House Bill Emerges To Restructure State Government

March 6, 2013

Investigative Reports

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South Carolina SealA new government-restructuring bill in the S.C. House Representatives would move state-purchasing control to the new Department of Administration under the governor and abolish the longstanding Budget and Control Board and recently created Public Employee Benefit Authority.

The 150-page bill (H. 3646), quietly introduced last week by Rep. Garry Smith, R-Greenville, has 39 cosponsors, including House Speaker Bobby Harrell, R-Charleston, and other House leaders.

“We want to achieve some real restructuring of state government,” Smith told The Nerve this week. “This is one of our top priorities.”

The House and Senate government-restructuring bills create a Department of Administration, but both also establish new stand-alone entities that would be unaccountable to the governor, though the House version would eliminate the BCB and PEBA.

Smith said H. 3646 is similar to another bill he sponsored, H. 3066, which died last year in the Senate after it came out of a conference committee.

Smith said in an email to The Nerve that H. 3646 has one addition: abolishing the Public Employee Benefit Authority (PEBA), an agency created last July to handle health insurance and retirement benefits for state employees, retirees and their families, and giving that responsibility to a new “State Contracts and Accountability Authority (SCAA).”

Smith said it would be more accountable to move PEBA’s responsibility to an independent administrative agency. Currently, certain PEBA actions need final approval from the BCB, made up of the governor, S.C. comptroller general, state treasurer and chairmen of the House Ways and Means and Senate Finance committees.

The South Carolina Policy Council, the parent organization of The Nerve, has an eight-point reform agenda, which recommends, among other things, that the governor be accountable for the executive branch.

Three big areas under the House and Senate government-restructuring bills include:  procurement, or the state purchase of goods and services; bonding authority; and state agency deficits.

H. 3646, which has been assigned to the House Judiciary Committee, would move all procurement to the new Department of Administration under the governor, along with a number of other functions currently controlled by the BCB.

However, H. 3646 also states that “the research universities while engaging in projects related to this act shall be exempt from the state procurement process.”  The state’s three research universities are the University of South Carolina, Clemson University and the Medical University of South Carolina.

The research universities would work with the seven-member SCAA to establish their procurement procedures, under the House bill.

The SCAA members would be comprised of the governor, treasurer, comptroller general, the designee of the House speaker, designee of the Senate president pro tempore, the lieutenant governor and attorney general. The House designee likely would be the House Ways and Means Committee chairman because the panel would spend money. The Senate appointee likely would be the Senate Finance Committee chairman for the same reaon.

Under H. 3646, the SCAA would have bonding authority.

The bill also would establish a process for dealing with state agency budget deficits. When there is a deficit, agency officials would work with the Executive Budget Office under the Department of Administration to avoid a shortfall, or ask the Legislature to recognize it. The General Assembly could recognize it or decline to do so.

As with H. 3646, the Senate’s government restructuring bill, S. 22, has been assigned to the House Judiciary Committee. Smith said he is working on a comparison of the two bills, but he believes his legislation would do more to restructure state government.

S. 22, which passed the Senate Feb. 20, would create a BCB-like entity called the “State Fiscal Accountability Authority.” The SFAA’s members are the current BCB members, and the SFAA would retain the BCB’S procurement and bonding authority.

“The Senate left the Budget and Control Board intact and gave it a different name,” Smith said.

Under the Senate bill, state agency deficits would have to hit at least $1 million to be recognized by the Executive Budget Office and reported to the General Assembly, The Nerve previously has reported.

The initial version of S. 22 also would have repealed a state law requiring joint public hearings by the Legislature’s two budget-writing committees on the governor’s annual proposed state budget, though the last bill version approved by the full Senate dropped that provision, leaving the law intact. Adhering to the law is part of the Policy Council’s eight-point reform agenda.

H. 3646 doesn’t address the joint-hearings law, though Rep. Mike Pitts, R-Laurens, has filed a bill (H. 3647) to repeal it.

S. 22’s main sponsors are Sens. Shane Massey, R-Edgefield, and Vincent Sheheen, D-Kershaw.

Smith said the House could amend S. 22 and make it the primary legislation to restructure state government. But with the House bill having nearly 40 co-sponsors, including the  House leadership, it’s highly likely that bill will be given priority by the House Judiciary Committee.

“I’m glad to see the House is moving on it,” Massey said in an interview with The Nerve Tuesday.

Massey said restructuring state for government is a priority for both chambers. He said the House must pass a bill by mid-April so that differences can be negotiated in a conference committee, recalling the slow progress on government-restructuring legislation in 2012.

“What we came up with wasn’t good enough to pass,” Massey said, though he added he believes a bill will pass this year

“I think the defenders of the current system are getting tired of us,” he said.

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.