Cash-Rich Tiny Agency Could Get Big Budget Boost

June 2, 2014

Investigative Reports

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Piggy BankAs of three weeks ago, the S.C. Rural Infrastructure Authority had nearly $48 million in cash on hand, state comptroller general records show.

Despite being cash-rich, however, the four-employee agency, which has been in operation less than two years, says it needs a 409 percent increase in general funds for the fiscal year that starts July 1. And the S.C. Senate fulfilled that request, voting last month to hike the RIA’s general-fund budget for fiscal 2015 to $7 million, an increase of $5,625,000 from its current state appropriation of $1,375,000.

The House version of next fiscal year’s budget, which passed in March, would give the RIA a somewhat smaller increase – $3 million more in non-recurring, surplus general funds, according to the Office of State Budget.

What the final appropriation for the RIA will be has yet to be determined, as House and Senate budget writers over the past week have been meeting in secret – bypassing the public conference committee process – to craft a compromise state budget for next fiscal year. The regular legislative session ends Thursday.

In the end, the tiny RIA will be getting millions more in taxpayer dollars for fiscal 2015 if either budget version is adopted by the General Assembly and the proposed increase survives Gov. Nikki Haley’s veto pen.

Most of the RIA’s total budget comes from “other” funds, state budget records show. Combined with general funds, its total proposed budget for next fiscal year under the House version is nearly $25 million, compared to about $27.6 million under the Senate version.

The Nerve previously reported that the “Rural Infrastructure Bank Trust Fund” accounted for most of the agency’s initially available funds. Rural infrastructure funds are derived from state job-development credits that certain companies cannot claim because they are located in more affluent counties. Job development credits are refunds of a portion of employee wage withholdings.

The RIA’s $47.95 million cash balance as of May 12 is more than double its total ratified budget of $21.8 million for this fiscal year. State comptroller general records show the agency carried over more than $3.2 million in general funds into this fiscal year.

The Nerve recently attempted – without success – to get a detailed explanation from RIA officials about their reasons for their requested 409 percent increase in general funds.

“If approved, the funds allocated to RIA would be used to advance the agency’s mission: to assist in financing rural infrastructure projects,” S.C. Department of Commerce spokeswoman Allison Skipper said in a written response to The Nerve, after being forwarded questions sent to Bonnie Ammons, the RIA executive director.

When pressed for more specifics on the requested $5.6 million increase in general funds by the agency, Skipper didn’t provide a direct answer, but included an agency press release announcing that the RIA had awarded nearly $12 million in grants this fiscal year for 42 water and sewer projects in 32 counties.

Contacted recently by The Nerve, Rep. Bill Clyburn, D-Aiken and one of three lawmakers on the seven-member RIA Board of Directors, also couldn’t provide immediately provide specifics on the proposed budget increase but said he would check with Ammons. The other two legislators on the board are Sen. Billy O’Dell, R-Abbeville and the board’s vice-chairman; and Rep. Mike Pitts, R-Laurens.

“They have a variety of requests they were looking at, and they said they needed more funds to meet those requests,” said Clyburn, who authored the law creating the agency.

Clyburn said he was aware that the RIA had a recent cash balance of more than $40 million, but couldn’t say why the agency needed $5.6 million more in general funds for next fiscal year given its fat bank accounts.

“I’m going to ask those specific questions,” he promised.

The purpose of the RIA, according to its enabling legislation, is to “aid the development of trade, commerce, industry, agriculture, aquaculture and employment opportunities.”

State law (Section 11-50-20 of the S.C. Code of Laws) allows the agency to provide “loans and other financial assistance” to local governments, special purpose and public service districts, and publics works commissions for constructing or improving rural infrastructure. Projects must be located in counties designated under state law as “distressed” or “least developed.”

In fiscal 2012-13, 26 of the state’s 46 counties were designated under state law as “distressed or “least developed,” according to the agency’s annual accountability report. The RIA’s governing board last fiscal year approved 31 grants, totaling $9.6 million, for 25 counties, about 60 percent of which was designated for upgrades or expansions of water systems, the report said.

The report noted the awarded grants “proposed to impact more than 30,000 residents and create 500 jobs,” though specifics on the job-creation numbers weren’t provided. The agency’s latest press release on grants awarded this fiscal year said the 42 approved projects would “impact 7,500 customers and 130 businesses,” though it implied that there wouldn’t be any immediate significant job creation with the grants.

“These investments will help the state continue to ‘set the table’ for economic development in our rural communities,” said Commerce Secretary Bobby Hitt, who serves by law as chairman of the RIA’s Board of Directors, which awards grants for qualified projects.

Some RIA-approved funds will be used to “lay the foundation for publicly-owned industrial properties that will attract new jobs and investment,” the press release said, though specifics on those projects, including the cost to taxpayers, were not immediately available.

The RIA is housed at Commerce headquarters in a high-rise office building across the street from the State House. Commerce provides administrative support for the agency.

The House speaker, House Ways and Means Committee chairman, Senate president pro tempore and Senate Finance Committee chairman each make one appointment to the RIA board. The governor gets two appointments; Hitt automatically serves by virtue of his position.

Then-Gov. Mark Sanford unsuccessfully tried blocking the law that created the RIA, writing in his 2010 veto message that it “creates a new state government entity to perform functions the Department of Commerce currently performs.” The agency began operating in late 2012.

Even when it existed on paper only, the RIA was flush with money. The Nerve reported in September 2011 that the agency had $28.8 million in available revenues that fiscal year.

Reach Brundrett at (803) 254-4411 or rick@thenerve.org. Follow him on Twitter @thenerve_rick. Follow The Nerve on Facebook and Twitter @thenervesc.