(The editorial below concerns H.4739, which was introduced at the request of The SC Small Business Chamber of Commerce.)
A new legislative initiative will serve as a watchdog for private businesses against unfair competition by taxpayer supported public agencies. House bill 4739, backed by 29 members of the SC House of Representatives, would require a state agency to gain approval from the State Budget and Control Board before undertaking a project that may compete with private businesses.
While the legislation puts the decision in the laps of our elected officials, it brings potentially unfair government competition to the limelight. The state agency must prove that the goods or services to be offered are not or cannot be made readily and competitively from private businesses. The request must also show the goods or services will enhance the state agency¹s primary governmental purpose.
The bill was sparked by a $12.5 million hotel project by the University of South Carolina. Upon the announcement by university officials in July, hotel operators in Columbia voiced opposition for the proposed 117-room hotel, citing the new hotel would be in direct competition with their businesses.
The purpose of the semi-private hotel, according to university officials, is to house 100 federal prosecutors who attend classes at the National Advocacy Center. Heated comments from USC president Andrew Sorensen on the quality of eight downtown hotels only fueled the fire. An anti-USC campaign soon followed.
But in October an agreement was finally reached, with USC agreeing to a phased-in occupancy rate, providing links to area hotels on the university¹s website, and a seven year suspension on future university-owned hotel development. The hotel is expected to be complete by 2005.
In Greenville a similar situation arose last summer when Greenville Hospital System officials announced plans to construct two $8 million Life Centers as part of expansion efforts at the Patewood Medical Campus and a new medical center planned in Greer. Local health and fitness businesses banned together to form the Coalition for Healthy Competition, and with the Greenville County Taxpayers Association attacked the plan, saying a tax-exempt status gives the hospital clubs an unfair advantage.
GHS president and CEO Frank Pinkney cited the plans were in response to needed services in the growing Upstate community, despite there being six private clubs already in the Patewood area. While GHS officials say the centers are for medical purposes and are not intended to compete with the private sector, GHS and the coalition continue to meet in hopes of reaching a compromise.
House bill 4739 is critical to defending small businesses from often unjustified government competition. Even if the state government can show that a proposal is warranted, let businesses do what they do best ‹ serving the local community, providing goods and services and creating new jobs.