In the wake of the landmark U.S. Supreme Court’s Kelo decision, South Carolina attempted to shore up property rights with a constitutional amendment. As it now stands, however, the state constitution does not protect private property from seizure by government or even private companies. Currently, in fact, private property can be seized at the discretion of the legislature.
At present, private property may only be taken for “public use”: for example, to build a road or to construct a public building. But the state constitution doesn’t define public use, with the result that state laws may be passed by the legislature and upheld by the courts that allow government to take land for almost any reason at all. The constitution allows, for example, for condemnation and seizure of property if it does not have sufficient ventilation or light.
Further, South Carolina’s laws on civil asset forfeiture are stacked against citizens. Currently, the state must only show probable cause to seize property. The difficulty comes in trying to have property returned in cases in which it was taken wrongfully. If your property was seized under South Carolina asset forfeiture laws, you must prove that your property was not forfeitable. A simple example: A farmer going to buy a tractor with cash is pulled over. The police decide that cash may be drug profits and they seize the truck and cash. For that property to be returned, the burden of proof isn’t on the police but on the farmer.
This flips the traditional notion of justice on its head. In essence, property seized by the state is automatically assumed to be justly taken; the owner must prove it wasn’t.
Even worse are the perverse incentives that encourage the practice. For example, 95 percent of assets seized, or the profit from their sale, are retained by law enforcement, with 5 percent going to the state. Equally worrying is the fact that there is virtually no requirement on government to report seized property in a transparent, accessible way.
Eminent domain, next to the power of imprisonment, is the most serious power given to government. It may be a necessary one under tightly restricted circumstances, but it is no less dangerous. When the state can condemn your property, seize it, and give it to another, the reason for doing so must be strictly defined and utterly necessary – as is also the case with regulations on the Second Amendment.
During the 2016 session, a bill was introduced that would have allowed private pipeline companies to seize private land. That bill was changed to prohibit private companies seizing private land, but the General Assembly then passed a law establishing a committee to “study matters related to the presence of petroleum pipelines in South Carolina.” That law allows the committee to examine “whether other states permit petroleum pipeline companies to exercise eminent domain, and if so, under what circumstances.” The committee met recently to discuss the feasibility of pipeline companies using eminent domain, but the discussion focused on how other states permit this – not why it shouldn’t be permitted.
The past four years have seen an increasing number of similarly framed bills empowering the state to seize the property of private citizens in the name of rehabilitating run-down buildings, and then either repair or demolish the property. In these bills, typically, the owner of the property would be billed for the repairs or be forced to sell it. Gone in this legislation is any assumption that the owner of property has a right to it.
Attempts to reform the state’s civil asset forfeiture laws have been consistently stopped.
In South Carolina, a citizen’s property can be held indefinitely by law enforcement agencies, even without a finding of probable cause. Legislation introduced in 2013 would have required law enforcement agencies to return confiscated property to its owner within 30 days absent a finding of probable cause. That bill died in the House Judiciary Committee.
In a similar approach, a bill introduced in 2015 would have reformed asset forfeiture laws by requiring a criminal conviction before property could be confiscated by law enforcement. The confiscation of property by law enforcement prior to a conviction prevents citizens from using their resources to defend themselves in court – an egregious infringement on property rights. This bill, similarly, died in the Senate Judiciary Committee.
The dominant trend in recently years is away from property rights and toward greater state infringements on private property. In general, lawmakers engaging in debate on questions of property rights fail to ask some version of this question: Is there an overwhelming reason to allow the state greater power to seize private property? Or, to put it differently, is this erosion of property rights being undertaken because there is no other way to protect some other constitutionally protected right? If the answer is No, lawmakers have the duty to reject it.
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Over the past several weeks there has been considerable public speculation that Gov. Nikki Haley’s successor may support a gas tax increase. Given calls to raise the gas tax from editorial boards, Department of Transportation officials, and state lawmakers, it’s fair to assume that the 2017 legislative session will include debate – for the third year in a row – on the alleged need for more revenue to pay for roads.
