June 5, 2023

The Nerve

Where Government Gets Exposed

Golf Proviso: Lawmakers Mum on Details

The NerveIt’s not shocking when politicians lie to the public.

But some South Carolina legislators also apparently don’t mind misleading their own colleagues.

Take Rep. Brian White, R-Anderson.

At a Feb. 22 House Ways and Means subcommittee meeting, White offered a 2010-11 budget proviso that would provide a $10 million loan to the Heritage professional golf tournament next year if a new sponsor could not be found for the annual Hilton Head Island event. Wireless phone service provider Verizon has said it will pull out as a sponsor after this year.

But the proviso doesn’t mention the Heritage tournament. Here’s the actual text of proviso 89.112(C):

“During the current fiscal year, the Department of Parks Recreation and Tourism may enter into a loan agreement of up to ten million dollars on behalf of the State with Beaufort County to promote tourism. The money to finance the loan is to be acquired from the Insurance Reserve Fund and the loan is to be repaid to the Insurance Reserve Fund within five years using Beaufort County’s local accommodations tax revenues. The State Treasurer’s Office is to approve the terms and conditions of the loan agreement and ensure that the Fund is fully repaid for any monies taken from the Fund together with lost earnings.”

It isn’t clear why White, an Upstate lawmaker, was advocating for a Lowcountry project.

Several of White’s colleagues on the Ways and Means subcommittee tried to get specifics from White. But White gave only vague answers during the exchange, which lasted about 5-1/2 minutes. (Readers can watch an accompanying video shot by The Nerve of the subcommittee meeting here.)

“Does somebody put up something to guarantee they’re gonna pay that money back?” asked Rep. Harry Ott, D-Calhoun. “Is this a gift?”

Ott also asked White directly, “Can you give me an example of what they (Beaufort County) might do with the money? … Build a golf course?”

White didn’t give any direct answers.

Members of White’s own party also appeared confused about the proviso language. Said House Majority Leader Kenny Bingham, R-Lexington, “I really don’t understand. … Tell me about the Beaufort County portion of it.”

White responded with another vague answer: “This allows Beaufort County basically … to borrow this money to promote tourism in their area. They can do so, and they have to guarantee it back out of accommodation taxes.”

White deflected other questions about why the money was going only to Beaufort County, saying that other counties already received “destination-specific” tourist money, and that any funds to Beaufort County would have to be approved by the state Department of Parks, Recreation and Tourism.

White said Beaufort County could repay any loan, noting, “They are a huge donor to the state; they pay a ton of accommodations taxes.”

But White never mentioned that the money was for the Heritage golf tournament.

The Nerve attempted last week in writing and by phone to ask White why he was evasive with his colleagues, and if other lawmakers asked him to submit the proviso because he is from the Upstate. He also was asked why he believed the loan was fiscally responsible, given the fact that lawmakers are trying to fill a projected budget hole next fiscal year of at least $500 million.

White did not respond to The Nerve’s inquiries.

Contacted last week by The Nerve, Ott said, “I believe Mr. White chose on that particular day not to disclose what the money was to be used for, and that’s unfortunate. That’s not the way government should be run.”

Ott, the House minority leader, also criticized fellow subcommittee member Rep. Bill Herbkersman, R-Beaufort, noting, “Mr. Herbkersman apparently asked Mr. White to put the proviso in, and I didn’t see Mr. Herbkersman answering any questions.”

Herbkersman could not be reached for comment.

White made a motion to approve the proviso, which passed on a voice vote. No lawmaker is heard on The Nerve’s videotape voting against it, though Ott told The Nerve he opposed it then.

There was heated debate last week on the House floor about the proviso. Rep. Nikki Haley, R-Lexington, strongly opposed the proposal.

“You’re taking from an insurance trust fund for a golf tournament,” Haley said. “When you take from an insurance trust fund, I don’t think you’re doing right by the people of this state.”

But Rep. Leon Stavrinakis, D-Charleston, contended that more than 1,200 jobs would disappear if the tournament left South Carolina.

“Can we afford to risk losing them?” he said. “The resounding answer is, ‘No.’”

Rep. Herb Kirsh, D-York, proposed an amendment to kill the proviso. But Rep. Dan Cooper, R-Anderson, the House Ways and Means Committee chairman, was able to get the amendment tabled after convincing his colleagues to split it into two questions.

The proviso eventually passed the House during a marathon session on the budget. Unlike a bill that becomes permanent law, a proviso has to be renewed every year in the budget.

But questions remain about how the $10 million loan would be funded and repaid.

Asked last week if the state Insurance Reserve Fund could afford floating a $10 million loan, Mike Sponhour, spokesman for the S.C. Budget and Control Board, which oversees the fund, told The Nerve, “Based upon the announced payback provisions for the golf tournament loan, we do not believe this arrangement would have any impact on the IRF rate structure.”

As of last week, the Insurance Reserve Fund had a fund balance of about $155 million, Sponhour said.

But the fund, which provides property and liability insurance to 1,021 state and local agencies, lost more than $4 million last fiscal year, taking in $103.8 million in premiums and paying out $107.9 million in claims, according to figures provided by Sponhour.

Under the proviso, Beaufort County would have to repay any loan it received within five years through the county’s local accommodation tax revenues. Ott during the February hearing questioned whether the county already had other commitments for its accommodation taxes.

Beaufort County has collected an average of about $5.5 million in accommodation taxes over the past four fiscal years, state Department of Revenue records show.

But under the proviso, only the local portion of those taxes could be used to repay the loan; the proviso is unclear whether any state portion of the tax that comes back to the county is included.

Unincorporated Beaufort County, for example, collected $1,113,911 in accommodation taxes last fiscal year, of which $508,511 was the state portion, and $605,400 was remitted to the county, according to county finance records.

The local allocation is earmarked for various tourist-related organizations and projects, as is the state’s portion remitted to the county.

The town of Hilton Head collected about $2.3 million last fiscal year in local accommodations taxes, town records show. If the town were responsible for repaying the entire $10 million loan over five years, it likely wouldn’t have anything left over in that fund to do anything else.

Hilton Head also had about $1.4 million last fiscal year in transferred state accommodations tax revenue, town records show.

A state bill (H. 4229) sponsored by Herbkersman would allow Beaufort County and other counties that collect at least $5 million in accommodations taxes yearly and have annual per-capita incomes of at least $40,000 to impose a local option sales tax of up to 1 percent to pay for tourism marketing and tourism-related capital projects.

Reach Brundrett at (803) 779-5022, ext. 106, or rick@scpolicycouncil.com.

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The Nerve