The “Legislative State:” How the General Assembly Controls South Carolina’s Government

South Carolina statehouse grounds

Checks and balances are one of the strongest protections for individual liberty because they prevent any one branch of government from becoming too powerful. Concentration of power and lack of accountability breeds corruption and tyranny, and both are typical of South Carolina government by design.

Technically, South Carolina has three branches of government. In reality, the legislature dominates the executive and judicial branch, creating what is sometimes referred to as a “legislative state.” The legislature makes laws, in many cases executes the laws, and elects the judges who interpret the laws. This power structure dates back to the colonial era and is rooted in large plantation owners’ control over the state government and economy.[1]

Today, not much has changed. The legislature overshadows the other two branches of government and directs the state economy through regulation, boards and commissions, economic development deals and targeted tax favors to special interests.

 

How the Legislature Controls the Executive Branch

The legislature’s role is to make laws and determine state spending priorities. The executive is to execute or to carry out those laws. Unfortunately, this is not what always occurs in South Carolina. The governor’s office is extremely weak and the legislature is generally able to pursue its own agenda unchecked by the governor, the judiciary, the voters, and even the state constitution.

Legislative appointments to executive boards and commissions

One of the primary ways the legislature usurps executive jurisdiction is through appointments to various executive boards and commissions. These boards and commissions serve an executive function and appointments to them should accordingly be made by the governor instead of the legislature.

However, the legislature directly controls 423 appointments to executive boards and commissions – over half of the 759 appointments made by the governor. The legislative appointments constitute some of the most significant areas of state government, including:

  • The Public Service Commission – regulates the state’s energy monopoly and controls rates
  • Public Employee Benefit Authority – oversees the state employee pension plans
  • All public university boards of trustees, including the University of South Carolina, Clemson University, etc.
  • The Education Oversight Committee and State Board of Education – controls state education policy
  • Lottery Commission
  • State Transportation Infrastructure Bank – issues bonds to finance new road construction projects

Even many of the governor’s appointments are controlled by the legislature through the screening and approval process. While a simple, public Senate confirmation vote is a proper check for major executive appointments such as department heads, many gubernatorial appointments (such as the Department of Transportation commissioners and the Santee Cooper board of directors) are screened and/or approved by unaccountable legislative bodies with no public vote. This undermines the governor’s authority and makes those positions indirect legislative appointees.

Many of the legislative appointments are controlled by key legislative leaders rather than the General Assembly at large. For instance, the Senate Finance Committee Chairman serves on or makes appointments to at least 17 state boards, commissions, or committees. The Senate president pro tempore can serve on or appoint members to at least 29 state boards, commissions, or committees. As both these offices are currently held by the same individual – Senator Hugh Leatherman – this allows him to control a staggering 46 appointments to state government.

The legislature also holds regular legislative oversight committee meetings to review state agencies on a rotating schedule. While control of executive agencies is properly an executive duty, legislative oversight could arguably be an appropriate check and balance to the governor – if the agencies were controlled by the governor to begin with. As it currently stands, however, the legislature is both controlling and overseeing a large portion of the executive branch.

Legislative control over state finances

For years, state procurement, bonding, oversight of the state retirement system, and a host of other powers resided in the five-member Budget and Control Board (BCB) – comprised of the governor, treasurer, adjutant general, Senate Finance chairman and House Ways and Means chairman. This conglomeration of legislative and executive functions undermined the executive branch and shielded the most important functions of state government from accountability, as no one member of the BCB could be held accountable for BCB decisions.

In 2014, lawmakers passed restructuring legislation, but instead of completely eliminating the BCB and properly dividing its powers between the executive and legislative branches, they replaced the BCB with the State Fiscal Accountability Authority (SFAA), a board with the exact same members as the BCB and many of the same powers – most notably procurement and bonding.

The SFAA authorizes the sale of state bonds for building projects, approves large purchases and sales of real property by state agencies, and manages state procurement services. The other body that approves state bonds is the Joint Bond Review Committee (JBRC).

The JBRC is a ten-member entity comprised entirely of legislators. All of its members are appointed by two legislators, the Senate Finance chairman and the House Ways and Means chairman. The only place the names of current JBRC members are publicly available is here, on the official minutes printed on the committee’s letterhead.

These powers should properly be vested in the executive branch and legislative branch respectively – the first pertains to administering state government, the second to appropriating funds. Further, all decisions involving the spending of taxpayer dollars – especially taxpayer dollars financed by debt – should be made by the General Assembly in full public view through the legislative process.

The concentration of these powers in the SFAA robs executive authority and effectually shields lawmakers from accountability to the citizens of South Carolina.

Legislative control over the educational system

Another area improperly controlled by the legislature is the educational system. Lawmakers control K-12 education policy via the State Board of Education. Of the board’s seventeen members, sixteen are elected by their respective legislative delegations and one is appointed at-large by the governor. The board’s expansive powers include:

  • adopting policies for the government of public schools
  • adopting standards for any phase of education
  • approving budget requests for institutions/agencies under the board
  • granting and revoking teaching certificates, and
  • prescribing the course of study and use of textbooks and other instructional materials for all public schools.

