Debate on S.C. House bill H. 4200, which would provide millions in incentives to big-box sporting goods retailers, was adjourned Wednesday until March 23.
The bill, believed to be geared toward luring Bass Pro Shops into building in the Upstate, passed second reading in the House March 3 with little debate but failed to pass on third reading the following day.
It is unusual for a bill to fail on third reading.
Rep. Harry Cato, R-Greenville, one of the bill’s sponsors, made a motion Tuesday afternoon to adjourn debate on H. 4200 until today. There was speculation that Cato made the motion because proponents of H. 4200 didn’t have the votes to reconsider the bill Tuesday.
H. 4200 and another retail-incentives bill, S. 1054, have come under close scrutiny in recent weeks. Combined, the pair would potentially give out more than $100 million in retail incentives to out-of-state companies.
S. 1054 could result in between $40 million and $130 million in incentives for a Lowcountry mall being built by Florida-based Sembler Co.
Missouri-based Bass Pro Shops would reap a smaller incentives package, but that doesn’t make it any easier for many South Carolinians to stomach.
“Giving a big business like that tax breaks – I don’t know where they get off trying to do that,” said Judy Fulton, who owns Fulton’s Tackle Box in Duncan with her husband. “I have nothing against Bass Pro, but it stirs up resentment that our legislators would even consider giving them our tax dollars.”
Bass Pro Shops has more than 50 locations in North America, but just one in the Palmetto State, in Myrtle Beach. Fulton’s, by comparison, has just a single location and two employees: Judy Fulton and her husband.
“The tax break they’re talking about would pay for Bass Pro’s building,” Fulton said. “We’ve already had several shops close around here because the economy is bad. Why they’d want to put more people out of work, which is what would happen if Bass Pro gets this big break, makes no sense.”
Incentive packages for retailers have been shown to be particularly ineffective. Such incentive packages rarely account for the effect that a new retailer will have on existing retail firms.
In addition, South Carolina’s dismal fiscal condition would seem to be another good reason against doling out taxpayer dollars. The state’s general fund budget has been slashed by nearly $439 million since July 1 and even with those cuts lawmakers are facing a projected $563 million deficit for the next fiscal year.
H. 4200 would revise the definition of an “extraordinary retail establishment,” essentially for receiving retail incentives, making it easier for a site to be qualified as an extraordinary retail establishment. It would also increase the infrastructure-improvement cost requirements necessary to qualify for incentives.
Gov. Mark Sanford, who has vetoed similar legislation in the past, is opposed to bills such as H. 4200 because retail captures existing purchasing power in a region or community and retail development is going to occur without incentives.
The General Assembly has tried to lure a big-box sporting goods retailer with incentives before.
In 2007, a bill was introduced to attract “extraordinary retail establishment,” eventually identified as Bass Pro Shops, to the Greer area.
The previous year, the General Assembly passed an ensemble of incentives tailor made for sporting goods retailer Cabela’s to build in North Charleston. That push represented the first time the state had extended tax incentives that it typically reserves for manufacturing.
Sanford twice vetoed the special legislation, partly because many smaller competitors would get nothing. Twice his veto was overridden by the Legislature.
But neither Cabela’s nor Bass Pro Shops has taken advantage of existing retail incentives as yet.
There is conjecture that the companies are simply waiting for the state to sweeten the pot, as H. 4200 does.
Legislation passed last year allowed sales tax rebates and tax credits on jobs created for an extraordinary retail establishment that invested at least $25 million in its site, attracted at least 2 million visitors a year and remitted at least $2 million in sales taxes every 12 months.
H. 4200 does raise the required capital investment of an establishment to $50 million from $25 million, but makes it easier for the entity to be designated as an extraordinary retail establishment.
Previously, to be approved as such, an entity had to get conditional approval from a county or municipality, then from the state Department of Parks, Recreation and Tourism.
Under H. 4200, if PRT fails to grant conditional certification within 60 days of receipt of the conditional certification from the county or municipality, certification is automatically approved.
Reach Dietrich at (803) 779-5022, ext. 110, or at kevin@scpolicycouncil.com.