Senate revives borrowing plan for state buildings

The state Senate will try to borrow money to pay for state building projects.

On the heels of the House’s rejection last month of a $500 million borrowing bill, Senate President Pro Tempore Hugh Leatherman, R-Florence, introduced a bill Tuesday to borrow by selling state bonds.

Leatherman did not specify the amount the state should borrow or where that money should be spent. Instead, he invited state senators to suggest the projects that should be included.

The revival of a borrowing proposal is sure to face opposition from some Republicans, including Gov. Nikki Haley. Haley pressured the GOP-controlled House to reject its $500 million borrowing plan, which its own leaders had endorsed.

“When the bond bill died, (House members) very selectively pulled out projects that they wanted to get funded,” Leatherman said Tuesday.

The University of South Carolina, for instance, was to get $5 million in the bond bill for renovations to its South Caroliniana Library. After the bond bill failed, the House budget was rewritten to give the school the same amount for the library project.

But other projects were cut, by millions of dollars, to fit into the state budget.

K-12 schools, for example, were to receive $50 million in the bond proposal, money to be used to address the Supreme Court’s school-equity ruling. In the rewritten budget, however, that amount was cut to $500,000.

Meanwhile, another USC project — renovating a Main Street building — saw its money sliced to $3.5 million from the original $15 million.

“They did not put in enough money to fully fund almost any project,” said Senate leader Leatherman, who also chairs the Senate Finance Committee, which writes the Senate’s budget proposal.

The shell bill that Leatherman introduced Tuesday will allow senators to put projects into a borrowing proposal that is separate from the state’s $6.9 billion general fund budget for its fiscal year that starts July 1.

Money for building projects already included in the general fund then could be spread across state agencies to pay for operations. “I’m not willing to take the chance of hurting the services that we provide to our people,” Leatherman said.

But Leatherman’s borrowing proposal will face opposition.

Gov. Haley has said she will veto a proposal to borrow money to pay for the state’s deferred maintenance needs, which run into the hundreds of millions of dollars. Instead, the Republican governor has said maintenance should be paid for from the state’s general fund, financed largely by sales and income taxes.

“We do a disservice to the agencies that have needed projects to fund if we don’t try to do it with cash as the governor has suggested by the threat of her veto,” said state Rep. Rick Quinn of Lexington, who was among the Republicans who revolted against the House borrowing proposal.

However, Leatherman’s proposal could win House backers.

Haley’s “pay-as-you-go” plan is appropriate for certain needs, but building projects are best financed by long-term bonds, said House Assistant Majority Leader Gary Simrill, R-York.

As a result, Simrill said, its possible that Leatherman’s borrowing proposal could attract enough legislative support to be able to override a Haley veto.

In part, that is because Leatherman’s proposal includes a vetting process, addressing critics who complained the House bond proposal was put together in secret, Simrill said.

Like other legislators who favor a bond issue, Simrill said the time is right now to borrow — interest rates are low and the state has paid off some of its debt, making it possible for it to borrow more without increasing its debt payments.

“We see within our road system, when you don’t reinvest in infrastructure, the real cost becomes exponentially more,” Simrill said. “The same thing applies to armories, to state buildings, to those things that are important to the people that we serve.”

This story was originally published April 14, 2015 at 1:20 PM with the headline "Senate revives borrowing plan for state buildings."