As in years past, though, lawmakers still haven’t proven this to be a revenue problem. Indeed, a far better argument can be made that existing infrastructure money is spent badly, and that the road funding system should be made accountable to taxpayers before politicians breathe another word about tax hikes.
Last year’s roads bill, passed by the General Assembly and signed by the governor, came nowhere near accomplishing the kind of accountability needed to fix the problem. Indeed, in some ways it made the problem worse by further blurring lines of accountability from the Department of Transportation commission. The new law also leaves the State Transportation Infrastructure in place, ensuring that repair and maintenance money will continue to go to unnecessary projects in politically important counties.
In short: revenue isn’t the problem – accountability is. We explain why in clear, no-nonsense language in our roads report here.
Many Americans assume, wrongly, that their state legislatures deal mainly with low-level issues and that only Congress and the president deal with the really important matters of governance. Certainly in South Carolina, that’s an increasingly dangerous assumption. Indeed, the General Assembly has debated and passed measures that have direct bearing on the First Amendment of the U.S. Constitution. These measures have dealt in significant ways with South Carolinians’ freedoms of speech, assembly, and press.
The trend lines are not encouraging, and citizens would benefit from closely considering what their lawmakers have tried to do in recent years.
Since 2014 every omnibus ethics bill has had an “electioneering” provision designed to have a chilling effect on the right to criticize politicians.
This provision defines “electioneering” as virtually all communications that reference a candidate during a broad window before an election. Any individual or group that engages in electioneering would be required to file a report with the State Ethics Commission. That would, in turn, force the individual or group to disclose top donors.
Non-partisan organizations and individuals would in effect be barred from mentioning politicians within a broad window of time or risk exposing their donors to retaliation and intimidation from politicians. The United States Supreme Court ruled in NAACP v. Alabama that NAACP had “immunity from state scrutiny of membership lists” when Alabama tried to force the NAACP to handover its list of members. Legislators in South Carolina want the same information and for the same reasons.
Groups that shouldn’t have to disclose their donors, moreover, would face tougher reporting requirements than full-on political action committees that are directly involved in elections.
Under current law, speech that clearly seeks to influence the outcome of an election through a significant financial investment is regulated to protect the public from quid pro quo corruption. The courts have drawn a very clear line between protected political speech and political speech that “expressly advocate[s] the election or defeat of a clearly identified candidate.” As the Supreme Court stated in Buckley v. Valeo, the government interest in regulating political speech is related to corruption, defined as large contributions “given to secure a political quid pro quo from current and potential office holders.”
While this legislation would almost certainly invite a court challenge, given the precedent set by numerous rulings in favor of protected speech and issue advocacy, the greater concern is the chilling effect it would have on citizens’ and organizations’ willingness to speak out on public policy issues.
It is important to remember that transparency is for government and privacy is for citizens. If South Carolina legislators were to have their way the opposite would be true.
What started out as a proposed House rule has taken many different forms over the past two sessions – and even though it has been defeated each time, it will almost certainly return in 2017. The proposal would allow legislative committees and subcommittees to require anyone offering public testimony to speak under oath. Anyone who offers testimony a legislator deems willfully “false, materially misleading, or materially incomplete testimony” would be guilty of “contempt of the General Assembly.”
Since testimony is generally only taken at the subcommittee level it is very possible, were this bill to pass, as few as two legislators could turn an individual over to SLED and have them prosecuted. It’s hard not to conclude that the proposal is designed to scare citizens away from offering testimony critical of lawmakers and their decisions.
Legislation filed last session would have required any citizen or a representative of any grassroots organization to register with the State Ethics Commission as a lobbyist and pay a $200 registration fee – forcing citizens to either stay silent or pay a fee to talk to their elected officials.
Registration would be required before delivering testimony at a legislative committee or subcommittee, and before speaking at a public hearing on a local ordinance or initiative. In essence, merely speaking to politicians in public forums would require government permission and a fee.
The measure passed the House Judiciary Committee.
A 2016 bill would have required all journalists to register with the Secretary of State.
