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Lawmakers Uphold Hydrogen Funding Veto

It took one of South Carolina’s worst budget crunches in modern history, but legislators have finally turned off the unproductive tax-dollar spigot for hydrogen research funding, at least for one year.

Lawmakers voted this week to sustain Gov. Mark Sanford’s veto that lined out nearly $560,000 allocated to the University of South Carolina for hydrogen fuel cell research.

Last year, the General Assembly overrode a Sanford veto on the same item and allocated $775,601 to USC for hydrogen research.

Also last year, legislators slipped a proviso to the current year’s budget that repaid nearly $1.5 million borrowed by the city of Columbia and Aiken County for hydrogen fueling stations, even though there was just one hydrogen-powered vehicle in South Carolina at the time.

Hydrogen research has proven to be one of South Carolina’s biggest taxpayer-funded economic development boondoggles in recent years.

More than $40 million in state and local tax dollars has been allocated to hydrogen in the Midlands alone over the past few years, even though multiple experts question how viable the technology will be in offsetting U.S. reliance on foreign oil or reducing carbon emissions.

Investment returns have been paltry. Barely 200 jobs have been created, according to House Speaker Bobby Harrell. And neither the Speaker’s Office nor the S.C. Hydrogen Fuel Cell Alliance, which provided the Speaker’s Office with the data on job-creation figures, have yet provided the sourcing for that information to The Nerve..

What’s even more frustrating is that there is neither demand nor supply for hydrogen fuel in South Carolina.

There are, at most, a handful of hydrogen-fueled cars in the state, as hydrogen-fueled vehicles can cost anywhere from $100,000 to more than $1 million, and the fuel is considerably more expensive than gasoline.

Sanford’s rationale for the veto was simple:

“We are vetoing this funding because USC has thus far relied too heavily on state dollars to fund this research rather than recruit private investment. USC has received ample funding to sufficiently jump start its hydrogen fuel cell research over the past few years, and we believe it is now time to translate those dollars into privately funded research that will truly create permanent, private-sector jobs rather than more government jobs paid for by the taxpayers of South Carolina.”

The decision was likely made easier because of the state’s dire financial condition.

South Carolina’s general fund budget has been cut by more than $2 billion over the past two years because of falling tax collections related to the economic downturn. As part of those reductions, twice this year the Budget and Control Board has had to make across-the-board general fund cuts, totaling nearly $439 million.

In addition, the budget for next fiscal year, which starts July 1, includes about $1 billion in federal stimulus money. That cash will be gone by this time next year and state tax collections aren’t expected to recover fast enough from the recession to offset that loss.

Reach Dietrich at (803) 779-5022, ext. 110, or Kevin@scpolicycouncil.com.

Accountability General Assembly