In addition, the legislative leadership plays a significant role in shaping education policy via the Education Oversight Committee (EOC). Fourteen of the committee’s eighteen members are appointed by legislative committee chairmen, the House speaker or the Senate president pro tem. The EOC’s powers include reviewing the implementation of education laws, and making programmatic and funding recommendations to the General Assembly. These are highly significant responsibilities and give the EOC a great deal of say in what federal education standards are adopted in South Carolina.

The legislature also controls South Carolina’s higher educational system by electing the boards of trustees to all public colleges and universities. While state law instructs the Commission on Higher Education to oversee university programs and spending, lawmakers have overridden the CHE’s efforts to impose fiscal restraint. This past legislative session, a budget proviso passed (and was vetoed by the governor) that would strip some of the CHE’s oversight power, and a bill was filed that would allow higher educational institutions to avoid almost all state financial oversight for bonding and construction. Under that legislation, those decisions would be overseen only by university boards of trustees – which are directly controlled by the legislature.

The executive role encompasses responsibility over routine administrative government activities, procurement, personnel, management and oversight. This is a full-time job and accordingly the governor is a full-time state employee. In South Carolina, the General Assembly used its legislative role to codify routine legislative encroachment on gubernatorial jurisdiction – enabling lawmakers to both define and run the state government. This would be bad enough if it were limited to the executive branch, but it is not: Lawmakers have also given themselves complete power over the judiciary as well.

 

How the Legislature Controls the Judicial Branch

South Carolina is one of only two states whose judges are elected by the legislature. The other state, Virginia, allows its governor to make interim judicial appointments when the legislature is not in session, but in South Carolina the governor has no role whatsoever. In practice, this means the judiciary is subordinate, and not equal, to the legislature.

judicial appointments

Only masters-in-equity and magistrates are appointed by the governor with the advice and consent of the General Assembly (in the case of magistrates, advice and consent of the Senate only). Masters have jurisdiction in equity matters, such as foreclosures, referred to them by the Circuit Court. Magistrates likewise are courts of limited civil and criminal jurisdiction, handling matters such as small claims disputes, traffic cases, and issuing warrants.

Theoretically, the Judicial Merit Selection Commission (JMSC) screens potential judges, who are then elected in a joint session of the General Assembly. But the 10-member commission itself is controlled by legislative leadership, with the House speaker making five appointments, the Senate Judiciary chairman making three appointments, and the Senate president pro tem making two appointments – meaning that currently, the JMSC is appointed by three lawmakers. In addition, the legislature controls the purse strings for the judiciary. This unhealthy concentration of power is exacerbated by the fact that many lawmakers are attorneys who appear before the judges they elect.

 

How the Legislature Controls the State’s Economy

Here it is only possible to provide a sketch of how the General Assembly controls citizens’ ability to prosper in South Carolina. Lawmakers direct the state economy in two ways:

  1. By establishing numerous regulatory bodies, licensing requirements, fees and regulations, and
  2. By spending taxpayer dollars on economic development research, targeted tax breaks and special incentives to private entities.

Through what is frequently termed occupational licensing, the legislature controls nearly every industry in the state. Over 139 professions and occupations require licenses, including cosmetology, dentistry, nursing, pharmacists, and many more. These are overseen by licensing and regulatory boards. There is a Medical Examiners Board, a Pilotage Board, a Barber Examiners Board, and even a Funeral Service Board. The General Assembly attempts to add occupational licenses and business regulation every year. The 2017 session alone saw bills to license alcohol serving, electrology teaching and practice, locksmiths, and mobile barbershops. All of these bills passed either the House or the Senate, and could easily become law next year since 2017 is the first in a two-year session.

All in all, the regulatory burden imposed by the legislature costs state businesses billions of dollars in lost productivity – with small businesses impacted the most. The fines and fees (referred to as “Other Funds”) portion of the state budget totaled over $10 billion in the 2017 budget (see chart below).

2017 Budget with SNAP funds

Typical reporting of the state budget process only factors in the General Fund, as that fund comprises the discretionary spending of the legislature in the annual appropriations bill. However, the Other Funds (which are already appropriated in state law) and the Federal Funds receive very little legislative debate and even less public attention, although they comprise roughly two-thirds of the overall budget. 

The state appropriations bill does not include federal money funding the food stamp program (SNAP). In 2013, SNAP funds (estimated at $1.5 billion for fiscal year 2013-14) were moved “offline” into an unbudgeted account and have been unaccounted for in state budget documents since then. Last year’s federal appropriations to the SNAP program as roughly $1 billion.

 

However, the fines and fees collected by state government do not capture the entire economic impact of the regulatory state, which would include local taxes and regulations as well as state taxes not categorized as “Other Funds.” Nor does this include the federal regulatory burden which is estimated at $1.9 trillion annually.