Practicing journalism without authorization would be punishable by escalating penalties, the heaviest being a third-offense penalty of a maximum $500 fine or 30 days in jail, or both.
After an extended period of much scrutiny and national media attention, the bill’s sponsor claimed it was a joke. It wasn’t clear, however, from his initial explanation that it was a joke, and in any case – “joke” or not – it was a flagrant instance of using the law to intimidate private citizens into keeping quiet.
Two bills filed in 2016 would have restricted citizens’ right to protest at the State House. Under the guise of safety concerns, the regulations for use of the State House grounds would have escalated from a low-key reservation process to a more tightly-regulated permitting process. Among other regulations, the State Law Enforcement Division and the Department of Public Safety would review any application before the Department of Administration could approve it, and law enforcement would have been authorized to remove individuals from the State House grounds if the individuals’ “continued presence and activity [were] a threat to public security, health or well-being.”
This approach represents a fundamental shift from the right of citizens to protest at the seat of their government, to a requirement that individuals must ask for and receive government approval.
A similar bill aimed at Occupy protestors was filed in 2012 and would have prohibited camping, sleeping, etc. on the State House grounds – despite the fact that there were already laws on defacement of public property.
Only two years ago the state was successfully sued by protesters arrested for trespassing on the State House grounds. The courts ordered the state to pay $192,000 to the protesters for violating their First Amendment rights.
No one is arguing that the right to free speech is so inviolable that government can never regulate it. But government may only regulate a constitutional right in extraordinary and narrowly defined circumstances in which regulating that right is the only way another right may be protected. South Carolina lawmakers have not made that case in any of the instances cited above. The trend toward more attempts at abridging free speech continues, and citizens should treat it for what it is – a threat to their First Amendment freedoms.
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On the surface, members of the South Carolina General Assembly make comparatively little for their legislative work: just $10,400. Even when you add the hefty per diem payments (payments of which some lawmakers take full advantage even though they can see the State House from their homes), take-home pay only amounts to around $32,000 at the maximum.
Why campaign so hard and spend so much on a position that pays so little?
Not until you scrutinize reports, records, and contracts does the reason become clear. There are in fact several ways for lawmakers – and lawmakers’ families – to profit handsomely. As The Nerve has made sadly clear over the last several years, many lawmakers have turned 10K or 32K into much larger amounts. They’ve done it by directing state dollars to their own businesses, abusing campaign funds, appointing their own family members to sinecure appointments, and handicapping business competition.
Some of the instances below are technically legal, and some come close to the line of illegality. Taken together, however, all of them help to explain why some members of the South Carolina General Assembly are so eager to get and keep their seats.
A common way for lawmakers boost their bottom line is to secure government contracts for themselves or their own firms. Clearly, by doing business with a state lawmaker’s company, a business stands to gain influence with state government – and lawmakers know this. So, from office supplies for local governments to multi-million dollar road projects, lawmakers can make easy money – and the public often knows nothing about it.
The use of campaign funds falls into a gray area in the law – many obvious abuses may not technically violate the letter of the law. Current law allows lawmakers to use campaign funds on expenses “incurred in connection with an individual’s duties as a holder of elective office” – phrasing that members have interpreted to mean just about anything. Despite a few high-profile cases in which lawmakers went too far (and in the case of former Speaker Bobby Harrell, it took a complaint filed with the attorney general, since the House Ethics Committee had no inclination to act against abuse), lawmakers continue to treat campaign cash as though it were their own.
These “campaign expenditures” (probably) don’t go directly into the elected official’s pocket. But these expenses do secure the official’s position, extend his influence and prestige, in some cases benefit him personally (expensive meals, etc.).
South Carolina’s nepotism law (8-13-750 [A]) reads as follows: “No public official, public member, or public employee may cause the employment, appointment, promotion, transfer, or advancement of a family member to a state or local office or position in which the public official, public member, or public employee supervises or manages.” By either ignoring the law or interpreting it in the loosest possible way – that is, by pretending that the General Assembly’s oversight power is different from supervision and management – lawmakers allow themselves to appoint family members to lucrative boards, commissions, and agency headships.
