Lobbying by State Agencies Continues Despite State Ban

March 8, 2012

Investigative Reports

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HandshakeSixteen state agencies and institutions collectively have spent at least $320,000 since June lobbying the S.C. General Assembly, despite a state budget proviso banning those agencies from using general funds for that purpose, a review by The Nerve has found.

The first-of-its-kind proviso (90.20), which took effect July 1, prohibits “all state agencies and institutions” from using general funds to hire outside lobbyists or pay their own employees to lobby on their behalf.

An identical state budget proviso (90.13) for next fiscal year that recently was passed by the House Ways and Means Committee would renew the ban for another year.

But the proviso has a huge loophole: It doesn’t prohibit agencies from using “other” funds for lobbying. Other funds include such things as college tuition and various fees charged by other state agencies.

In total, 25 state agencies and institutions, mainly colleges and universities, spent $934,753 on lobbying last year, which represented nearly 5 percent of the nearly $19 million spent by 525 private and public entities, including local municipalities, during the 12-month period, The Nerve’s review found.

Rep. Jim Merrill, R-Berkeley and chairman of a House Ways and Means budget-writing subcommittee, who authored the proposed proviso for next fiscal year; and Rep. Eric Bedingfield, R-Greenville, who sponsored this fiscal year’s proviso, did not respond to written and phone messages left for them last week from The Nerve.

Besides the proposed proviso for next fiscal year, Merrill also is the sponsor of a similar bill (H. 3175), though it hasn’t moved out of the House Judiciary Committee since it was introduced last year.

Former Gov. Mark Sanford at the beginning of his administration signed an executive order, which remains in effect, banning Cabinet agencies from hiring outside contractors to lobby legislators. But the order doesn’t apply to most state agencies.

John Crangle, director of the government watchdog organization Common Cause of South Carolina, toldThe Nerve he believes that although state agencies “have to have somebody over at budget hearings and answering questions for the General Assembly,” it “maybe is overkill to hire contract lobbyists.”

“I see evidence of overkill – more lobbyists than they need and who are paid more than they need to be paid,” said Crangle, who is a registered lobbyist for Common Cause.

The state budget proviso for this fiscal year and the proposed one for next year each require that 21 agencies and institutions transfer a total of $604,312 to the state general fund “in order to eliminate taxpayer-funded lobbying.” Those agencies also must report their lobbying expenses to the S.C. Ethics Commission to “certify that the lobbying activities were not funded by general fund appropriations.”

In effect, though, the proviso hasn’t put much of a dent in lobbying activities, as only five of the 21 affected agencies and institutions reported no lobbying expenses for the first half of this fiscal year, The Nerve’s review found.

In fact, the transfers required by the proviso would increase lobbying costs for those agencies that use other funds for those activities, several agency representatives confirmed to The Nerve.

Take the Medical University of South Carolina in Charleston, for example.

MUSC spent $71,320 on lobbying between June 1 and Dec. 31 of last year, according to Ethics Commission records. In addition, the university is required under the proviso to transfer $80,380 to the state general fund by June 30 of this year.

Ethics Commission records show that MUSC incurred a total of $123,819 in lobbying costs for all of 2011 – the most for any state agency in The Nerve’s review of 25 agencies or divisions that reported expenses for the year.

In a written response this week to The Nerve, MUSC spokeswoman Heather Woolwine said funds generated by patient care services – not student tuition – are used to cover lobbying expenses, which she listed at $125,176 for 2011, and the required transfer to the state’s general fund.

MUSC has raised its tuition and required fees for full-time, in-state undergraduates by nearly 30 percent since the 2007-08 school year, state records show.

Asked why it was necessary to hire a lobbyist given the intent of the state budget proviso, Woolwine replied, “We believe it is necessary to employ a lobbyist with non-general funds because MUSC frequently receives inquiries from legislators and other elected officials about access to health care for their constituents.

“We are also asked by legislators and administrative offices to provide information about various programs and to characterize the impact of various policy initiatives.”

She added that the university’s governmental relations staff in Columbia “serve as liaisons for the University in providing legislators and elected officials with responses to these numerous requests.”

Big Spenders

The Nerve’s review found that of the 21 state agencies and institutions covered by the state budget proviso banning taxpayer-funded lobbying, 16 spent a total of $320,665 on lobbying from June 1 through Dec. 31. Several state agencies, such as the S.C. Ports Authority, are not included in the proviso because they don’t receive general funds, though they spend other funds on lobbying.

The top-five biggest lobbying spenders during the seven-month period were, according to Ethics Commission records:

  • MUSC – $71,320;
  • Clemson University – $61,410;
  • USC, Columbia campus – $36,710;
  • College of Charleston – $31,152; and
  • S.C. Judicial Department – $29,000

Five agencies and institutions covered by the proviso reported no lobbying expenses for the last seven months of 2011: the S.C. Department of Health and Environmental Control, State Board for Technical and Comprehensive Education (S.C. Technical College System board), S.C. Commission on Prosecution Coordination, Lander University and Horry-Georgetown Technical College.

