‘Shell Bill’ Would Require Disclosure of Private Sources of Income

April 17, 2013

Investigative Reports

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e3467c5885b5b0bcb0b479eeaada5db9An ethics-reform bill that had been a mystery until a House Judiciary subcommittee meeting Tuesday would, among other things, require lawmakers to disclose their private sources of income.

The proposal (H. 3945) came the same day that the South Carolina Policy Council, the parent organization of The Nerve, launched Project Conflict Watch, a strategy aimed at getting state elected officials to disclose their private sources of income.

Private-income disclosure is part of the Policy Council’s eight-point reform agenda. South Carolina is the only state where officials are required to disclose just their government sources of income.

“It’s our best effort to reveal where a public officials’ income is coming from,” Rep. Bruce Bannister, R-Greenville and chairman of the Constitutional Laws Subcommittee, said about the bill during Tuesday’s meeting.

“It’s important for the public to be aware of how we make our living,” said Rep. James Smith, D-Richland and a subcommittee member.

The five-member panel voted unanimously to approve an amended H. 3945. But Bannister, a co-sponsor of the bill, told reporters afterward that the income-disclosure provision could kill the legislation in the full House, adding he would be willing to drop it to get the bill passed this session.

Bannister also said some lawmakers could use the creation of limited liability corporations to skirt the income-disclosure provision if it became law.

Rep. Rick Quinn, R-Lexington and a subcommittee member, convinced the panel to delete language in the bill that would have required lawmakers to disclose income of “a business with which they are associated.” Instead, he said it should be limited to immediate family members and businesses in which a lawmaker has a financial stake of at least 5 percent.

He contended that the bill’s goal is to reveal lawmakers’ potential conflicts of interest, not to require the disclosure of income in cases where a lawmaker has some connection, but there is no obvious conflict.

As an example, he cited a personal real estate endeavor with nine other people. Although that situation posed no conflict of interest with state government, the bill would require him to ask the nine partners about their sources of income so he could report it on his statement of economic interests.

H. 3945 was first publicly listed last week on Tuesday’s subcommittee meeting agenda, though it essentially was a “shell bill” as it contained only the title. Details of the legislation weren’t released until Tuesday’s meeting.

While Bannister gave those who attended the meeting an opportunity to comment on H. 3945, there was no public comment, likely because no one knew the contents of the bill other than what the subcommittee discussed.

As of Tuesday evening, there was still no version of the bill online for the public to read.

“How can you get meaningful public input under the circumstances?” asked John Crangle, director of the government watchdog organization Common Cause of South Carolina.

Crangle made that comment to The Nerve during a brief break in the hearing.

“Our goal is to send this over to the Senate prior to the crossover (date of May 1),” Bannister replied, noting the looming deadline to get legislation passed.

H. 3945, sponsored by Rep. Murrell Smith, R-Sumter, has the three most powerful House Republicans as co-sponsors: House Speaker Bobby Harrell of Charleston County, House Speaker Pro Tempore Jay Lucas of Darlington County, and Bannister, the House majority leader.

The bill incorporates ethics-reforms ideas from legislation in both houses of the General Assembly and the governor-appointed S.C. Commission on Ethics Reform. It would, for example, create a “South Carolina Commission on Ethics Enforcement and Disclosure” by eliminating the House and Senate Ethics committees and the State Ethics Commission. The bill also would abolish leadership political-action committees.

The proposed ethics-enforcement super-commission would investigate and hand out penalties to lawmakers and executive branch officials for ethics violations. But the panel would have no authority over judges; the S.C. Supreme Court currently has final say over their discipline.

“If you don’t want ethics reform, include the judges and watch it (ethics reform) implode,” Bannister, an attorney, said following the hearing.

Members of the proposed super-commission would have staggered six-year terms and receive $12,000 a year. Public officials would not be allowed to serve on the panel, and members would be limited to one term.

Unlike H. 3945, a Senate ethics-reform bill (S. 346), sponsored by Sen. Wes Hayes, R-York, would not eliminate the House and Senate Ethics committees.

Quinn successfully pushed for an amendment to the bill that would require the House and Senate to each appoint three members of the super-commission. The bill’s original version gave three appointments each to the House speaker, Senate president pro tempore and the governor.

Quinn earlier crafted that idea with Rep. Tommy Pope, R-York and a subcommittee member, in the House Republican study group on ethics reform.

Bannister said following the meeting that creating the super-commission would increase the state budget, though he couldn’t provide specifics.

H. 3945 also would abolish leadership PACs. Harrell, who sat in briefly on the subcommittee discussion, has been tied to a leadership PAC known as the Palmetto Leadership Council, though he has maintained he has no direct involvement.

This ethic-reform bill also broadens the ban on lawmakers voting on things that are conflicts of interest to include the committee process.

The House bill does not address proposed changes to the state Freedom of Information Act. The S.C. Commission on Ethics Reform earlier this year recommended a plan that would allow the public to have access to public documents cheaper, faster and with a specific deadline. The commission also wants the General Assembly to eliminate the exemption allowing lawmakers to keep secret their correspondence and “working papers.”

A separate House bill (H. 3163), sponsored by Rep. Bill Taylor, R-Aiken, would accomplish all of those things, but it recently was referred back to the House Judiciary Committee. Usually that procedural move would kill a bill, but Bannister said Tuesday that Taylor’s bill will be discussed next week.

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.