connected lobbyists to secure tens of millions of taxpayer dollars in order to steal away customers from existing businesses. Lobbyists and those who can afford them stand to make out like bandits while the taxpayers pay the price. I object.