Every year legislators introduce and pass legislation that makes it harder for businesses to compete against those legislators’ firms.
Every year the state budget contains wasteful spending on unnecessary projects and programs with poor track records. The state’s opaque budget process makes it easy for lawmakers to slip in these items, and some cases the benefit to individual lawmakers is laughably obvious. Lawmakers can also send appropriations to their friends and business partners.
These are just some of the ways in which the concentration of power and secrecy in the General Assembly makes it easy for lawmakers to treat state government as a profit-making enterprise. The consequence for taxpaying South Carolinians is severe: public money wasted on unnecessary and poorly performing projects, contributions to campaigns and PACs used as pay-to-play bribe money, incompetent appointees on powerful state boards, businesses regulated out of the market, and more.
So in the run-up to the 2017 legislative session, as we read and analyze scores of new legislation – and especially as we follow the state budget – we’ll keep an eye on seemingly innocuous legislation that’s actually meant to benefit elected officials. To keep up with the latest, sign up for our weekly e-bulletin by clicking here.]]>
Our guide to the 2016 legislative session – The Best and Worst of the General Assembly – has just been published. It’s the only publication of its kind in the state. We examine every major bill, explain what it would do in plain English, and assess it according to one simple criterion: whether or not it would advance your personal and economic freedom.
We think this year’s guide is the best so far. The bill summaries are crisp and efficient, the layout is clear and logical, and the graphic design is terrific.]]>
The hostility toward Second Amendment freedoms seen at the national level – proposals for gun registries, bans on certain firearms, and so on – is just as evident in “red state” South Carolina’s State House as it is anywhere else in the country. The last several years, in fact, have seen the introduction of several bills intended in one way or another to curb Second Amendment rights.
For the upcoming 2017 session, legislators have already promised to introduce bills that would, among other things, increase the wait time for background checks and require registration of guns. If recent history is any guide, however, the bills will begin their legislative journey as highly restrictive gun control measures, then be slowly curtailed as the session goes on. By the end of session, such bills may no longer be the sweeping anti-Second Amendment bills they started out as. But that should be no comfort to South Carolinians who oppose further gun control measures, since small, seemingly modest restrictions grow over time to create a much more prohibitive environment for Second Amendment freedoms.
Recent history, moreover, suggests that – for all South Carolina’s reputation as a pro-Second Amendment state – lawmakers are not averse to introducing substantial gun control bills.
A bill introduced in 2014, for example, would have required background checks for all firearm sales in South Carolina – this despite the lack of evidence that background checks enhance crime prevention. In a 2013 Center for Disease Control report done at the request of President Obama, around 70 percent of the guns criminals used came “from family or friends, drug dealers, street purchases, or the underground market,” not from legal guns sales. Put another way, about 70 percent of guns used by criminals – the very group background checks target, would not be subject to them.
A bill introduced in 2015, similarly, attempted to mandate permits for “casual gun sales.” It would have required private sellers to get a license and a bond with the state – effectively criminalizing many informal gun sales. The simple process selling a firearm to a friend would have required approval by the state (and a fee, naturally).
Another bill from 2016 would have prohibited the sale, transport, and ownership of an “assault weapon.” There is no industry definition of an “assault weapon,” and so the law had to define it, which it did vaguely: The bill might have applied to all sorts of guns, or virtually no guns at all. Consequently – and this was also true of the bill’s now extinct federal counterpart – the state ban would have imposed an arbitrary ban on one type of gun while leaving others completely unaffected.* (For more on this and similar bills introduced during the latest session, see the Policy Council’s 2016 Best and Worst of the General Assembly.)
All of these bills failed to pass the legislature, but experience strongly suggests that once such bills begin to be introduced in significant numbers – and the bills above represent only a fraction of the over 30 gun bills introduced in the last two sessions – the legislature will be emboldened to pass them, or to pass components of them, eventually.
