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Shut Down the State House?

The State House should be closed when the Legislature is not in session if the S.C. Budget and Control Board’s $25.2 million operating budget is not restored, according to court papers filed recently by the agency’s director.

In his Aug. 19 reply to a petition before the S.C. Supreme Court, BCB Executive Director Frank Fusco provided a 10-page list of what the agency described as the impact of Gov. Mark Sanford’s veto of the BCB’s entire general fund budget for the fiscal year that started July 1.

The five-member Supreme Court has not yet decided whether to hear the case and is under no deadline to decide.

The approximate 1,000-employee BCB – unique in the country – performs a number of functions for state government. They include overseeing the state retirement system, making required general fund revenue forecasts and monitoring agency expenditures for state budget purposes, operating a computer system that processes payroll and other financial transactions for state agencies, and maintaining 88 state public buildings.

Records show that of the agency’s $25.2 million general fund budget for fiscal year 2010-11, about $1.6 million was designated for the agency’s  General Services Division to maintain:

•    The State House and adjoining landscaping;
•    The Blatt and Gressette buildings on the State House grounds, which house legislative offices; and
•    The McEachern parking garage beneath the Capitol, which provides secure parking for legislative and executive branch employees.

If the general funds are not restored, the agency in court papers recommended that the State House be closed when the General Assembly is out of session – typically July through December – to save operating costs.

“Some level of air conditioning will have to be maintained at the expense of other (General Services Division) programs in order to keep mold and mildew from forming,” according to agency documents included with Fusco’s response. “Horticulture would become a minimal operation. Maintenance staffing would be reduced to absolute minimums.”

In addition, the agency warned, “No funds would be available to maintain legislative buildings,” noting that those buildings are “older, high maintenance … and require significant resources to maintain and operate.”

Even if the BCB’s recommendations were implemented, however, it’s unlikely they would result in layoffs or reduced hours for House or Senate staff members. The Nerve reported earlier that the Senate increased its general operating budget by nearly $4 million for this fiscal year compared to the start of 2009-10, and that doesn’t include $1 million designated for the redrawing of legislative district lines.

Besides shutting down the State House part of the year, the BCB in court papers gave other dire predictions if its vetoed funds are not restored:

•    The state computer system (South Carolina Enterprise Information System) for issuing paychecks to employees at 67 state agencies could not operate.
•    Without funding for the state Board of Economic Advisors, neither the governor nor the General Assembly would be able to “initiate or adopt a budget as required by law, and there will be no monitoring of revenues throughout the year to avoid constitutionally prohibited deficits.”
•    If the Office of State Budget is shut down, neither the General Assembly nor the governor could prepare an annual appropriation act.
•    Without funding for the state Office of Human Resources, “the ability of state agencies to implement reduction-in-force plans would be compromised, and the current state employee grievance system could not operate.”

“The effect of the governor’s veto was to eliminate general fund funding for functions and programs critical to the operation of state government,” Fusco, who is being represented by attorney Vance Bettis of the Columbia firm of Gignilliat, Savitz and Bettis, said in his written reply .

In vetoing the agency’s $25.2 million general fund budget on June 9, Sanford in his written veto message said that “using available funds and implementing cost-cutting measures will sustain this agency easily over the next fiscal year.”

Sanford said the BCB has more than “$1 billion in carry-forward funds, including approximately $60 million in unrestricted accounts.” He also said the board handles nearly $224 million in “other funds that it receives from state agencies in the form of rent, fees and other charges.”

The S.C. House sustained Sanford’s veto, which left the BCB scrambling to find a new source of operating revenue for the start of this fiscal year. On July 2, Sanford, chairman of the BCB’s five-member governing board, and Fusco agreed, with the governing board’s authorization,  to transfer $13.3 million from an unused fund controlled by the agency, known as the “Rural Infrastructure Bank Trust Fund,” to keep the agency operating temporarily this fiscal year.

The BCB cited two state budget flexibility spending provisos as its authority to raid the account’s entire balance.

Darrick Jackson, the mayor of Timmonsville in Florence County, filed a lawsuit July 30 against Sanford, other BCB members, Fusco, Senate President Pro Tempore Glenn McConnell and House Speaker Bobby Harrell, contending that Sanford’s veto of the $25.2 million and the approved $13.3 million transfer were unconstitutional.

Jackson, who is being represented by attorney and state Rep. James Smith, D-Richland, has asked the S.C. Supreme Court to decide the case.  If it accepts it, the high court could schedule oral arguments as early as this fall, or make a ruling based on written legal briefs only.

In his written reply to Jackson’s petition to the Supreme Court, Fusco disputed Sanford’s veto message, contending that of the special accounts under the agency’s control, only the Rural Infrastructure Bank Trust Fund could be tapped for general operations.

“In sum, contrary to the governor’s Veto 52 message, the board did not, and does not, have available funds that could be accessed to meet the $25 million shortfall to support critical state functions and programs under the board’s governance,” Fusco said.

In an affidavit accompanying his reply, Fusco said he and Sanford “sanctioned” about $7.6 million of the approved $13.3 million transfer to “temporarily fund critical state functions and programs for the first quarter of the fiscal year.”

Fusco asked the Supreme Court to hear part of the lawsuit dealing with the constitutionality of Sanford’s veto but to deny considering other parts of the suit dealing with the $13.3 million transfer, contending those issues were “more appropriate through a trial court action.”

In a joint written reply, Sanford and S.C. Comptroller General Richard Eckstrom, a BCB member, said the Supreme Court should deny hearing the case and instead “direct Mayor Jackson to file his complaint in the circuit court system if he wishes to proceed with this litigation.”

Among other things, their reply contends that the town of Timmonsville was not harmed by the $13.3 million transfer because it never applied for any of those funds, and that the BCB never intended to allocate any of that money to the town.

The Nerve reported last month that no money had ever been transferred from the account in the past four fiscal years.

The reply by Sanford and Eckstrom was submitted by attorney Butch Bowers of the Columbia firm of Hall and Bowers, which also represents the South Carolina Policy Council, the parent organization of The Nerve.

In their written replies, McConnell and Harrell, both Charleston Republicans;  Senate Finance Committee Chairman Hugh Leatherman, R-Florence; and House Ways and Means Committee Chairman Dan Cooper, R-Anderson,  said they were not opposed to the Supreme Court hearing the lawsuit. But all of them said they would not make any legal arguments unless the court accepted the case.

Leatherman and Cooper are BCB members.

Harrell and Cooper, who submitted a joint response, are represented by House attorney Bradley Wright.  McConnell is represented by three Senate attorneys – Michael Hitchcock, John Hazzard and Kenneth Moffitt – while Leatherman’s attorney is Bobby Stepp of the Columbia firm of Sowell Gray Stepp & Laffitte.

Reach Brundrett at (803) 254-4411 or rick@thenerve.org.

Budget Budget and Control Board General Assembly