By RICK BRUNDRETT
In touting a $600 million settlement with the federal government over plutonium storage in the state, S.C. Attorney General Alan Wilson publicly described the deal as the “single largest settlement in South Carolina’s history.”
But what Wilson, the state’s chief lawyer since 2011, didn’t mention in his Aug. 31 announcement was that he wants to keep $10 million to $15 million out of the $600 million for his own agency, records show – though his office every year gets tens of millions of tax dollars through the normal budget process.
In a Sept. 17 written request to the state Executive Budget Office (EBO), the Attorney General’s Office (AGO) said it “will be retaining” $10 million to $15 million from “settlement for cost(s), fees and fines.” No other details about the proposed payout were provided on the “Request for Other Funds Authorization” form.
Under state law, approval by the EBO, which is part of the S.C. Department of Administration, is required for other-fund increase requests after the annual state budget takes effect.
The proposed $10 million-$15 million was included in the written request by Wilson’s office to the EBO to pay two outside law firms a separate, collective $75 million for work on the $600 million settlement. Brian Gaines, the EBO’s executive director, approved the request on Sept. 25, according to the authorization form.
The AGO filed the EBO form on Sept. 29 in Richland County Circuit Court as part of Wilson’s response to a lawsuit by Columbia lawyer John Crangle and the nonprofit South Carolina Public Interest Foundation opposing the attorney general’s approval of the $75 million to the Willoughby & Hoefer, and Davidson Wren & DeMasters law firms, based in Columbia. Before being elected attorney general, Wilson, a Republican, worked at Willoughby & Hoefer, according to his biography on the AGO’s website.
The Nerve on Monday sent written questions to Wilson’s office seeking specifics on how it arrived at the proposed $10 million-$15 million for the agency, and how the money would be spent. In an initial email response, agency spokesman Robert Kittle said only: “Actually, our office is not requesting any fees from the settlement. That was a mistake in the request to the EBO.”
In a follow-up interview this morning, Jeff Young, the chief deputy attorney general, and Kittle said Wilson had discussed the $10 million-$15million with senior staff before the lawsuit was filed. Wilson decided, though, not to immediately take the payout after discussing the matter with state House “budget people,” but instead would seek the amount through a state budget proviso as part of next fiscal year’s normal budget process, Young said.
Kittle said the AGO’s finance department included the amount in the request to the EBO for the separate $75 million, without Wilson’s knowledge, as a “formality for dispersing the funds,” noting the office by state law is authorized to “keep a portion of any settlement.”
“This ($10 million-$15 million) is a large amount,” Young said. “We want the (state) Budget Office and the House and the Senate to look at this, and if they decide we’re entitled to it, then we’ll get it.”
Settlement fees are considered “other” funds, which include such things as fees and fines, college tuition, lottery proceeds, state gasoline taxes and part of the state sales tax earmarked for K-12 education. Other funds made up nearly $12 billion, or about 40%, of last fiscal year’s $30-billion total state budget, which also included state and federal funds.
Lawmakers often hide other funds in obscure provisos in the annual state budget with little, if any, advance public debate.
An annually recurring budget proviso requires that a legislative committee review all other-fund change requests, though it wasn’t done for Wilson’s latest request, according to a court affidavit filed by the committee’s co-chairman.
If the AGO receives $10 million to $15 million in fees from the $600 million settlement, it would easily be the single-biggest payout to the agency in recent years. Kittle said it was “assumed” initially that that the office would “keep approximately 1.5% to 2.5% on this case.”
Last year, The Nerve that over the previous four fiscal years, the AGO retained a total of about $13.2 million in 33 settlements – some of which involved well-known corporations – including $3.1 million in 10 cases in which the office kept all the settlement proceeds.
Asked this morning what specific work the AGO did to justify $10 million-$15 million in fees out of the $600 million settlement, Kittle replied, “The $10 million-$15 million is not to pay for that because that’s not how much that costs, but it’s the needs of the office that are needed anyway, and here’s a way to get that money.”
In last year’s story, The Nerve reported that the agency’s total budget, which includes state, federal and other funds, had skyrocketed since Wilson took over, increasing from $18.1 million in fiscal 2012 to $101 million last fiscal year.
Kittle then attributed the agency’s budget growth to a change in state law in 2017 requiring the transfer of certain federal funds and court fees and fines from other state agencies to the AGO, though The Nerve pointed out that state and other funds collectively had grown by $9.6 million since fiscal 2012 until the law took effect.
The AGO ended last fiscal year with $31 million in “other” fund reserves and a $1.3 million general-fund surplus, state records show.
Few oversight meetings
Under a state budget proviso that lawmakers have annually renewed since it initially was passed in 2010, requests to spend additional other funds after the fiscal year has started are supposed to be reviewed by an eight-member legislative panel called the “Joint Other Funds Oversight Committee,” which is appointed by House and Senate leaders.
The proviso requires the EBO to notify the committee of any request for an increase in “interim budget authorization resulting from other funds collections” by any state agency, department, board or commission, noting the committee “shall review each request and recommend appropriate action.”
But in an affidavit filed Tuesday as part of the lawsuit against Wilson and the two outside law firms, state Sen. Nikki Setzler, D-Lexington, who is the committee co-chairman, said the panel never received any request to consider the $75 million that Wilson approved for the two law firms. Setzler, an attorney, didn’t respond this week to The Nerve’s written request for comment.
In a written response Monday, committee co-chairman Rep. Gary Simrill, R-York, told The Nerve that the committee did not meet after the COVID-19 outbreak in the state, and that he was supposed to have “rotated off” the panel because of other legislative assignments.
Kate Wink, a senior budget analyst with the Senate Finance Committee, in an email response Tuesday said the committee has met once this year – Jan. 30 – and had two “telephone poll meetings” last year.
“All of the information was disseminated to Committee members and staff discussed each request for other funds authorization directly with the members to receive input and questions,” Wink said. “A telephone poll was then conducted of members to get their recommendations.”
Asked if committee approval was needed for Wilson’s settlement-fee request, Department of Administration spokeswoman Kelly Coakley in a written response Tuesday said only that the EBO had complied with a state spending bill passed by lawmakers in May.
Nerve stories are free to reprint and repost with permission by and credit to The Nerve.