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Obscure New Agency Would Grow Under Restructuring Bill

A little-known state economic development agency created two years ago but not yet in operation would grow even more under the S.C. Senate’s version of a bill creating a Department of Administration.

Under Senate amendments to H. 3066, the new agency, known as the Rural Infrastructure Authority, would assume control of three panels and a program now part of the S.C. Budget and Control Board:

  • S.C. Infrastructure Facilities Authority;
  • S.C. Water Quality Revolving Fund Authority;
  • Tobacco Settlement Revenue Management Authority Board; and the
  • Office of Local Government’s loan program for local municipalities

On paper, the entities are responsible for awarding tens of millions of dollars collectively in federal and state dollars designated for infrastructure projects, such as water and sewer improvements, primarily in the state’s rural areas.

In reality, the BCB’s Office of Local Government administers the programs. In fact, two of the panels, which had been comprised of the five members who make up the BCB’s governing board, haven’t met for years, a BCB spokeswoman told The Nerve last week.

The Senate’s version of H. 3066 would do away with BCB’s governing board and agency with the same name, and transfer many of the state’s administrative functions to a newly created Department of Administration under the governor’s control.

But as The Nerve pointed out last month, the chamber’s proposal also would create several free-standing new entities – not including the Rural Infrastructure Authority – that would be appointed by both the executive and legislative branches, replicating the power-sharing structure of the BCB board.

A coalition of grassroots group last week publicly blasted the Department of Administration bill, which is back before the full House for consideration. The House is expected to take up the bill next week.

Contacted recently by The Nerve, Rep. Bill Clyburn, D-Aiken and author of the 2010 law creating the Rural Infrastructure Authority, said he wasn’t aware of the Senate’s amendments to H. 3066.

“It seems to me that it gives more authority (to the Rural Infrastructure Authority),” Clyburn said. “Hopefully, it doesn’t water down the intent.”

Clyburn earlier told The Nerve that the RIA would finance primarily smaller projects, such as sidewalks or relatively small water-line projects in rural areas.

But under the law, the agency legally could go after bigger projects with tax dollars, such as the purchase of land and buildings, and the construction of buildings to “aid development of trade, commerce, industry, agriculture, aquaculture and employment opportunities” in designated “distressed or least developed” counties.

The RIA is not funded as a line item in this fiscal year’s state budget or the first version of the proposed budget for next fiscal year, which starts July 1. But a budget proviso (80A.42) for this fiscal year transfers funds controlled by the BCB’s Office of Local Government to the RIA.

Including general appropriations and reserves, those funds, which include the Local Government Grants Program, Tobacco Settlement Local Government Fund and the Rural Infrastructure Bank Trust Fund, totaled nearly $34.3 million as of Feb. 28, BCB records show. As of September, the balance was nearly $29 million, The Nerve reported then.

In addition, if the Senate’s version of H. 3066 becomes law, the RIA would control three infrastructure loan programs targeted primarily to rural municipalities. Last fiscal year, those programs collectively received about $182.8 million in state, federal and investment revenues; and spent $92.2 million, according to BCB records.

Slow Startup

Although created in May 2010, the RIA is not yet operating; its governing board, which includes Clyburn, who was appointed last year by former House Ways and Means Committee Chairman Dan Cooper, R-Anderson, hasn't even held its first meeting, according to Clyburn.

Gov. Nikki Haley didn’t appoint two members of the seven-member governing board until last November, records with the Office of the Secretary of State show. One of those appointees, Edward Edmondson of McCormick County, told The Nerve last week he is withdrawing from the board because of a family medical issue.

Besides the governor’s two appointees, the Senate president pro tempore, Senate Finance Committee chairman, House speaker and House Ways and Means Committee chairman each appoint one board member. Clyburn introduced a bill (H. 4664) in January, which unanimously passed the House, that would allow the House speaker and Ways and Means Committee chairman to appoint legislators as ex-officio board members.

The Commerce secretary automatically serves as the RIA’s board chairman. Neither Commerce Secretary Bobby Hitt nor the agency’s chief spokeswoman, Amy Love, responded to recent written questions from The Nerve about the RIA.

Under the state budget proviso for this fiscal year, the RIA board can “hire a director for the authority, so long as one of the gubernatorial appointees and three of the legislative appointees votes in favor of the hiring.”

But no director has been hired because the board hasn’t met, Clyburn said. Still, he said he expects the agency to be operating soon.

“I believe it will be up and running by the time the budget is approved in the next five weeks,” Clyburn said.

Multimillion-Dollar Balances

As for the other entities that would be assumed by the RIA under the Senate’s version of H. 3066, the Tobacco Settlement Revenue Management Authority Board, which is made up of the BCB’s governing board, is responsible for overseeing funds paid by tobacco companies to South Carolina under a 1998 settlement aimed at reimbursing the state for tobacco-related health costs.

By law, 73 percent of that money is earmarked for health-related programs. Two percent must go to the Tobacco Settlement Local Government Fund that has been transferred this fiscal year, under Proviso 80A.42, from the BCB's Office of Local Government to the RIA.

As of Feb. 28, that fund had a balance of approximately $13.5 million, BCB records show.

The remaining bulk of the nearly $34.3 million total fund balance available this fiscal year to the RIA – $16.8 million – would come from the Rural Infrastructure Bank Trust Fund, BCB records show.

The Nerve reported earlier that the BCB in 2010 voted to raid that fund, which is tied to job development credits given to eligible companies for economic development projects, after then-Gov. Mark Sanford vetoed the BCB’s entire $25.2 million general fund budget, though the S.C. Supreme Court later reversed that decision.

Besides meeting as the Tobacco Settlement Revenue Management Authority Board, the BCB for years met as the S.C. Infrastructure Facilities Authority and the S.C. Water Quality Revolving Fund Authority, according to meeting minutes provided last week to The Nerve.

Both entities would be assumed by the Rural Infrastructure Authority under the Senate’s version of H. 3066.

But BCB spokeswoman Lindsey Kremlick confirmed last week when contacted by The Nerve that those panels haven’t met in recent years, noting in a written response that those entities “granted authorization for the (BCB’s) Office of Local Government to perform certain functions on their behalf.”

The two panels have similar functions under state law, mainly to help local governments construct or repair water and sewer systems in their communities. Infrastructure facilities funds, example, can be used for “public, commercial, residential or industrial development purposes,” according to information provided by Kremlick.

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

State Agencies Local Government Legislation Incentives General Assembly Economic Development Budget and Control Board Budget Corporate Welfare

S.C. Budget and Control Board Commerce Secretary Bobby Hitt Rural Infrastructure Bank Trust Fund Rep. Bill Clyburn Gov. Nikki Haley Rural Infrastructure Authority Tobacco Settlement Revenue Management Authority