When South Carolina politicos commence debating gun-related legislation in 2017 – as they begin debating which measures are acceptable means of curtailing citizens’ right to defend themselves – it’s best to treat many of the restrictionists’ claims that gun laws decrease violence with skepticism.
For example, it cannot be proven that there is a correlation between restrictive gun laws and a decrease in violence. The same 2013 study of gun violence the CDC did at the request of President Obama found that “whether gun restrictions reduce firearm-related violence is an unresolved issue.” The CDC reported, in a different study, that in 2013 California had 1,312 firearm homicides. This was the highest in the nation by over 35 percent – despite the fact that California has among the strictest gun laws in the nation.
Nor is there any evidence that gun registries are effective ways to prevent crime. Canada and New Zealand abolished their gun registries after they had become clearly ineffective. Canada saw non-compliance (people neglecting or refusing to register their guns) as high as 50 percent; and New Zealand ended the registry of rifles and shotguns when police said registration was expansive, impractical, and yielded almost nothing of value.
To sum up: Watch for new gun restrictions in 2017. Gun restrictionists will likely cite vague goals such as “public safety” and “decreasing gun violence,” but the evidence that their proposals can accomplish those goals is deeply problematic. The criterion for restricting constitutional rights, meanwhile, is the same as it’s always been: Government can regulate a constitutional right (in this case, the right to bear arms) only when it’s clear that doing so is the only way to protect another constitutional right (for example, the right to life). On the evidence produced so far, it’s not only unclear that gun restrictions protect life: the evidence strongly suggests that they don’t.
* The federal assault weapons ban was allowed to lapse in 2004 after a study by the Department of Justice concluded that “we cannot clearly credit the ban with any of the nation’s recent drop in gun violence … Should it be renewed, the ban’s effects on gun violence are likely to be small at best and perhaps too small for reliable measurement.”]]>
State lawmakers are now holding public forums to consider whether the General Assembly should further restrict citizens’ Second Amendment rights. Here’s what South Carolinians should understand about the gun debate before it begins.
The American Constitution is not a “working draft” or a list of suggestions. It is the rulebook for governing in this country. Government officials may not take a constitutional right from the people simply because they’ve decided it’s in the people’s best interest.
Only in the rarest of circumstances – when there is a clear and compelling case that limiting one right is absolutely necessary to protect against a greater threat to another right – may any American government impose a limit on a constitutional right.
It’s easy to dismiss such statements as demagogic in the face of heightened emotions, or theoretical ideals that are impractical for “real life.” That is exactly the attitude that threatens citizens’ rights, and precisely why the constitution was designed with such clarity of purpose. The question to ask about any gun control law is not whether it will prevent gun deaths. It has not and will not. The important question is this: Is the threat to life so dire that the only way to protect it is by compromising Americans’ right to defend themselves?
The answer: No. The call for gun control isn’t based on compelling evidence that the threat to life is so overwhelmingly great that it merits compromising the Second Amendment’s right to self-defense. The senseless taking of innocent life understandably provokes a frustrated call to action, but to claim that firearms are responsible for a “pandemic” of homicidal violence isn’t just misleading – it’s irresponsible – and elected officials have a duty to respond to such claims with reason rather than irrational fear.
In truth, only 1.2 percent of all deaths in the United States are the result of firearms.* And of those, around two-thirds were suicides. More to the point, gun homicides account for 0.43 percent – less than half a percent of total deaths.
The total number of deaths in the United States for 2013 (the most recent year complete data is available) were 2.5 million. Of those, a total of 33,636 were caused by firearms – 21,175 of which were suicide. It is unavoidably true that the inherent properties that make a firearm the most effective self-defense weapon also make it the most efficient means of taking one’s own life. In fact, the vast majority of gun deaths – roughly two-thirds – are suicides. Still, roughly half of those who committed suicide did so through means other than a firearm.
Perhaps the most irresponsible element of the gun control debate is the overblown rate of accidental deaths from firearms. To be sure, it is horrifying to learn of a child dying from accidental gunfire, or shooting someone else. But how prevalent is accidental gun death? Of the 2.5 million who died in 2013, accidents claimed the lives of 130,557. Of those, a total of 505 died from accidental gunfire – 0.38 percent. Less than half of one percent of all accidental deaths were from a firearm.