Of the 21 state agencies and institutions covered by the proviso, the top-10 biggest lobbying spenders for all of 2011 were as follows:

  • MUSC – $123,819;
  • Clemson University – $105,962;
  • College of Charleston – $61,618;
  • S.C. Judicial Department – $60,008;
  • University of South Carolina, Columbia campus – $59,162;
  • State Board for Technical and Comprehensive Education – $46,758;
  • S.C. Department of Health and Environmental Control – $37,551;
  • The Citadel – $37,024;
  • Tri-County Technical College – $32,958; and
  • S.C. State University – $31,000

S.C. State University has made recent headlines with the firings of eight high-ranking employees and President George Cooper’s announcement last week that he was resigning his position amid inquiries into financial and management problems at the school.

In a written response Wednesday, Clemson spokeswoman Cathy Sams told The Nerve that of the $105,962 in lobbying expenses last year, $45,848 of it represented “that portion of staff compensation that was attributable to lobbying.” She said the university uses no general funds for lobbying in compliance with state law, noting that money for lobbying is “provided through non-appropriated sources, including private gifts and university or departmentally generated funds.”

“The governmental affairs office plays a critical role as liaison between the university and the many state and federal agencies that impact Clemson,” Sams said. “As a state university, Clemson is affected by thousands of regulations, provisos and reporting requirements.The state’s impact goes well beyond funding – there are state licensing issues that impact how we prepare architects, engineers or nurses, for example.”

As for USC, The Nerve’s review found that in addition to $59,162 spent last year on lobbying by the main campus, USC’s Upstate campus spent $11,000 during the 12-month period for lobbying activities, half of it during the last six months when the proviso was in effect.

The Nerve first reported in September that the university circumvented the state budget proviso when it created a new State House lobbying job and hired Trey Walker, Gov. Nikki Haley’s former deputy chief of staff for legislative affairs, to fill the position at an annual salary of $135,000.

Since the 2007-08, USC has raised its tuition and required fees for full-time, in-state students at its main Columbia campus by nearly 22 percent, state records show.

University spokesman Wes Hickman did not respond to written questions from The Nerve by publication of this story.

In a pattern similar to USC, the S.C. Technical College System’s main oversight body and individual technical colleges have separately spent money lobbying the General Assembly.

For example, in addition to the state board’s nearly $47,000 in lobbying expenses last year, four technical colleges in the system – Florence-Darlington, Greenville, Piedmont and Tri-County, collectively spent another $78,847 on lobbying, Ethics Commission records show.

On top of that, a separate group of technical college commissioners, known as the South Carolina Association of Technical College Commissioners, spent $18,267 on lobbying in 2011, records show.

Well-Connected Lobbyists

Agencies know how to use well-connected lobbyists to get results they want. The S.C. Judicial Department, for example, has paid Bob Coble, Columbia’s immediate past mayor and an attorney with the Nexsen Pruet law firm, a total of $26,582 since September 2010 to lobby on behalf of the department, Ethics Commission records show.

Coble, who served as mayor for 20 years before retiring in June 2010, told The Nerve before a Senate Judiciary subcommittee meeting last month that he was representing the Judicial Department on budget matters. Coble accompanied S.C. Supreme Court Chief Justice Jean Toal, who spoke to the subcommittee on a pending bill.

The Nerve previously has pointed out that the Judicial Department in recent years has relied heavily on fees imposed on users of the court system, which are classified for budgeting purposes as “other” funds.The Nerve’s review of state budget records found that the department’s other-fund revenues have increased by more than $4 million since fiscal year 2006.

Toal, who served in the S.C. House from 1975 to 1988 before joining the high court, made no promises during last month’s subcommittee meeting that she would seek to lower court fees any time soon.

In a written response this week to The Nerve, Tom Timberlake, the department’s finance and personnel director, said other funds cover lobbying costs, though he didn’t provide specifics.

As far as access to lawmakers is concerned, department officials don’t have any proximity problems: The Supreme Court is located across the street from the Capitol, and the department’s administrative offices are located on the State House grounds.

Asked why the department believes it is necessary to employ lobbyists, Timberlake replied, “It is in the interest of good government that a separation be maintained between the legislative, executive and judicial branches of government.”

Timberlake added, “It is sometimes better to have an outside party representing our interests to the legislature rather than having the head of the judicial branch negotiating directly with the leadership of the general assembly.”

But having an insider doesn’t hurt, either.

The College of Charleston, for example, uses Shirley Hinson, the college’s government relations director and a former longtime S.C. House member, as a lobbyist. Ethics Commission records show she earned $21,249 last year in that role; her total annual salary as of last Nov. 1 was $85,000, according to a state salary database.

Contacted Wednesday, Hinson told The Nerve that lobbying is part of her duties as the governmental relations director, and that no general funds are used to pay for her lobbying activities. Asked what funds are used for that purpose, she referred The Nerve to the college’s finance office.

Hinson, who served in the House from 1996 to 2007, said she thinks the intent of the state budget proviso banning taxpayer-funded lobbyists is geared toward outside, contract lobbyists, not toward full-time state agency employees who engage in lobbying as part of their job duties.

Still, the former House majority whip said in general, lawmakers need lobbyists.

“I believed this when I was a legislator,” she said. “They (lobbyists) have to be a resource, and if they are not a resource, they have no business being up there (in the Capitol).”

Reach Brundrett at (803) 254-4411 or rick@thenerve.org.