The second way lawmakers control the economy is through government-driven economic development policies. These policies entail grants, taxes, fees, regulations, etc. to provide or promote services that are better left to the free market. Not only does this result in wasted taxpayer dollars, as there are no mechanisms in place for measuring the success or failure of incentives, but it allows government to pick winners and losers in the marketplace.

When lawmakers hand out special tax credits and economic incentive packages to favored industries and businesses, they do so with money taken from other businesses and industries. Moreover, lawmakers never hand out taxpayer dollars at a loss – they simply look elsewhere to make up the lost revenue. This is one reason the fines and fees from occupational licensing – which particularly impact citizens at lower levels of income – are such an integral part of the state government’s revenue stream.

Knowledge Pyramid

click to enlarge

For years, lawmakers have worked toward the creation of a top-down economy. In 2008, legislative leaders unveiled a “Knowledge Economy Strategic Framework” – a confusing pyramid consisting of a conglomeration of agencies and programs that was touted as the key to economic prosperity. The institution at the top of the pyramid is the South Carolina Research Authority (SCRA) – a murky, state-owned technology and real estate company which pays no income, property or sales taxes. The SCRA’s reach extends throughout the business and academic world in South Carolina and according to state code, it exists (among other things) to increase employment opportunities, promote research, and to function as a hub between the academic, governmental, and business communities.

Legislative leaders have two seats on the SCRA board of trustees, but the board also includes five university presidents (all five are from public universities governed by legislatively-elected boards of trustees).

The SCRA was created with a taxpayer-funded grant of 1,400 undeveloped acres of land and $500,000. Over the years, the SCRA has amassed millions in assets and in the last legislative session alone, the Senate passed a bill that would effectively double the SCRA’s private contribution fund.

A number of agencies in state government have economic development roles, from the SC Coordinating Council of Economic Development and the Department of Commerce to Santee Cooper (a state-owned utility), which is statutorily directed to promote economic development and accordingly engages in a number of economic development initiatives.

Lawmakers have also implemented economic development elements in the educational system. Another bill that passed the House in 2017 would task the Coordinating Council for Workforce Development (CCWD) with advising and reporting on the implementation of the South Carolina Education and Economic Development Act (which mandates that career awareness and exploration be incorporated into the public school curricula from the first grade, culminating in
personalized graduation plans depending on the student’s career interests).

The bill also creates two new programs and a grant fund to aid in funneling students through the educational system and into “high-demand occupations in industry sectors with critical workforce needs” – which means government picks the industries that will benefit. The ordinary term for legislation like this is economic central planning. The goal of education is to empower individuals to pursue their own dreams and goals, not those of government. This bill has already passed the House and could pass the Senate and become law in the next session.

 

How Can Citizens Take Back Control?

The parameters of state government should be set by legislators who debate the various positions, views and needs of their constituents and pass laws by majority vote. But while citizens can easily hold their representatives accountable for legislative votes, the legislature’s decentralized power structure is impossible to hold accountable when it is used to implement and manage state government. This is why the executive branch – run by an official elected by the entire state – should be powerful enough to hold all government operations accountable. The power of the governor is the power of the citizen. This is no guarantee of good government – no structure is immune to poor decision-making on the part of elected officials. However, it would guarantee that citizens can exercise direct accountability when poor decisions are made.

It is likely that good government in South Carolina will ultimately require constitutional reform. However, there are a number of statutory changes that would go a long way to reclaiming the legislature’s inappropriate control over our state’s government and economy. Here are just a few examples:

  • Limiting session length to 45 legislative days
  • Eliminating the seniority system by which Senate committee members and chairs are selected (this would give the Senate body a bit more control over the boards and commissions that certain Senate chairmen control by virtue of chairmanship)
  • Replacing legislative appointments to boards and commissions with gubernatorial appointments
  • Eliminating the State Fiscal Accountability Authority (SFAA)
  • Abolishing the Education Oversight Committee and State Board of Education
  • Eliminating the Coordinating Council for Economic Development
  • Enacting economic incentive transparency legislation
  • Reviewing and sunsetting onerous regulations and licensing requirements for businesses

The consolidation of power in the legislative branch makes implementing other needed reforms very difficult. Given the impotence of the executive and judicial branches, the reforms must come from the General Assembly itself. This means legislators must be held accountable by the people they represent.

However, this is reason for hope. While the legislature should not attempt to run the government, defining the scope and parameters of government is the proper role of the General Assembly because it is most reflective of the people of South Carolina. The legislative branch is specifically designed to represent the opinions, needs, and political will of its various constituencies. Legislative districts are relatively small and elections are frequent to keep lawmakers politically vulnerable to the accountability of those they represent.

While the legislature was not designed to run the government, it was designed to be influenced by the citizens. Reform in South Carolina can and must start with the people of South Carolina.

 

[1] For an overview of South Carolina’s constitutional history, see Cole Blease Graham, Jr., The South Carolina State Constitution: A Reference Guide (Westport: Praeger Publishers, 2007), 3-30

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