Compare 505 accidental deaths from gunfire to the 38,851 who died of accidental poisoning, the 37,184 who died in a transportation accident and the 30,208 people who died from an accidental fall.
What is not reflected in those statistics is that the overwhelming number of gun owners are responsible citizens who do not commit crimes. It is their lives – and their right to defend them – that must be weighed in context. There is no overwhelming case that banning guns – or even limiting access to them for reasons that aren’t logically connected to the goal – would reduce the rate of gun deaths. But there is an excellent case that innocent people can and do protect themselves through responsible gun ownership.
It isn’t possible to know how many more innocent lives might have been lost had they not had that right, just as there is no evidence that the right to self-defense poses a greater threat than the lack of it. There is evidence, however – and a lot of it – that gun control legislation is both constitutionally unwarranted and practically ineffectual.
* Source for statistics: 2013 Center for Disease Control National Vital Statistics Reports Volume 64, Number 2.
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South Carolina’s general obligation bonding process is a mystery to the vast majority of citizens. The process is murky by design: It allows lawmakers to spend borrowed money with virtually no public awareness or input.
With the state now saddled with $326.6 million in general obligation debt – along with a total debt of around $71 billion when outstanding unemployment trust fund loans, debt, and pension liabilities are included – citizens ought to know how this debt is accrued, and who’s responsible for accruing it.
South Carolina requires only one form of general obligation bonds – bonds secured by the taxing power of the entire state – to be voted on by the entire legislature: state capital improvement bonds.* All but two other types of general obligation bonds can be issued by two unaccountable boards: the Joint Bond review Committee (JBRC) and the State Fiscal Accountability Authority (SFAA).
The two classes of state general obligation bonds that aren’t authorized by either of these boards are, first, the
aforementioned state capital improvement bonds – voted on by the legislature in the form of a bill – and, second, state school bonds, which are requested by the State Board of Education and authorized by the governor and treasurer.
The JBRC and SFAA still have a role to play in these two bond categories, however. The state code gives the JBRC the
blanket authority to review “the establishment of any permanent improvement project and the source of funds for any such project not previously authorized specifically by the General Assembly.” And although capital improvement bonds are not authorized by the two boards, the SFAA and JBRC are empowered to prioritize projects funded by capital improvement bonds.
The seven categories of state general obligation bonds that are approved and authorized by the JBRC and SFAA are:
The process for issuing these seven categories of bonds goes like this:
(1) The appropriate agency (the Department of Transportation for highway bonds, the State Board of Education for school facilities bonds, etc.) submits its request for bond issuance to the JBRC and SFAA.
(2) The JBRC and SFAA review the application.
(3) Once the request is approved, the SFAA authorizes the issuance and sets the terms (interest rates, time and place of payment, etc.).
(4) In the case of state agencies, the requests and proposed terms must also be approved by the governor and treasurer.
(5) After advertising the bonds’ sale in a New York City financial newspaper, the governor’s office and treasurer’s office sell the bonds.
(6) The proceeds of the bonds are typically held and distributed by the treasurer.
All state general obligation bonds are ultimately payable from the state’s general revenues. That’s why, in each year’s state budget, the General Assembly sets aside funds to make debt service payments on general obligation debt – money taken from taxpayers for no other purpose than to pay interest on debt.
Some categories of bonds, though, have to be repaid with more specific sources of revenue. The following categories of bonds are repaid in whole or part by specific revenue sources.
Consider a specific example. State economic development bonds are one of the most used and debated types of bonds.
They’ve been used in the recent past to finance the construction of an aircraft assembly plant for Boeing, and were used during the 2015 session to finance infrastructure as part of an incentive package for the Volvo Corporation.
