Commerce mum on details of massive budget request

December 10, 2021

Investigative Reports

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By RICK BRUNDRETT

The S.C. Department of Commerce wants $100 million more in state funding for next fiscal year – which represents nearly 80% of its entire current budget – for an unspecified “infrastructure” program.

“South Carolina does not have a funding mechanism to address significant needs that are necessary for the state to continue and capitalize on its economic development success,”  according to Commerce’s formal budget request submitted recently by new agency head Harry Lightsey to the state Department of Administration. “Currently the state addresses the need to modernize or construct new infrastructure based on population density or individual economic development projects.”

“This approach leaves significant infrastructure gaps and inhibits the state from responding to business needs in a timely fashion,” according to the “Strategic Economic Development Infrastructure” request.

But the fiscal 2022-23 request contained no details on the types of proposed infrastructure projects, such as water or sewer lines; what areas of the state would be targeted; or which Commerce officials would be involved in making grants or loans.

The Nerve last week submitted a list of written questions to department spokeswoman Alex Clark about the proposal, but received no response. The new fiscal year starts July 1.

To put the proposed $100 million into some context, it’s more than this fiscal year’s total budgets of at least 50 state agencies.

Tens of millions of dollars already are awarded annually for infrastructure projects in South Carolina. A separate state agency, the Rural Infrastructure Authority (RIA), provides grants and loans for water, sewer and drainage projects in rural areas statewide; last fiscal year, a total of $77 million was awarded for 65 projects in 32 counties, according to its annual report.

By law, as the Commerce secretary, Lightsey serves as the RIA board chairman. Lightsey was appointed in June by Gov. Henry McMaster to head Commerce and was quickly confirmed by the Senate, taking over for longtime secretary Bobby Hitt. Lightsey’s salary is $252,000, according to the state salary database maintained by the Department of Administration.

Besides RIA funding, lawmakers in 2019 appropriated $65 million to Commerce for the newly created “Rural School District and Economic Development Closing Fund,” which, according to McMaster, who pushed for the state funding, was to be used “solely, and without exception, for economic development” in rural areas. Of that total, $30 million was directed earlier this year to the state Office of Regulatory Staff to administer a grant program for broadband expansion in eligible counties, according to Commerce’s fiscal 2020-21 accountability report.

The additional $100 million in state funding that Commerce wants for fiscal 2022-23 represents 77% of its $159.5 million total budget for this fiscal year, which includes state, federal and “other” funding, budget records show.

And it’s not the only item on the agency’s wish list for next fiscal year.

Commerce is asking for an additional $17 million for its “closing fund,” which, according to the agency’s budget request, would be used to increase the number of “new/retained jobs and capital investment to South Carolina,” though no specifics were given on how the money would be spent. For this fiscal year, lawmakers provided $21.3 million to the fund; as of Thursday, the account had a cash balance of $18.7 million, state comptroller records show.

In recent years, grants from the fund have been used to lure large corporations to the state by helping them cover building, road and infrastructure costs. In 2014, for example, nearly $36 million was awarded from the fund to help Singapore-based Giti Tire locate a manufacturing plant in Chester County, as The Nerve revealed then.

Money from the account, also known as the “governor’s closing fund” or “deal closing fund,” is doled out by the state Coordinating Council for Economic Development (CCED), an 11-member group made up of the directors or board chairpersons of state agencies, including Commerce, involved in economic development. By law, the commerce secretary is the CCED chairperson.

The CCED over the years has met behind closed doors in Commerce’s headquarters in an office high-rise across from the State House to discuss various taxpayer-backed incentives to companies, as The Nerve has revealed.

In addition to the $17 million for the closing fund, Commerce also wants $4 million more for next fiscal year for its “LocateSC” program, which is used to market and develop industrial sites, as The Nerve has reported.

Budget requests by Commerce and other state agencies will used by McMaster in crafting his annual state spending plan. The S.C. House and Senate next year will pass their own state budget proposals; a final legislative version will go to McMaster for consideration of vetoes.

This fiscal year’s total state budget is more than $32.3 billion.

Brundrett is the news editor of The Nerve (www.thenerve.org). Contact him at 803-254-4411 or rick@thenerve.org. Follow him on Twitter @RickBrundrett. Follow The Nerve on Facebook and Twitter @thenervesc.

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