The S.C. Department of Commerce has submitted a total of nearly $80 million in state spending requests for next fiscal year, including $28.5 million for a program with ties to the Scout Motors project in Richland County.
In its annual “Agency Budget Plan” submitted to the S.C. Department of Administration, Commerce is seeking $25 million in nonrecurring funds and $3.5 million in recurring funding for “LocateSC,” which, according to a Commerce spokeswoman, supports the agency’s “recruitment efforts” by “making sites competitive for industrial development.”
In reviewing the agency’s total $79.9 million in general-fund requests for the 2026-27 fiscal year, which starts next July 1, The Nerve requested updated LocateSC spending records since fiscal year 2018.
Those records, which were provided Monday to The Nerve, showed a total of $5.4 million in LocateSC expenses in Richland County starting in fiscal year 2023, when lawmakers quickly approved a nearly $1.3 billion incentives package for a Scout Motors electric-vehicle assembly plant now under construction at the town of Blythewood.
The Nerve asked Commerce whether any of those LocateSC expenses were related to the Scout Motors project.
“Scout benefits directly or indirectly from any LocateSC expenditures that add value to the Blythewood Industrial Site,” Commerce spokeswoman Alex Clark said in a written response Thursday to The Nerve.
“Many of these expenditures relate to property adjacent to the Blythewood Industrial Site but were incurred to make that site suitable for a large, high-impact industrial user like Scout,” Clark said. “The adjacent property was needed to enable rail access to the Blythewood Industrial Site but remains available for other industrial prospects.”
The Nerve first reported about the LocateSC program in 2018.
Since 2023, The Nerve has reported extensively about the Scout Motors project, which officials initially announced would bring at least 4,000 jobs and a $2 billion investment. Production of SUVs and pickup trucks at the approximately 1,600-acre Blythewood site is targeted to begin in 2027, according to company press releases.
Scout Motors Inc., which German-based Volkswagen launched in 2022, announced last month that it would locate its corporate headquarters in Charlotte, with plans to bring 1,200 jobs there.
In the Commerce records provided Monday to The Nerve, none of the five LocateSC expenditure entries for Richland County from fiscal year 2023 through last fiscal year identified the Scout Motors project, though four of the five entries identified the respective locations as “Blythewood,” “Blythewood Site,” or “Blythewood Industrial Site.” Blythewood was not listed in provided records before fiscal 2023.
Of the total $5.4 million in LocateSC money for Richland County starting in fiscal 2023, an approximately $593,000 grant was for “another project that was considering the Blythewood site, underscoring the user-neutral nature of Locate SC expenditures,” Clark said.
In approving the $1.29 billion incentives package in March 2023, lawmakers directed the state treasurer to transfer $1.2 billion to Commerce within five days of the law’s effective date, with the remainder of the appropriation to be dispersed within five days of the close of the state books or by Nov. 1, 2023, whichever occurred first.
As The Nerve previously has pointed out, the incentives package works out to be about $240 for every man, woman and child in South Carolina.
Big budgets
Commerce’s total budget, which includes state, federal and “other” funds, has fluctuated since fiscal year 2022, with a high of $493.8 million for fiscal 2023 when the Legislature passed the Scout incentives package.
Commerce’s total appropriations for this fiscal year are $299.3 million, which collectively is 30% more compared to last fiscal year and a 58.5% hike after inflation from the fiscal 2022 overall budget. This fiscal year’s total state budget is more than $41 billion.
In recent years, the department, which is headed by Harry Lightsey, consistently has been among a group of state agencies with overall annual budgets of at least $200 million.
The current overall $299.3 million budget doesn’t reflect $891 million in general funds that Commerce carried into this fiscal year, or a $194.6 million other-fund cash balance at the end of last fiscal year, according to online records with the S.C. Comptroller General’s Office and state Department of Administration.
The Nerve over the years has revealed that some state agencies have operated with large general or other fund surpluses carried forward into the new fiscal year, as allowed by state budget provisos that are renewed annually. Those reserves have allowed agencies to spend above their appropriated amounts for general or specific purposes, depending on the relevant proviso.
The $891 million in general funds carried forward into this fiscal year by Commerce was easily the highest amount among all state agencies and represented 26% of the total $3.4 billion carried forward, comptroller general records show.
The South Carolina Policy Council – The Nerve’s parent organization – has recommended that lawmakers limit overall general-fund spending increases in a fiscal year to inflation plus population growth. For the 2026-27 fiscal year, the Policy Council set the “sustainable budget” limit at 4.4%, capping general fund spending at $13.83 billion.
