State cuts cops & teachers, hands Boeing millions
State leaders in South Carolina have decided to borrow $270 million to give to Boeing, even as legislators there met this week to figure out how to slash $563 million in spending for schools, colleges and health care programs for the poor.
They’ve also decided to give Boeing a break of more than 60 percent on its property taxes for its newly acquired Charleston facilities — which our math shows will amount to a savings of roughly $300 million over the next 30 years — while also funneling millions of dollars more to Boeing in the form of grants.
Boeing would never have considered putting its proposed third 787 assembly line in Charleston if it had thought it would have to pay its fair share of property taxes, Charleston County Economic Development Director Steve Dykes said. Other manufacturers pay a 10.5 percent rate, but “on a mega-project like this, they would never even look at the state if they thought we were going to stay at the 10.5 percent,” he said.
Instead, Boeing has graciously agreed to pay 4 percent taxes on its Charleston facilities, which amounts to payments of $186.6 million over the next 30 years. Paying the full tax rate would have cost Boeing just under $490 million in that period, we calculate.
But state and local governments will turn around and give $50 million of taxes that the company does pay back to Boeing. Over the next 15 years, they’ll spend half the taxes they receive from Boeing on site improvements.
In addition, Boeing’s getting corporate income tax breaks that’ll amount to $9.5 million a year once the third line is fully operational in Charleston — producing three planes each month while District 751 members here in Everett build seven. And if that all weren’t enough, Boeing’s going to get more than $5 million in grants from various agencies.
Plus, the state this past week agreed to go out and borrow $270 million, which is going to cost South Carolina $23 million a year to pay back – starting in July. When you factor in interest payments, South Carolina taxpayers will have to pay $315 million to pay off the bonds. That works out to $83,000 for each job that Boeing is expected to create in South Carolina. And with Boeing paying the average Charleston worker $14 an hour, it will take each one of them about 34 months — just under three years — to earn that much money.
Because even as he gives away cash to one of America’s biggest profit-generating companies, South Carolina Gov. Mark Sanford (remember him?) is proposing to slash $107 million from the state’s Medicaid budget, which pays the cost of delivering most of the babies born in the state, according to the Associated Press. The state police forces has already cut a third of its officers — 110 so far — and is expecting further cuts. The state’s top cop warned that South Carolina is “at the edge of a cliff” in terms of public safety. A few years ago, the federal government sued South Carolina because its juvenile jails were so bad; now Sanford plans to cut their budgets once again. And as one business-friendly Web site puts it, “rather than an increase in education spending for the Nation’s 3rd worst school system, ther is a budget cut in K through 12th grade education.” (We left their typos intact to prove the point.)
Budget-writers also face the prospect of losing some $700 million in federal stimulus dollars that will run out this year. That represents about 13 percent of the state’s $5.3 billion general fund.
But even in the midst of this unprecedented budget crisis, state leaders feel they can give the largest corporate bailout in South Carolina history to Boeing.
Anything to create more jobs, said Senate President Glen McConnell, a Republican. “When they’re not working, they’re not paying personal income tax; they’re not buying things and paying sales tax. That’s the two big shortfalls in revenue today and we’ve just got to get people back to work.”
Yet while South Carolina Republicans are counting on working people to pay taxes, Sanford is proposing to eliminate the state’s corporate income tax altogether. To help pay for that, he proposes cutting funds for breast cancer screenings and wheelchair ramps, forcing employees to take unpaid leave, and making drastic cuts to the state’s colleges and universities — the very institutions that Boeing’s counting on to train workers for its new Charleston facilities.
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