SC Lawmakers OK More Than $270M in Boeing Bonds

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High finance, State hat in hand.

Groet / Cees

January 12, 2010
SC Lawmakers OK More Than $270M in Boeing Bonds
http://www.nytimes.com/aponline/2010/01/12/business/AP-US-Legislature-Returns-South-Carolina.html
By THE ASSOCIATED PRESS

Filed at 2:59 p.m. ET

COLUMBIA, S.C. (AP) -- South Carolina legislators sweating a wrecked
budget that threatens schools, colleges and law enforcement cheered
plans to borrow $270 million to build a new Boeing airliner assembly
line in North Charleston.

The approval came on the first day of a 2010 session overshadowed by a
$563 million budget hole, plans to overhaul the state's finances and as
the House moved closer to a formal rebuke of Gov. Mark Sanford in the
aftermath of his confession of an affair with an Argentine woman.

The Boeing plan makes sense because of jobs that will be generated
across South Carolina, said Senate President Pro Tem Glenn McConnell,
R-Charleston, after the Boeing Inc. bonds were approved by a legislative
panel on the session's first day. ''This is a tremendous bargain.''

It's the most the state has ever borrowed for an industrial prospect and
worth it, said Senate Finance Committee Chairman Hugh Leatherman,
R-Florence.

''If we don't make an investment to get world-class blue chip companies
like Boeing in our state to create jobs for people, we're not going to
come out of this recession,'' said Leatherman, who chairs the panel that
approved the bonds. Economic development prospects calling on him
already are taking note of the Boeing flag on a staff in his Senate
office, he said.

Over time, legislators argue, the Boeing plant will make the state a
power in the aerospace industry and create spinoffs that generate far
more jobs than the 3,800 the manufacturer has promised.

But the state's borrowing comes in the midst of a budget crisis and
could end up adding to the pain of job and program loss legislators
already are confronting because legislators will have to come up with
$23 million to cover interest payments in the 2011 fiscal year that
begins in July.

Three years ago, the annual spending bill was $7 billion. Repeated
budget cuts, including $439 million since September, have left
legislators with only about $5.3 billion as they start writing that
fiscal 2011 spending plan. With Boeing debt, legislators will have to
come up with $563 million mostly to cover property tax breaks and repay
money borrowed from reserves.

''The only way out of this recession is to put our people to work. 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.''

Legislators downplay the risk of being deeply enmeshed in Boeing's
future with taxpayer dollars. ''They've got an airplane that everybody
wants and they can't build enough of right now -- in a recession, a
worldwide recession,'' McConnell said.

''Boeing ain't going out of business,'' Leatherman said, noting Boeing
has plenty of orders on hand and is expanding operations in South
Carolina as a union bargaining tool to hedge against costly future
strikes in Everett, Wash., and other locations.

Meanwhile, the state Commerce Department is asking for a short-term loan
to get the work moving faster while it waits for the state to issue the
bonds, Commerce Secretary Joe Taylor said.

The borrowing goes to the state's financial oversight board for final
approval Wednesday.

Leatherman emphasizes that the $23 million annual cost for Boeing
building bonds will be less of a burden for the state during the next
couple of years as older bonds are paid off. Paying off the old debts
are freeing up about $15 million year, Leatherman said.

Meanwhile, there's no better time to borrow for this kind of project
with interest so low, Leatherman said.

The House, meanwhile, quickly worked through its calendar and ran
through introductions of new legislation. The House Rules Committee set
Wednesday as the debate date for a censure measure that castigates
Sanford for ''dereliction in his duties of office, for official
misconduct in office and for abuses of power while in office that has
brought ridicule and dishonor to himself, the state of South Carolina,
and to its citizens.''

House Speaker Bobby Harrell, R-Charleston. said the House needs to deal
with the issue and get it out of the way.

''We need to get focused on jobs and education,'' Harrell said

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