Eco-Devo Groups with Legislative Ties Poised to Get Taxpayer Funding Again

May 14, 2013

Investigative Reports

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By RICK BRUNDRETT

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A conflict? Naaaaah.

In 2011, S.C. Sen. Hugh Leatherman was among a group of state and local officials, including Gov. Nikki Haley, who attended the 49th International Paris Air Show.

The $3,544 bill for the Florence County Republican’s trip, according to his state income-disclosure form, was covered by the North Eastern Strategic Alliance (NESA), a regional economic-development organization serving a nine-county area in the state’s northeast corner, including Florence County.

Leatherman serves on the executive committee of the NESA board, according to the organization’s website and federal tax records. He also is chairman of the budget-writing Senate Finance Committee, which has proposed allocating a collective $5 million in state tax dollars for the fiscal year that starts July 1 to seven regional economic-development groups – including $730,000 to NESA – and three counties.

Leatherman’s committee would give $80,000 more to NESA than under the House version of the fiscal 2014 state budget. As in past years, the proposed funding for the economic-development groups would be through the state Department of Commerce, authorized by a little-noticed budget proviso, which has to be renewed yearly to stay in effect.

The full Senate began debating the state budget Monday afternoon.

Both the Senate Finance and House versions also would resume state funding through Commerce to a Columbia-based, economic-development organization known as New Carolina, also known as the South Carolina Council on Competitiveness. Leatherman’s committee has proposed giving the nonprofit $650,000 next fiscal year – more than double the $300,000 proposed by the House.

The Nerve first reported about New Carolina in 2010, revealing that the organization had received a total of $905,000 in government funding from fiscal 2006 through 2008, including $800,000 from Commerce through budget provisos. The group in recent years had not received state appropriations.

New Carolina, formed in 2004, describes itself on its website as a “working to increase South Carolina’s economic competitiveness through a cluster development strategy.”

Regional and other nonprofit economic-development organizations typically boast that they bring industry and jobs to their respective areas, though critics contend the groups often cannot verify their claims.

As has been his practice with The Nerve, Leatherman did not respond to a written request from The Nerve last week seeking comment on the latest funding proposals.

Leatherman isn’t the only legislator with ties to economic-development groups that receive taxpayer funding courtesy of the General Assembly. Sen. Yancey McGill, D-Williamsburg and a member of Senate Finance, also serves on NESA’s executive committee. McGill, whose home county is served by NESA, didn’t respond to The Nerve’s inquiries last week.

Sen. Brad Hutto, D-Orangeburg, is a board member of the SouthernCarolina Alliance, which serves six counties in the state’s southwestern corner. Hutto’s legislative district includes all or parts of five of the six counties served by the organization.

In a story last year in The Nerve, Hutto said he saw no conflict of interest sitting on the alliance board and voting on the Senate version of the state budget, which contains the proposed appropriation to the alliance.

“I’m aware we’ve done it (appropriate state funds to regional economic-development groups) in the past,” he said then.

Those organizations typically rely on taxpayer funding for a good chunk of their budgets. NESA, for example, reported that for the fiscal year that ended last June 30, it had received nearly $440,000 in government grants, which represented about 30 percent of its nearly $1.5 million in total revenues, according to its federal tax return.

For the same period, the Charleston Regional Development Alliance (CRDA), which serves Berkeley, Charleston and Dorchester counties, listed more than $1.5 million in government grants, which represented more than half of its nearly $3 million in total revenues, federal tax records show.

And their leaders generally are well-paid, according to federal tax records. For example, NESA Executive Director Jeff McKay received $239,999 in salary and bonuses last fiscal year, while David Ginn, CRDA’s president and CEO, received $226,098 in total compensation.

Besides the Charleston Regional Development Alliance and NESA, three other economic-development groups would each be eligible for $730,000 under the Senate Finance Committee’s version of the fiscal 2014 state budget: Upstate SC Alliance, Central SC and SouthernCarolina Alliance. Two other groups – the newly formed I-77 Alliance and the Economic Development Partnership – would be appropriated $500,000 and $475,000, respectively.

In addition, the Senate Finance version would appropriate $150,000 each to Beaufort and Sumter counties, and $75,000 to Saluda County for economic development efforts.

The House version of the fiscal 2014 state budget would split up the $5 million as follows:

  • Upstate SC Alliance (Abbeville, Anderson, Cherokee, Greenville, Greenwood, Laurens, Oconee, Pickens, Spartanburg and Union counties) – $750,000;
  • Central SC (Calhoun, Clarendon, Fairfield, Kershaw, Lee, Lexington, McCormick, Newberry, Orangeburg and Richland counties) – $750,000;
  • North Eastern Strategic Alliance (Chesterfield, Darlington, Dillon, Florence, Georgetown, Horry, Marion, Marlboro and Williamsburg counties) – $650,000;
  • Charleston Regional Development Alliance (Berkeley, Charleston and Dorchester counties) – $650,000;
  • I-77 Alliance (Chester, Fairfield and York counties) – $575,000;
  • Beaufort and Sumter Economic (Base) Alliance – $575,000;
  • Economic Development Partnership (Aiken and Edgefield counties) – $475,000;
  • SouthernCarolina Alliance (Allendale, Bamberg, Barnwell, Colleton, Hampton and Jasper counties) – $475,000;
  • Lancaster County – $50,000; and
  • Saluda County – $50,000

In a March story on the website of Rock Hill radio station WRHI, Rep. Gary Simrill, R-York, said he put in $575,000 in the House-passed budget for the newly formed I-77 Alliance, which, according to the article, aims to market York, Chester and Fairfield counties as a “world-class business location to attract investment, jobs, entrepreneurs and professional talent.”

Under both the House and Senate Finance versions of the state budget, taxpayer funding for the I-77 Alliance would come largely at the expense of the Economic Development Partnership, which would be appropriated $270,833 less compared to this fiscal year.

Simrill did not respond to a phone message left for him last week by The Nerve.

As with similar appropriations by the General Assembly in recent years, proposed state funding for the economic-development groups in fiscal 2014 would require a dollar-for-dollar private match, to be certified by the state Department of Commerce. Some critics question, however, whether Commerce does any independent verification of the required private matches.

Commerce spokeswoman Amy Love did not respond to written questions last week from The Nerve, including what specific records the agency requires of economic-development organizations to validate their private matches.

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