Top SC leaders agree more accountability needed for earmarks, but ignore audit request
Some of South Carolina’s most powerful political leaders took a step forward Wednesday to ensure more accountability with the state’s hidden earmark system, but fell short of ordering an audit of organizations with millions in past questionable expenses.
The State Fiscal Accountability Authority — whose members are Gov. Henry McMaster, state Treasurer Curtis Loftis, Comptroller General Richard Eckstrom and top budget writers Sen. Hugh Leatherman, and Rep. Murrell Smith, all Republicans — unanimously agreed that agencies need to ensure that organizations report back how money was spent after it has been handed out, something already required by law but rarely followed. Leatherman was not present for Wednesday’s meeting.
In years past, lawmakers have quietly sent tens of millions of taxpayer dollars to community projects with little-to-no public debates through the hidden earmark process.
Wednesday’s discussion was spurred by a July request from two lawmakers for the state to audit organizations that received some of those state funds. However, the fiscal authority made no mention of an audit during the meeting.
“It’s just closing the barn door after the horse has bolted,” said state Sen. Dick Harpootlian, D- Richland. “Their vote today was amnesty for people who took the state’s money and misspent it. That’s not how government is supposed to work.”
The authority instead agreed to develop standard reporting requirement forms for agencies to better follow-up with recipients to ensure the law is followed.
Currently, reporting requirements vary throughout state agencies. Some don’t follow up with groups and only require recipients to submit a tax return form to prove their existence, while other agencies ask for more detailed records of how the money was spent.
Smith, the chairman of the House Ways and Means Committee, acknowledged the changes would be a work in progress and vowed to work with top lawmakers moving forward to fix the flawed system.
“We need transparency and we need accountability,” he said. “We need some uniformity.”
For nearly two years, The State Media Co. reported on the secret world of earmarks, which found that the process lacked transparency, accountability and has been used as a negotiation tactic to gain support for the state’s annual spending plan, other bills and pet projects.
The newspaper found that most lawmakers were unaware of projects being funded. The newspaper also found the state has been unable to track how millions were spent, largely because recipients didn’t relay back to the state what they did with the money, as required by state law.
Even some basic rules — that have been in place in the House of Representatives for at least a decade and would also shine light on funding requests — were being ignored or not followed by lawmakers who hand picked pet projects in their districts.
In several cases, funds have gone to groups with close ties to lawmakers or their close friends, and have sometimes gone toward questionable expenses, such as lawn care, rent and to pay political allies. A disproportional amount of funds have also gone to counties whose local leaders have the most say in the budgeting process, while some of South Carolina’s poorest counties received nothing.
Earlier this year, legislators in both the House and Senate for the first time publicly released a list of all requested earmarked projects and their amounts prior to the budget’s approval after a Senate rule change that required disclosures.
But while some progress has been made over the past year, some lawmakers say it’s not enough.
In July, state Sens. Wes Climer, R-York, and Harpootlian called on the SFAA to audit groups that received millions of taxpayer dollars through the hidden earmark system, citing reporting by The State.
Though some SFAA members previously expressed support of an audit to account for the money, no one mentioned the request on Wednesday.
“They definitely could have gone further in the direction for accountability and transparency, but this is progress nevertheless,” Climer said. “We will continue to pursue other avenues for transparency and accountability on earmarks from prior budget years.”
McMaster had previously vetoed $150 million in funding request, citing a lack of transparency and noting the lack follow-up from organizations and dispersing agencies. Lawmakers, however, overrode the governor’s vetoes so the money could be doled out.
He also sent letters to 24 different state agencies, requiring they begin providing the Executive Budget Office with an explanation of how earmarked funds will be spent by the recipients, and what accountability measures are in place to ensure proper spending.
Eckstrom, the state’s comptroller general, said Wednesday the new changes should improve reporting compliance, adding the law on earmarks could also be more detailed.
In May, The State and McClatchy’s other S.C. papers surveyed General Assembly members about hidden earmarks, finding that 83% of lawmakers said they would support budget reform that would provide more transparency and accountability. However, no change to existing the law was been made.
This story was originally published September 9, 2021 at 5:00 AM.