Besides capping state spending growth, the Policy Council also has recommended gradually eliminating the state income tax; implementing surplus “triggers,” which would use surplus revenue for immediate tax relief; and requiring state agencies to annually justify all spending requests, a practice known as “zero-based budgeting.”
The yearly spending requests submitted to the Department of Administration typically cover proposed increases for existing programs or new program spending. Under state law, the governor must ensure that state agencies annually justify their entire respective budget requests, not just proposed increases.
“Agencies may propose increases or decreases to existing programs and services or funding for new programs or initiatives,” Brooke Bailey, a Department of Administration spokeswoman, said in a written response this week to The Nerve about the annual “Agency Budget Plan” submitted by state agencies.
The submitted plans require agencies to include a “contingency” proposal to reduce their general fund spending by 3% in the event of an economic downturn. Agencies, however, typically use most of the budget document to justify requested spending increases, as The Nerve and Policy Council repeatedly have pointed out.
‘Sustain our momentum’
The $28.5 million that Commerce wants for the LocateSC program for next fiscal year is part of a collective $72 million and $7.9 million in nonrecurring and recurring state funding requests, respectively, by the agency.
Lawmakers for this fiscal year appropriated $80 million in nonrecurring state funds and another $1 million in recurring funds for the LocateSC program. In fiscal years 2022 through last fiscal year, the budgeted amounts for the program were $4 million, $5 million, $9 million and $4.5 million, respectively, records show.
A state budget proviso allows Commerce to carry forward any unspent LocateSC funds into the new fiscal year to be used for the same purpose.
Records provided by Commerce to The Nerve in 2018 showed a total of nearly $23 million in LocateSC grants to towns, cities, counties and regional economic development organizations for “site evaluation,” property purchases, “site development,” and “site certification” at identified and listed confidential locations from fiscal year 2016 through March 2018.
Updated Commerce records provided Monday to The Nerve show an additional amount of nearly $85 million in total LocateSC expenses statewide from April 2018 through November this year.
In its fiscal 2027 spending request, Commerce said more LocateSC funding is needed because “South Carolina’s historic economic success has significantly depleted our inventory of available properties, and it has reached an all-time low.”
“With each new company announcement, another piece of valuable real estate is absorbed,” according to the request. “To sustain our momentum in attracting jobs and investment, it is essential for our State to continue investing in itself.”
The request said the $80 million in nonrecurring LocateSC funds appropriated for this fiscal year already has been “committed to projects,” which Commerce didn’t identify. It noted the next phase of improvements “requires larger-scale projects that our current funding cannot support alone,” and that neighboring states in recent years have been making “significant investments” in “site readiness.”
“Ideally, all site readiness is complete before we land a project,” Commerce spokeswoman Clark said in her written response Thursday, “but when site readiness takes place simultaneously with a recruitment effort, the expenditures are such that the value added remains even if a particular recruitment is not successful.”
Besides the LocateSC program, Commerce has proposed the following increases in nonrecurring and recurring funding for fiscal year 2027, according to its budget request:
- $25 million in nonrecurring funds for rural development to “improve the quality of life in these areas to lessen population loss and create environments where people would want to live.” Quality-of-life improvements can make areas “more attractive for businesses to locate their operations, especially headquarters,” according to the request.
- $20 million in nonrecurring funds to partially repay a loan to Palmetto Railways, a short-line railroad that is a division of Commerce, for the “Navy Base Intermodal Facility” project in conjunction with the completion of the Hugh Leatherman Terminal. The $51 million loan originated from “committed, but unexpended” grant funds provided by the Coordinating Council for Economic Development – made up of the heads or board chairpersons of 11 state agencies involved with economic development, including Commerce, along with legislative representatives – and “accordingly, were loaned only on a temporary basis and must be repaid.”
- $3.7 million for the agency’s longstanding “closing fund” to “assist companies in locating or expanding in South Carolina.” If approved, the fund’s total recurring amount would grow to $25 million, according to the request, which noted the fund “offers greater flexibility than other incentive resources.”
Gov. Henry McMaster reviews agency budget requests, with assistance from the Department of Administration’s Executive Budget Office, in crafting his proposed state spending plan for next fiscal year. The governor’s executive budget will be submitted to lawmakers before they draft their own budget versions during the legislative session that starts Jan. 13.
Brundrett is the news editor of The Nerve (www.thenerve.org). Contact him at 803-394-8273 or
