Should State Lawmakers Give More Budget Scrutiny to Santee Cooper, Ports Authority?

February 11, 2013

Investigative Reports

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MoneyEvery legislative session comes with a parade of officials from dozens of state agencies who make their case for funding in the upcoming fiscal year.

However, many South Carolina taxpayers may not know about the “off-budget” agencies or “authorities” created by the state years ago that generate millions – and, in at least one case, billions – of dollars of revenue, and yet legislators have no say on their final budget.

The state-owned utility Santee Cooper and the S.C. Ports Authority are two main examples.

Santee Cooper and Ports Authority officials made presentations last week to the Economic Development and Natural Resources Subcommittee of the House Ways and Means Committee. But they weren’t asking lawmakers to approve their upcoming budgets, as other state agencies typically do.

In fact, the Office of State Budget has no budget documents here for either Santee Cooper, based in Moncks Corner, or the Ports Authority, located in Charleston.

When the Ports Authority’s fiscal year 2014 budget is approved this spring, it will happen by a vote of its board of directors, according to a spokeswoman for the authority. The same thing will occur for Santee Cooper when its calendar year 2014 budget gets final approval.

Under state law, Santee Cooper’s 12-member board of directors is appointed by the governor with consent of the S.C. Senate, after those candidates have been found qualified by the State Regulation of Public Utilities Review Committee.

The governor and Senate also are responsible for selecting the nine voting members of the Ports Authority’s 11-member board. The other two non-voting members are the state transportation and commerce secretaries, or their designees.

Contacted after last week’s hearing, Rep. Gary Simrill, R-York and subcommittee chairman, told The Nerve that the difference between Santee Cooper and the Ports Authority and other state agencies is the two in question are classified as “authorities.”

“An authority means they produce their own income,” Simrill said. “They were created by the Legislature, and because of that they must appear before the Legislature to tell us what’s going on.”

Santee Cooper provides the state 1 percent of its revenues, and in 2012 that totaled $20 million, said utility spokeswoman Mollie Gore.

Meanwhile, Ports Authority leaders told the subcommittee that it would pay another $1 million to the S.C. Transportation Infrastructure Bank to dredge the Charleston Harbor shipping channel. A proviso in the proposed fiscal 2014 budget would change the date of the authorized expenditure.

Asked why Ports Authority officials appear before Legislative budget-writing panels, authority spokeswoman Allison Skipper in an email to The Nerve said, “We accept invitations to appear before the Legislature, including Ways and Means and Senate Finance.”

Santee Cooper spokeswoman Mollie Gore echoed Skipper.

“We are certainly always happy to tell our story, whether it’s the State Legislature or a Rotary club,” Gore said in a written response to The Nerve.

Gore said Santee Cooper expects to generate more than $2 billion in revenue this year. Its expenses include $1.7 billion plus interest expenses of $210 million, reinvested earnings of $132 million, and the state payment of $20 million.

The Ports Authority presentation to the subcommittee revealed the authority has $68.6 million in revenues so far for this fiscal year, with $60.9 million in expenses.

Simrill said lawmakers must amend existing state law to do anything more than what the House budget-writing committee does now with both entities, adding there must  be a “cause” to compel him and his colleagues to change the law.

Yet the Legislature’s handling of Santee Cooper and the Ports Authority raises some questions:

  • If officials from those entities are going to appear before budget-writing panels, shouldn’t lawmakers be able to sign off on their budgets?
  • Santee Cooper and the Ports Authority aren’t the only state agencies to receive no general funds, so why not give more scrutiny to their budgets?
  • And why not require greater transparency of their annual revenues and expenditures?

More than a dozen agencies or funds in the state budget have little or no appropriated general funds but sustain their operations with federal or “other” funds, or a combination of the two. For example, the Patients Compensation Fund is projected to receive $996,000 in “other” funds this fiscal year, which started July 1, while the Department of Motor Vehicles was approved to receive $85 million in federal and “other” funds.

The S.C. Department of Transportation – one of the state’s biggest agencies –is authorized to receive just $57,270 in general funds this fiscal year, while the remainder of its $1.4 billion budget is made up of federal and “other” funds.

In response to a question from The Nerve, Simrill said an independent audit of Santee Cooper and the Ports Authority was not needed because both entities have proper oversight from the Governor’s Office.

“I don’t see where there is a need because there are very capable hands on the boards of directors,” he said.

Simrill also said those boards need as little outside influence from public officials as possible.

However, critics say more attention should be given to how much top executives are paid at Santee Cooper and the Ports Authority.

Lonnie Carter, Santee Cooper’s president and chief executive officer, earns $416,899 excluding benefits, according to a salary database maintain by The State newspaper.

The other nine highest-paid officials at Santee Cooper are:

  • Elaine Peterson, executive vice president and chief financial officer, $303,667;
  • Rennie Singletary, executive VP for corporate services, $261,162;
  • James Brogdon, executive VP and general counsel, $249,534;
  • Lewis Pierce, senior VP for generation, $215,540;
  • Terry Blackwell, senior VP of power delivery, $212,806;
  • Jeffrey Armfield, VP of fuels strategy and supply, $203,928;
  • Shawn Abrams, VP of planning and power supply, $202,306;
  • William Brown, VP of human resource management, $195,139; and
  • Marc Tye, senior VP of customer service, $192,266.

Jim Newsome, the Ports Authority’s president and CEO, will make $370,000 this year, Skipper said in her email.

Among other top-paid Ports Authority employees are:

  • Paul McClintock, senior VP & chief commercial officer, $245,000;
  • Peter Hughes, senior VP and chief financial officer, $215,000;
  • William McLean, senior VP and chief operations officer, $190,000;
  • Barbara Melvin, senior VP of external affairs, $170,000;
  • Philip Lawrence, general counsel, $170,000;
  • John Ellenberg, senior VP of economic development and projects, $170,000;
  • Pamela Everitt, chief information officer, $154,000;
  • Stephen Connor, VP of senior, human resources and administration, $154,000;
  • John Wheeler, VP of carrier sales, $150,000;
  • Robert Reinecke, VP of global account sales, $150,000; and
  • Stevenson Kemp, VP of terminal operations, $150,000.

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.