Before they’re issued, economic development bonds are first requested by the Department of Commerce or the agency that will own the project funded by the bonds. The SFAA and JBRC review the request and either approve or deny it. If approved, the SFAA adopts a resolution authorizing the bond issuance and setting the terms – interest rate, maturation date, place and time of payment, etc.
The bonds are then sold by the governor and state treasurer. The treasurer then receives the proceeds and applies them to the purpose for which the bonds were sold. Finally, the legislature appropriates revenue to keep up with the sale’s principal and interest.
Although bonding is a function properly executed by the entire legislature, in South Carolina two boards are responsible for approving and authorizing the issuance of most state bonds. One of these boards is controlled by only two legislators, and the majority of the others board’s members aren’t even from the legislative branch. In other words: Although legislative leaders dominate the process, lawmakers themselves never face any real accountability for the decision to finance state needs with debt.
Together these unaccountable boards are responsible for hundreds of millions in debt that must be paid back by state taxpayers. To put this into perspective, in 2015 taxpayers paid $125 million simply on the debt service for bonds approved by the JBRC and SFAA.
All decisions involving the spending of taxpayer dollars – and especially the spending of taxpayer dollars financed by debt – should be conducted in full public view. In South Carolina, these decisions are made not by the body supposedly charged with appropriating public money – the General Assembly – but by two murky and practically anonymous boards that have de facto freedom from any accountability to taxpayers.
* The “bond bill” passed by the legislature (it was incorporated into the roads legislation passed on June 1, 2016, then signed by the governor) really wasn’t a bond bill; it was revenue bill. The appropriation will go to the State Infrastructure Bank, which would then bond the money. This is one of the few cases in which a state bond has attracted even a little public scrutiny.
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The legislature has now passed, and the governor signed, allegedly groundbreaking “ethics reform” legislation on the investigation of lawmakers and income disclosure.
Why does income disclosure matter? Currently, state lawmakers are required to disclose almost nothing about their sources of income. That means, among other things, that they can be paid by special interests to support and promote legislation without the public knowing anything about it – and do so without breaking the law.
Any reform to the state’s disclosure requirements should aim to expose conflicts of interest. That is the whole point of disclosure, and that is what the bill signed by the governor mostly doesn’t do. In fact, under the new law, a whole lot of income will still remain undisclosed.
The law’s two main problems are these:
The law doesn’t get rid of a loophole in current law that allows public officials to set up a limited liability company, or LLC; direct all their private income into that account; and “disclose” that they’re paid by the LLC. That tells the public nothing about where the money actually came from: which lobbyist principals paid them, which special interests paid them, etc.
The problem, in essence, is that the law’s definition of “private income” is weak: “anything of value received, which must be reported on a form used by the Internal Revenue Service for the reporting or disclosure of income received by an individual or business.”
That sounds tough, but the IRS isn’t especially concerned with conflicts of interest at the state level. The IRS is concerned with taxable income. The public has no interest in knowing what bank accounts lawmakers pay themselves with. They want to know the actual source of the income in order to discern whether there is a conflict of interest. The new law does very little to ensure that the public will have access to that information.
In fact, one longtime senator actually urged his colleagues on the Senate floor to pass the
bill specifically on the grounds that they could set up LLCs and refrain from disclosing anything important. Another senator, Brad Hutto, correctly predicted during debate that, if the bill passed, voters wouldn’t know any more about him, Hutto, than they do now.
Many lawmakers draw far more government income than the $10,400 to $32,000 they’re allotted as state lawmakers. The same is true of other key government officials. One important source of de facto government income involves subcontracts. If a state lawmaker owns a company that subcontracts with another company that does work directly for the state, the lawmaker doesn’t have to count that as government income – even though it’s a result of the state paying for the service, and even though the lawmaker may well be in a position to steer that contract to the firm with which is company does business.
Consider the case of Sen. Hugh Leatherman’s concrete company, for instance.
Till now, all of this would be considered “private” income and therefore wouldn’t have to be disclosed. Under the new law, it would have to be disclosed as private income, but then we are back to point (1) above: All the official has to report is how much he was paid by his business, and no one would know how much his business was paid by government contracts or subcontracts.
