New State Agency Seeks 400% General Fund Hike

January 6, 2014

Investigative Reports

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FarmA recently created state agency that focuses on economic development in South Carolina’s rural counties is seeking a 400 percent increase in general funds next fiscal year, despite having millions in reserves in 2013.

The S.C. Rural Infrastructure Authority (RIA) has requested $7 million in general funds – $5,625,000 more than its current state appropriation of $1,375,000 – for fiscal 2015, which starts July 1, according to its budget plan submitted recently to the Office of State Budget.

“The Authority anticipates that demand for its grant program will exceed current grant program levels which is the reason the Authority has established a competitive grant process,” RIA Executive Director Bonnie Ammons said in the budget request.

Ammons said the authority’s governing board authorized a $12 million grant program for this fiscal year, though Office of State Budget records reviewed by The Nerve show that the agency’s total ratified 2013-14 budget is $21.84 million, including $19 million in “other” funds designated for the grants program.

State comptroller general records show that the RIA carried over more than $3.2 million in general funds into this fiscal year. As of March, the total available balance of all funds under the agency’s control was $36.4 million, as The Nerve reported then.

Ammons forwarded recent written questions from The Nerve seeking comment on the RIA’s reserves to Commerce spokeswoman Allison Skipper, who did not directly answer those questions.

The agency was created in 2010 but existed only on paper until late 2012. Its purpose, according to its enabling legislation, is to “aid the development of trade, commerce, industry, agriculture, aquaculture and employment opportunities.”

State law (11-50-20) allows the RIA to provide “loans and other financial assistance” to local governments, special purpose and public service districts, and public works commissions for constructing or improving rural infrastructure facilities. Projects must be located in counties designated under state law as “distressed” or “least developed.”

Then-Gov. Mark Sanford unsuccessfully tried blocking the law that created 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 RIA’s seven-member governing board is chaired, per state law, by Commerce Secretary Bobby Hitt. The agency is housed at  Commerce headquarters in a high-rise office building across the street from the State House. In the agency’s 2012-13 accountability report, Ammons said the RIA contracts with Commerce to provide “office space, legal, financial and human resources services.”

“This agreement allows for more efficient use of staff and resources available to the Authority,” the report said.

Ammons, whose annual salary as the RIA director is $115,000, previously was the assistant director of Commerce’s federal grants program.The RIA has three other employees in addition to Ammons, according to the agency’s website.

Besides Hitt, three lawmakers serve on the RIA’s governing 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 agency.

In a recent interview with The Nerve, Clyburn said while he had “heard something about” the RIA’s budget request for next fiscal year, he wasn’t aware that the agency had formally requested an additional $5.6 million.

“I do know we have moneys in reserves,” Clyburn said when asked,”and for some reason, they have set a top line of what they want to spend out of those moneys.”

Last fiscal year, 26 of the state’s 46 counties were designated under state law as “distressed” or “least developed,” making them eligible for RIA funding, according to the agency’s 2012-13 accountability report.

The report noted the agency’s governing board this fiscal year will “consider projects in non-eligible counties” if a proposed project would be located “outside of an urbanized area,” as defined by the U.S. Census Bureau, but inside a census tract that “meets the same definition” of “distressed” or “least developed” counties under state law.

The Nerve previously reported that the “Rural Infrastructure Bank Trust Fund” accounted for most of the RIA’s initially 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 wage withholdings.

The RIA’s governing board last fiscal year approved 31 grants for 25 counties totaling $9.6 million, about 60 percent of which was designated for upgrades or expansions of water systems, according to the agency’s accountability report, which noted that the agency leveraged about $33 million from local and “other” resources.

The report said the awarded grants “proposed to impact more than 30,000 residents and create 500 jobs,” though specifics on the job-creation numbers weren’t provided.

“The expected job creation impacts from projects approved in FY 2013 were a result of two confidential projects that have not yet announced,” Skipper said in her Dec. 20 email response to The Nerve. “One is expected to announce before the end of the year and the other is expected to announce in 2014.”

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