What’s really in the Panthers deal

In the final days of the legislative session, the House and Senate both passed legislation to give big tax breaks and other incentives for the NFL team the Carolina Panthers. In one of several procedural twists, the SC Senate skipped one of the roll call votes specifically required by state law.

The bill was sent to conference committee on final day of session, and three House members and three senators met this week to iron out the differences between the House and Senate versions. The General Assembly will likely vote on the final version when they come back next week for a special session.

Below is an overview of what’s in the deal – and what is not.

What’s in the bill:

The jobs tax credit – This legislation is tailored specifically for the Carolina Panthers (and any other “professional sports team”) to provide eligibility for substantial special tax credits:

• Up to $25,000 per new job, depending on where the team locates
• Credit can be claimed against 50% of the owner’s personal or corporate income tax or insurance premium tax liability

Exemption from job creation requirements – Current law requires other businesses to create new jobs to qualify for the jobs tax credit, but this bill would exempt the Panthers from that requirement. (The team would have to employ at least 150 employees at the sports team park, but none of these jobs must be newly created jobs for South Carolinians to fill.)

Drastic jobs tax credit increase for low-income counties – For businesses locating in “Tier IV” (the category for the lowest-income counties), the jobs tax credit would be increased from $8,000 to $25,000 per job, and from $4,000 to $20,250 per job in “Tier III” (second-to-lowest income categories) counties (click here to view the county tier map). For example, if the Panthers were to locate their team park in Chester County instead of York the team would qualify for this increase.

Exemption for the Panthers from local business license taxes – These taxes are levied on gross income and are extremely burdensome, particularly for small, local businesses.

Protection from being annexed by a city without the team’s specific, written consent.

What’s NOT in the bill

Jobs development credit – The jobs tax credit described above triggers eligibility for an even more significant incentive laid out elsewhere in state law.

• Can be as much as the company’s entire withholding tax amount paid to the state
• Can be claimed for up to fifteen years
• Awarded to eligible companies at the discretion of the Coordinating Council for Economic Development – under such terms as it deems appropriate

An extra $1,000 per job if the team locates in a multi-county industrial or business park, which refers to a complex developed by multiple counties. That extra perk is part of existing jobs tax credit law.

A location for the team – as noted above, just how much the team is eligible for depends on where they locate. But while multiple locations (see here and here) have been floated as possibilities, no location is included in the bill.

The Carolina Panthers themselves – despite the bill being crafted for their benefit, the bill does not specifically mention the team. That’s likely because the state Constitution specifically prohibits laws that benefit specific companies (Article X, Section 11 and Article III, Section 34). This bill relies on semantics to appear constitutional, but it is clearly designed to do exactly what the Constitution prohibits.

Any financing of infrastructure, land acquisition or site preparation – because that is included in another bill. H.4332 – a bill which has already passed the House – would allow the state to issue taxpayer-backed economic development bonds for the benefit of the Panthers.

That bill would create a special type of project that is exempted from job creation and capital investment requirements (which the Panthers would not meet), and would allow economic development bonds to finance road, highway and freight improvements, rail spur construction, water service, and wastewater treatment. The state could even finance land acquisition and site preparation, depending on where the project is located.

Non-transparent, unaccountable backroom dealing

How much lawmakers will ultimately give the team for building a facility in South Carolina is unclear.  As usual, this has not been disclosed to taxpayers. These deals are always negotiated behind closed doors, and even after the fact state officials are reluctant to reveal the details of the amounts spent and what those dollars paid for. The Senate even skipped one of the legally mandated roll call votes for this bill.

The legislation in conference committee only covers part of the potential incentives for the Carolina Panthers. And while the bill contains a couple of reporting requirements (such as an annual report of the jobs created and the average salary and aggregated residency status of the employees filling those jobs) it does not require the full-scale, iron-clad detailed reporting that it should. If taxpayers are going to judge the success of their investment, they need the facts on the front-end of the deal, and detailed reporting on the subsequent returns.