The point of an income disclosure law is to make it possible for the public to see conflicts of interests when they occur. An effective law, therefore, would first need to require the actual sources of the money, not necessarily the IRS information. And second, an effective law would need to explicitly require the disclosure of all money flowing to the public official from government entities.
What H.3186 requires, in short, is a lot of gesturing but not much disclosure.
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Gov. Nikki Haley recently signed a bill shortening South Carolina’s legislative session. Media reports indicate that the bill would cut session by three weeks or four weeks, but a close reading of the bill strongly suggests that session won’t be shortened in any significant way, if at all.
So: why is shortening session important, and will the reform the governor signed make a difference?
South Carolina’s state legislature seems to be in session almost all the time – because it is. Stretching from January to June, our session is tied with those of seven other states as the 6th longest in the nation. It’s tied with Tennessee’s as the longest session in the Southeast. Whereas Southeastern legislatures meet for an average of 94 calendar days out of the year, South Carolina’s General Assembly sits from January to June, or about 143 calendar days a year.
That’s a big deal for this reason: The longer lawmakers spend in Columbia, the more time they spend with lobbyists and special interests, and the less time they’re around the people they represent. Studies have consistently found that professional, full-time legislatures pass more bills catering to special interests and spend more taxpayer money than part-time legislatures. In other words: professional legislatures are more prone to pressure from lobbyists – and this translates into higher spending.
Technically, of course, South Carolina’s legislature isn’t “professional” – lawmakers don’t receive a full-time salary – but the length of time necessary to be a South Carolina lawmaker makes it a de facto professional job. And although lawmakers make considerably more than the $10,400 many of them claim is their total salary – the real amount is closer to $32,000 per year – the relatively low pay may make it more likely, not less likely, that lawmakers will use their offices to profit financially.
The answer isn’t to increase lawmakers’ pay. The answer is to dramatically shorten the time required to be a lawmaker. The fact is, it simply shouldn’t take much time to do the people’s business and leave town. Texas, for example – a state whose economy and state government dwarf South Carolina’s – only holds legislative sessions every other year. (The same is true of Montana, Nevada, and North Dakota.)
Every year, session-shortening bills are introduced in South Carolina’s General Assembly, and 2016 was no exception. Several were filed in January. Eventually, one passed and was quickly signed by the governor.
Unfortunately, no. The law contains so many loopholes as to make it virtually pointless – and maybe worse than pointless.
S.267 shortens the annual legislative session by three weeks, ending it on the second Thursday in May instead of the first Thursday in June. That would shorten session modestly, but the bill includes these exceptions:
Furthermore, an already existing loophole remains part of the state law: If the House does not pass the budget by March 31st, session is extended by one day for every day after March 31st that the budget doesn’t get third reading.
Now consider a new provision introduced by S.267. Each year, the Board of Economic Advisors, or BEA, publishes its final economic forecast that allows legislative budget-writers to assess how much revenue they have to work with for the next fiscal year. The deadline for publication of the BEA’s final forecast was February 15, but the new law moves that date forward to April 10. If the point is to get the budget done faster because session is shorter, it makes no sense to move the BEA deadline forward.
The House almost always passes its budget before the BEA forecast is published, but the Senate never does. Or to say it another way: the Senate Finance Committee never finalizes its budget until the new BEA numbers are available. (This isn’t a rule or statute; just longstanding tradition.) The later April 10th deadline for the BEA forecast makes it likely that the budget process will take more time, not less, by moving the full Senate budget debate further into the year.
Under the best of circumstances, then, South Carolina’s 21-week session would be 18 weeks in length (still two weeks longer than the median session length among all other states – a modest cut). But since in practice the “best of circumstances” never applies – since lawmakers always take longer than anticipated to finish their job and routinely continue to meet well past the end of session by means of sine die resolutions – one can safely assume that South Carolina’s legislative session will last as long as it always does.
A genuine session-shortening reform should either
These proposals will have to wait till next year, or for a legislature that actually sees the need to spend less time in Columbia and more with constituents.
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