May 21, 2024

The Nerve Archive

Where Government Gets Exposed

Business Mags Get State Ad Money, Rank State High


haley shovel

Does South Carolina pay for its top magazine rankings?

If the true measures of a state’s economic success were accolades from magazines, rather than the state’s employment level, per-capita income and related factors, South Carolina could well be considered a business powerhouse.

Since May, three national economic development publications have lauded the Palmetto State’s economic climate with high rankings and an award recognizing several high-profile projects the state has landed.

Coincidentally – or not – records show that all three magazines have received payments in the past few years, mostly for advertising, from the state’s main economic development agency – the S.C. Department of Commerce.

In addition, each of the publications’ praise for the state’s business atmosphere includes direct mentions of the availability of taxpayer-funded incentives.

Meanwhile, an arguably more objective judge of the state’s economic environment, the cable television business news channel CNBC, recently weighed in on it with a considerably less flattering assessment.

In its fifth annual “Top States for Business” roundup released in June, CNBC ranked South Carolina 37ththis year. Among 10 criteria, poor standings in “quality of life,” “economy” and “education” contributed to the state’s lackluster ranking.

In late July, by contrast, the site-selection news magazine Business Facilities rated South Carolina the third-best state for “economic growth potential” and No. 5 in “best business climate” this year.

The designations were part of annual rankings that the publication issues to the top five and top 10 states that it selects in various categories.

Determining “economic growth potential” was based on “job creation and project development in specific industry sectors in a location, along with supporting elements like incentives programs and the availability of a skilled workforce,” Business Facilities wrote.

The magazine cited “generous financial incentives provided by the state” as a common thread in the “best business climate” category.

In 2010, Business Facilities ranked South Carolina No. 1 in “economic growth potential,” attributing the first-place showing to a decision by Boeing to locate a 787 assembly plant in North Charleston, and fourth in “best business climate.”

As The Nerve first reported upon its launch in January 2010, the state gave Boeing an incentives package for the 787 facility, valued conservatively at about $500 million, that is possibly the largest in South Carolina history.

From fiscal year 2007-08 through last fiscal year, the Department of Commerce paid at least $44,650 to the parent company of Business Facilities, New Jersey-based Group C Media, primarily for “promotional services,” according to entries in a state spending transparency database on the comptroller general’s website.

As of Monday, an ad featuring the logo of state-owned utility Santee Cooper touting South Carolina’s business climate had been running on the Business Facilities website for an unknown period of time.

The story is similar when it comes to the Area Development and Chief Executive magazines.

In the spring, Area Development bestowed one of its yearly top-tier “gold shovel” awards on South Carolina for the state’s efforts at creating jobs and spurring capital investment.

“It’s not easy winning big investment projects, especially in a recovering economy where states are desperate for jobs and competing fiercely with incentive packages, tax breaks, and work force development programs,” Area Development wrote.

Based in the New York City area, it too is a site selection industry publication.

In explaining its choice of South Carolina for a “gold shovel” honor, the magazine cited two big projects announced in the state last year: expansion of a Robert Bosch automotive parts plant in Dorchester County, and construction of a Proterra electric and hybrid bus-making facility in the Greenville area.

State incentives deals to land those two projects will cost South Carolina taxpayers an estimated $11.8 million and up to $40 million, respectively, over 10 years, not including local tax breaks, The Nervereported previously in separate stories.

Along with the “gold shovel” award, Area Development also identified the announced construction of a First Quality Tissue manufacturing plant in Anderson County in 2010 as one of the publication’s “projects of the year.”

Neither the magazine nor a First Quality Tissue spokesman quoted in it mentioned any public costs for the project. But, as The Nerve reported in April, it is projected to total at least $33.8 million in state incentives and associated outlays over 10 years.

Like Business Facilities, Area Development also has received vendor payments from the Department of Commerce – a minimum of nearly $25,600 since 2007-08, mostly for advertising services, the state spending database shows.

Similarly, an ad displaying the Santee cooper logo and promoting South Carolina as business friendly could be seen on the Area Development website Monday.

Setting aside quid-pro-quo questions about the magazines’ assessments of South Carolina and their advertising revenue from the Department of Commerce, the rankings clearly do not mesh with two of the most important hard measurements of the state’s economic well-being.

In June, the most recent month for which numbers are available, South Carolina was tied with Michigan with the fifth highest unemployment rate among the states, 10.5 percent, according to the U.S. Bureau of Labor Statistics. The national jobless rate in June was 9.2 percent.

In per-capita income, South Carolina, at $33,163, ranked 45th in 2010, according to the U.S. Bureau of Economic Analysis and other sources cited in a March 23 report by USA Today.

In a related vein, the state’s glowing rankings by the economic development publications often get regurgitated with little to no context or question.

In October, the Department of Commerce issued a news release talking up recognition of South Carolina by Business Facilities and Area Development.

Two different regional business publications in South Carolina subsequently reported on the agency’s publicity release, more or less parroting its contents.

Lastly, the Palmetto State garnered a No. 8 ranking in this year’s annual “best/worst states for business” survey of chief executive officers by Chief Executive magazine, up two spots from No. 10 in 2010.

Some 550 CEOs participated in this year’s survey, according to the publication. Chief Executive, an arm of Chief Executive Group LLC, reported the results in May.

The state spending database shows an $856 payment to Chief Executive Group by the Department of Commerce in the 2009-10 budget year.

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