We asked 170 SC lawmakers where they stand on ‘hidden’ earmark reform. What they said

An overwhelming majority of lawmakers in the South Carolina Legislature say they would support new laws that would require more transparency and accountability for hidden earmarks.

The state’s controversial budgeting process, which critics say is cloaked in secrecy and ripe for abuse, was first exposed by The State Media Co. in December 2019 after it was found that more than $30 million in pet projects were tucked into the budget unbeknownst to taxpayers and most lawmakers. Since then, The State has spent more than a year investigating the secret world of earmarks, discovering at least $104 million in projects dating back five years, with several million going to groups with close ties to lawmakers making the request.

A team of reporters at The State, The Island Packet and Sun News have since surveyed all 170 State House legislators on the subject, collecting responses from 95% of them.

Their feedback?

Nearly 81% of all lawmakers interviewed said they would support a new law that would require all hidden earmarks, or pass-throughs, to be publicly posted on the State House website for all to see, along with details that show which lawmaker requested the money, where it’s going and why. What’s more, 83% also said they would support another law that would ensure all organizations fully account for how the money was spent, something currently required but rarely followed.

“That’s good to hear,” said Senate Majority Leader Shane Massey, R-Edgefield, who added he is willing to sponsor such legislation. “But I think it’s easy for people to say they support accountability and transparency, it’s another thing when you put it on paper and they start picking it apart.”

In the Senate, at least 41 of the 45 members interviewed said they would support new laws for hidden earmarks. Only four said no or didn’t give a definitive answer. Sen. Hugh Leatherman, R-Florence, the chairman of the powerful Senate Finance Committee which dishes out earmarks every year, was the only lawmaker who avoided reporters about the subject in person, by phone and after receiving the questions from his chief of staff.

Massey credits the support to a new Senate rule he sponsored that required the disclosure of earmarks — both hidden and line item projects — during the budgeting process. As a result, the Senate Finance Committee released a full list of proposed earmark recipients totaling $107 million this year along with each sponsoring lawmaker.

The House of Representatives, however, which has a similar rule that is not being followed, appears to be more split on the subject, though a majority say they are supportive of reform. About 73% of those interviewed said they would support the same legislation that requires detailed lists of earmarks to be posted, while 16 members refused to give a yes or no answer on the subject. At least 75% said they would support legislation that enforces the taxpayer dollars to be accounted for. Only seven House members did not speak with reporters, though some received the survey questions.

“Transparency is important,” said House Majority Leader Gary Simrill, R-York, who suggested the process is already done in the open but said he would support changes.

What is a hidden earmark?

The millions lawmakers distribute each year to local projects are called “hidden” earmarks or pass-throughs. Sometimes they are also referred to as grants, though there is no open competitive process through which organizations apply for or receive the funds. And you usually can’t find them in the state budget either.

An earmark often begins with a conversation between a lawmaker, who makes the request, and a member of one of the Legislature’s powerful budget-writing panels — the Senate Finance or the House Ways and Means committees. Approved requests are bundled together and attached to various state agencies’ budgets under nondescript names like “parks revitalization” or “medical contracts.” The individual requests are not publicly debated and most lawmakers are unaware they are in the budget when voting.

Once the budget is approved, the earmarked funds are temporarily sent to various state agencies that did not request the money. Then agency staffers contact the legislative budget committees to ask whom to cut the checks to or will reach out to the lucky organization directly. On some occasions, lawmakers are given the check to deliver to the receiving groups for a photo opportunity. Earmarks are often called donations or grants during the events.

Last year alone, $44 million was quietly sent to more than 180 projects, with few describing what the money was for, how it was spent or if the program or project was successful.

“There shouldn’t be any secrets,” said Rep. Bill Taylor, R-Aiken. “Don’t hide stuff. Put it out there where everyone can see it and make it a legitimate request … If it’s worth spending the taxpayers’ money on, there ought to be transparency, we ought to be able to explain it or defend it.”

Why survey lawmakers?

The survey questions given to lawmakers were based around McClatchy’s yearlong investigation, which found numerous examples of poor record keeping from state agencies, existing laws and rules with lax enforcement or being ignored altogether and that some groups receiving funds share close ties to lawmakers making the request.

In that time, The State has exclusively reported that Sen. Darrell Jackson, D-Richland, had used the process to send more than $800,000 to a nonprofit connected to Bible Way Church where he is pastor and a board member. House Minority Leader Todd Rutherford, D-Richland, has steered $450,000 in hidden earmarks to a small Charleston-based nonprofit run by his now-mother-in-law, while Rep. Kirkman Finlay, R-Richland, sent $325,000 to a nonprofit founded by family members and run by his friend and political associate.

While lawmakers correctly contend the earmarks are legal, the secrecy behind the spending raises ethical questions. None of those funding requests were publicly debated. And no lawmakers publicly shared information about their connection to the groups prior to the budget being approved, according to the newspapers’ review.

Sometimes the name of the program is listed on documents instead of the receiving organization, making it more difficult to track the spending.

In many cases, lawmakers’ names were not listed on required forms used by agencies or House and Senate staffers to track the spending requests, as required under current rules for both chambers. And once the money is sent out, there usually is no review or oversight of projects, the news organizations’ review found.

A recent audit from the State Inspector General’s Office found that 73% of the receiving organizations over the last two budgets failed to report back how they spent that money, even though it is a legal requirement.

Agencies currently have no enforcement measures in place to hold those groups accountable and the rules and record keeping vary between agencies, though some, like the Department of Archives and History, do better than most and have logged most details before dispersing funds. Agencies like the Department of Public Safety, however, which disperses millions in “local law enforcement grants” to non-law enforcement organizations, rarely keeps tabs on who made the origins of funds and what they will go toward. Rather, the department asks for each group’s latest tax form and logs the reason for funding as “capital needs.”

Survey results show that Democrats and Republicans largely agree that taxpayers should know the name of the receiving group, how much they get, who made the request and what the funds will go toward.

“That’s pretty basic stuff,” said Rep. David Weeks, D-Sumter.

“I believe the people ought to know where the money is being spent,” said Rep. Weston Newton, R-Beaufort.

The news organizations’ poll of lawmakers didn’t ask if the earmarks should be banned from the budget entirely, or point out questionable funding requests. The practice goes back years, is deeply embedded in the General Assembly’s political culture and is, as some lawmakers point out, one of a few ways to garner support for arguably worthy projects in communities that need help.

Though some lawmakers cite existing rules in the House and Senate as their reasoning to refuse to discuss potential new legislation, a lack of accountability over the years has made tracking the origins and reasoning for funding difficult to follow, if not impossible, under its current system.

Of the 30 lawmakers who refused to answer definitively whether they would support legislative changes, most said they were too new to office to understand the process or said that they agreed in theory with the concept of transparency. Some were more skeptical that any such bill would pass, let alone work.

“If you think the rule is unenforceable, what makes you think the laws are going to be enforceable?” said Senate Minority Leader Brad Hutto, D-Orangeburg.

Reporters John Monk, David Weissman, Emily Bohatch, Christina L. Myers, Chiara Eisner and Zak Koeske contributed to this report.