DOA Bill Conferees Unable to Resolve Differences in First Meeting

June 6, 2013

Investigative Reports

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South Carolina SealHouse and Senate conference committee members who met for the first time Wednesday afternoon on a bill that would restructure state government have significant differences about who should have the authority to purchase goods and services, and allow agency deficits.

There is agreement, however, between the different versions of S. 22 on moving many of the current functions of the state Budget and Control Board (BCB) and Governor’s Office to a newly created Department of Administration (DOA) that would be under the governor’s control.

The bill is sponsored by Sens. Vincent Sheheen, D-Kershaw and Shane Massey, R-Edgefield, both of whom were appointed to the six-member conference committee.

Today is the final day of this year’s regular legislative session. If the conferees on S. 22 cannot reach an agreement by 5 p.m., they can continue their work when the Legislature reconvenes for a three-day special session starting on June 18.

Sen. Thomas Alexander, R-Oconee and the conference committee chairman, didn’t immediately schedule another meeting after Wednesday’s first meeting.

The biggest difference between the bill versions involves what state entity would have procurement powers. The House version would put those functions under the proposed DOA; the Senate would give that authority to a newly-created “State Fiscal Accountability Authority” (SFAA).

The SFAA would be comprised of the same members of the BCB’s governing board, made up of the governor, comptroller general, treasurer and chairmen of the House Ways and Means and Senate Finance committees.

S. 22 originally was referred to the Senate Judiciary Committee, but Senate Finance Chairman Hugh Leatherman, R-Florence and a BCB member, moved the bill to his budget-writing committee in a deal reached during  a secret executive session of the Senate, The Nerve reported in February.

House Speaker Pro Tempore Jay Lucas, R-Darlington and an S. 22 conferee, said during Wednesday’s meeting that procurement is a ministerial function of government and belongs in the DOA.

“There’s no way we’re going to pass that (the House version of procurement),” Massey replied.

Besides procurement, conferees also disagreed about who would authorize state agency deficits. The House version of S. 22 would require the General Assembly to sign off on any state agency deficit. The Senate would give that power to the Executive Budget and Strategic Planning Office if an agency deficit is less than $1 million and the Legislature is adjourned, while deficit amounts of $1 million and higher would have to be approved by the General Assembly.

Agency deficits would be covered with year-end surplus money in the state budget or from the state general or capital reserve funds, under both bill versions.

“Anyone can recognize a deficit. The (state) constitution says we can’t run a deficit,” Rep. Harry Ott, D-Calhoun and a conference committee member, said in criticizing the Senate version. “Are you trying to do an end-run around the constitution that would allow us to run a deficit and say that’s OK?”

Sheheen said the BCB has authorized deficit spending in recent years, noting a $228 million deficit in the S.C. Department of Health and Human Services’ budget a couple of years ago and “serial deficits” in the state Department of Corrections’ budget for most of the past decade.

Massey said a $20 million loan given to the S.C. Department of Revenue this fiscal year in response to the massive cyber-security breach at the agency is the most recent example of deficit spending allowed by the BCB.

Massey also said that after much discussion in the Senate, it was decided that if lawmakers are out of session and an agency deficit is just thousands of dollars, the cost of the General Assembly to come back to deal with that deficit would be more than the shortfall.

“The House position is it’s inappropriate for a state agency to have up to $1 million (for a deficit),” replied Patrick Dennis, a staff attorney with the House Judiciary Committee.

The conference committee, which includes Rep. Greg Delleney, R-Chester, also has to resolve differences over cyber security. The Senate version of S. 22 would create a new information-security agency at an initial projected cost of $12 million to $13 million, though the House has balked on that proposal.

The conferees also did not resolve what entity would replace the BCB’s governing board – either the State Fiscal Accountability Authority (SFAA) under the Senate version or the “South Carolina Contracts and Accountability Authority” (SCAA) that would be created by the House. The members of the SCAA would be similar to the BCB’s makeup, being comprised of the governor, treasurer, comptroller general, and a member of the House appointed by the House speaker and a member of the Senate appointed by the chamber’s president pro tempore.

The conference committee on Wednesday did not discuss bonding authority, which would land with the SFAA under the Senate version and the SCAA under the House version.

Olson can be reached at (803) 254-4411 or curt@thenerve.org. Follow him on Twitter @thenerve_curt and @olson_curt. Follow The Nerve on Facebook and on Twitter @thenervesc.