Political advocacy group looks to block South Carolina ‘bailout’ of railroad
(The Center Square) – The South Carolina chapter of Americans for Prosperity is leading a campaign to prevent what it calls a public bailout of a private railroad company over an unpaid loan from the state.
At issue is a $51 million loan the South Carolina Department of Commerce made to Palmetto Railways a few years ago to pay for improvements in and around the Port of Charleston that has yet to be repaid.
A joint resolution introduced in the South Carolina Senate in February would authorize the sale of up to $550 million in general obligation bonds – ultimately paid for by taxpayers – for various infrastructure projects at the Port of Charleston.
About $400 million of that would pay for a rail yard at a former Navy base in North Charleston. While the South Carolina Port Authority would operate the rail yard, Palmetto Railways would own the site.
The total amount also includes enough money for the state to essentially forgive the loan to Palmetto Railways.
“The resolution has a separate line item letting the state repay itself and put that expense on the backs of taxpayers,” said Candace Carroll, interim state director for AFP-SC. “Taxpayers should not be forced to bailout a state government agency, especially when many South Carolina families are struggling due to the government’s response to COVID. We must eventually say enough is enough.”
The South Carolina Senate approved the measure, 45-1, in late February, but the House hasn’t voted on it. Sen. Rex Rice, R-Pickens, was the lone “no” vote in the Senate.
AFP-SC is running a statewide digital ad that allows voters to connect with legislators to object to the plan and is running newspaper ads. Response to the campaign is one reason why Carroll believes the House has yet to address the resolution.
Gov. Henry McMaster also came out recently against the bond idea, particularly in light of the state’s $1.9 billion surplus.
On its website, Palmetto Railways explains it is a “short line” railroad, meaning it goes shorter distances and connects shippers to larger freight lines.
Palmetto Railways counts larger lines such as CSX and Norfolk Southern among its customers, as well as Volvo, BMW and General Electric.
According to records recently released by the South Carolina Department of Commerce, Palmetto Railways had $30.7 million in revenues in 2019, nearly a quarter more than in 2018. The company had expenses of $18.7 million in 2019, leaving it with $12 million in profits. It also had $292 million in capital assets at the end of 2019.
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