New State Agency Not Under Governor’s Control

March 4, 2013

Investigative Reports

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The Buck Stops HereDespite all the talk in the Legislature about giving the governor more control over the executive branch, South Carolina’s newest state agency is largely unaccountable to the Palmetto State’s chief executive.

Under the Senate’s massive government-restructuring bill (S. 22), which is now before the House Judiciary Committee, the little-known S.C. Rural Infrastructure Authority (SCRIA) would remain as a stand-alone agency outside the proposed Department of Administration, which would be under the governor’s control.

The SCRIA has about $36.5 million under its control, according to agency records provided last week toThe Nerve. The authority’s first proposed budget for next fiscal year, which starts July 1, is nearly $22 million – larger than the proposed spending plans of more than 40 other state agencies, divisions and funds listed in the House Ways and Means Committee’s recently passed version of the fiscal 2014 state budget, a review by The Nerve found.

Although created by state law in 2010, the SCRIA had existed only on paper until late last year. The agency’s purpose is to “aid the development of trade, commerce, industry, agriculture, aquaculture and employment opportunities,” according to its enabling legislation.

Then-Gov. Mark Sanford unsuccessfully tried to block the law creating the agency, writing in his 2010 veto message that it “creates a new state government entity to perform functions the Department of Commerce currently performs.”

The SCRIA’s ties to Commerce are close: The agency is housed in Commerce’s offices in a high-rise office building across the street from the State House, and its executive director – Bonnie Ammons, who was hired by the SCRIA board in November – is a former assistant director of Commerce’s federal grants program.

Ammons’ annual salary as SCRIA’s first executive director is $115,000; her salary while with Commerce last year was $99,430, according to a state salary database. Ammons has two full-time employees assisting her at the SCRIA – one who earns $65,000 and the other, $46,000 to $50,000, according to information provided last week by Commerce to The Nerve.

The Infrastructure Authority is governed by a seven-member board headed, per state law, by Commerce Secretary Bobby Hitt. But although Hitt was appointed by Gov. Nikki Haley to head Commerce and is a member of her Cabinet, she cannot control the SCRIA, unlike her Cabinet agencies.

Besides Hitt’s automatic seat on the authority’s board, the governor has two appointments to the board. But the General Assembly controls the majority of the board’s appointments – four – with the Senate president pro tempore, Senate Finance Committee chairman, House speaker and House Ways and Means Committee chairman each having one appointment.

Three lawmakers serve on the SCRIA board: Sen. Billy O’Dell, R-Abbeville and the board’s vice-chairman; and Reps. Mike Pitts, R-Laurens, and Bill Clyburn, D-Aiken and author of the law creating the SCRIA.

Under state law, at least three of the legislative appointees and one gubernatorial appointee must approve the hiring of the SCRIA’s executive director. In contrast, Haley appoints the heads of her Cabinet agencies, with Senate confirmation, and in most cases has the authority to fire them for any reason.

A state budget proviso this fiscal year directs that all funds under the control of the state Budget and Control Board’s Office of Local Government be transferred to the SCRIA. The Senate’s government-restructuring bill, S. 22, would put the Office of Local Government’s loan program for municipalities under the SCRIA, though the legislation would not make the authority part of the proposed Department of Administration, which would be under the governor’s control.

As with last year’s Senate version of a similar government-restructuring bill, S. 22 would move certain state panels made up of the same members of the Budget and Control Board (BCB) to the SCRIA, including, for example, the S.C. Infrastructure Facilities Authority and the state Water Quality Revolving Fund Authority.

S. 22, authored by Sens. Vincent Sheheen, D-Kershaw, and Shane Massey, R-Edgefield, would eliminate the five-member, quasi-executive, quasi-legislative BCB, made up of the governor, state comptroller general, treasurer and chairmen of the Senate Finance and House Ways and Means committees.

But the legislation would put certain key BCB functions, such as state bonding and purchasing authority, under a new entity called the “State Fiscal Accountability Authority,” made up of the same members of the BCB. Critics contend the BCB over the years has assumed more control over state finances and operations with no direct accountability because of its makeup.

As of Friday, the total available balance of all funds under the SCRIA’s control was $36,429,599, which included $3.8 million in grants awarded at an authority board meeting last week for 14 water, sewer and drainage projects in 13 counties in the state, Commerce’s chief lawyer, Karen Manning, said in a written response to The Nerve.

The Nerve previously reported that the “Rural Infrastructure Bank Trust Fund” accounts for most of the SCRIA’s available funds. Rural infrastructure funds are derived from state job-development credits that qualifying companies cannot claim because they are located in more affluent counties. Job development credits are refunds of a portion of employee state income-tax withholdings.

The SCRIA for next fiscal year would have more than $19 million available for its grants program under the House Ways and Means version of the state budget that is scheduled to be debated next week by the full House. That amount represents 87 percent of the agency’s proposed total $21.8 million budget for fiscal 2014.

In an interview last week with The Nerve, Clyburn, who authored the SCRIA’s enabling legislation, said he doesn’t want to see agency funds diverted from poor, small rural counties to larger, more affluent counties.

“My concern is that we stick to underdeveloped and distressed counties to give them first priority,” he said.

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