Legislative Caucuses Secretly Spend Millions on ‘Operations’

March 18, 2015

Investigative Reports

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SC State HouseFrom 2008 through last year, the S.C. House and Senate Republican and Democratic caucuses collectively spent nearly $9.5 million from their operating expense accounts, The Nerve found in a review of the groups’ campaign reports.

But the caucuses, which represent the 170-member General Assembly, have refused to publicly reveal any details of their operating expenses, though expenditures from their separate campaign expense accounts, as well as contributions to their operating and campaign accounts are itemized in their quarterly campaign reports filed with the State Ethics Commission.

The Nerve’s review of the seven-year period found that the four main legislative caucuses collectively spent $9.45 million from their operating accounts – three times more compared to the total spent ($3.09 million) from their separate campaign expense accounts. Nearly the same ratio held true when the caucuses’ collective contributions to their operating accounts ($9.74 million) were compared to total contributions ($3.31 million) to their campaign accounts.

The expenditures from the caucuses’ campaign expense accounts typically were contributions to lawmakers’ individual campaign committees. Contributions to the caucuses’ operating accounts came from a variety of sources, including large corporations and smaller businesses, political action committees, lawmakers’ campaign committees, and transfers from the caucuses’ campaign accounts, records show.

“That’s their slush fund; that’s their conference money,” John Crangle, director of the government watchdog organization Common Cause of South Carolina, said about the caucuses’ operating expense accounts when informed of The Nerve’s findings.

Crangle questioned how the caucuses could keep their operating expenses secret when they “hold meetings in state buildings.” The House GOP and Democratic caucuses have rent-free offices in the Blatt Building, where individual House members’ offices are located, on the State House grounds, House Clerk Charles Reid confirmed Tuesday in a written response to The Nerve.

“It’s like running a private enterprise in a public facility with no overhead,” Crangle said.

In a 2006 opinion, then-S.C. Attorney General Henry McMaster – now the lieutenant governor – said the House Majority (Republican) Caucus is a “public body” for “purposes of FOIA (Freedom of Information Act)” and is “thus required to comply with FOIA.” McMaster said the fact that the caucus then had three staff members who worked in rent-free space in the Blatt Building “meets the requirements of the (Freedom of Information) Act.”

The Nerve previously has reported about secret meetings held by the caucuses at the State House during legislative session and at out-of-town locations when the Legislature was not in session.

The Nerve this week sent written questions about the operating expense accounts – including a request for a list of itemized expenses for the last three years – to officials with the House Republican and Democratic caucuses, and Senate Democratic Caucus, but no answers were provided by publication of this story. The Nerve also received no reply to a phone message left with the Senate Republican Caucus.

Small Staffs, Big Spending

The House Republican Caucus’ website lists one staff member – Executive Director Charles Cannon, who didn’t respond to either a phone or written message this week from The Nerve. A woman who answered the phone at the caucus office told The Nerve when asked that two people worked in the office.

The House Democratic Caucus’ website lists two staff members – Executive Director Duane Cooper and Political Director Tyler Jones. Cooper acknowledged getting The Nerve’s written questions when contacted by phone this week.

“We’ll do our best,” Cooper said, though no answers were provided by publication of this story.

Antjuan Seawright told The Nerve when contacted this week he is the only person working for the Senate Democratic Caucus, and that the caucus didn’t have its own office space, noting, “I’m advising them.” He said he forwarded The Nerve’s written questions to Sen. Brad Hutto, D-Orangeburg and an attorney, though Hutto didn’t respond by publication of this story.

No online listing could be found for the director of the Senate Republican Caucus. A woman who answered the phone this week at the state Republican Party headquarters told The Nerve that the caucus currently has no director, and that caucus duties have been split up “among staffers.”

Yet despite having small staffs, the caucuses typically recorded spending at least tens of thousands of dollars each quarter from their operating expense accounts, though only total amounts were listed in their campaign reports.

From 2008 through last year, the House Republican Caucus spent a total of about $3.26 million from its operating expense account, while the House Democratic Caucus, Senate Republican Caucus and Senate Democratic Caucus collectively spent $1.49 million, $2.75 million and $1.94 million, respectively, from their operating accounts, The Nerve’s review found.

When The Nerve initially asked House Majority Leader Bruce Bannister, R-Greenville, last month about why reported House GOP Caucus operating expenditures were not itemized, he replied: “I don’t know. I will have to talk it over with Charles (Cannon) and get back with you.”

Bannister did not respond to several follow-up phone messages from The Nerve.

Asked the same question last month, House Minority Leader Todd Rutherford, D-Richland, said in a written response, “It would be burdensome on staff to do so, and it is not required by statute.”

Asked if the public has a right to know how that money is spent, particularly given that lawmakers have contributed to the operating accounts from their own campaign accounts, Rutherford responded: “That’s a policy question. Both caucuses are in compliance with the statute.”

Rutherford couldn’t describe even generally what types of expenses are covered from the House Democratic Caucus’ operating account, noting, “I don’t do accounting stuff.”

Neither Senate Majority Leader Harvey Peeler, R-Cherokee, nor Senate Minority Leader Nikki Setzler, D-Lexington, responded to written or phone messages from The Nerve seeking comment.

Different Definitions

State ethics law requires elected public officials to record both their contributions and expenses in their individual campaign reports. The state Republican and Democratic parties also have itemized contributions and expenses in their separate operating and campaign accounts, as required by law.

But under state law, lawmakers police themselves for ethics violations, which means they get to interpret the law as it applies to them. In a written response last month to The Nerve, Herb Hayden, the State Ethics Commission’s executive director, said the two legislative ethics committees have jurisdiction over legislative caucuses.

Asked why the House Ethics Committee doesn’t require House legislative caucuses to publicly itemize their operating expenses, Rep. Kenny Bingham, R-Lexington and the committee chairman, issued the following written response to The Nerve:

“Legislative Caucuses have no legal obligation to disclose expenditures from, so called, operations accounts, itemized or otherwise. The money in an operations account is not a contribution as the word is defined by the ethics act nor is it an expenditure as the word is defined by the ethics act. Operations money cannot be used to influence the outcome of an election and is therefore not subject to the requirement of itemized disclosure that expenditures from a campaign or campaign style account are.”

Asked the same question regarding the Senate Ethics Committee, Sen. Luke Rankin, R-Horry and the committee chairman, replied last month in an email, “The practice of requiring only the amount of expenses vs. the itemization thereof apparently follows the House practice.”

Rankin referred further questions to Sen. Wes Hayes, R-York and former Ethics Committee chairman, noting that “this practice/policy existed before my service on the committee began.”

Hayes, currently the Senate Banking and Insurance Committee chairman, told The Nerve when contacted this month he didn’t know why caucus operating expenses weren’t publicly itemized, referring The Nerveto Senate Ethics Committee lawyer Lyn Odom, who didn’t respond to written questions from The Nerve.

“We raised a lot of money, and when it was raised, it came into the caucuses,” Hayes recalled.

South Carolina Policy Council research intern Danny Morris contributed to this story. Reach Brundrett at (803) 254-4411 or rick@thenerve.org. Follow him on Twitter @thenerve_rick. Follow The Nerve on Facebook and Twitter @thenervesc.