Their pet projects get your tax dollars. Should SC lawmakers have to tell you about them?

Do South Carolina lawmakers want to prevent taxpayers from knowing more about the murky process they use to send millions of public dollars each year to the pet projects of their choice?

To answer that question, reporters from The State, The Island Packet and The Sun News are contacting the 170 members of the S.C. General Assembly to see who wants to keep that spending in the shadows — and who favors more openness.

Those questions are being to put lawmakers after more than a year of investigation and analysis by reporters found that tens of millions of taxpayer dollars regularly flow to lawmakers’ pet projects with little or no transparency, oversight or public discussion. Last year alone $43 million quietly went to more than 180 projects.

Specifically, reporters are asking lawmakers if they would support a law that would require the public disclosure of the name of the lawmakers who requested the earmarked money, the name of who gets the money and how the recipient promises to use the money. So far, 103 lawmakers have responded to our survey. The news organizations will continue to reach out to the remaining ones.

Early responses indicate support for change.

“If you are going to ask taxpayers who work to earn money to pay taxes, lawmakers have to guarantee that money is being spent wisely,” said Sen. Wes Climer, R-York, who favors more openness in the process.

“Transparency and accountability are essential to that guarantee. The way we give out this money now is a terrible process, and we know how to fix it — shine a bright light on the process to at last have an honest conversation about the money.”

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.

Whatever they’re called, you usually can’t find them in the state budget.

An earmark often begins with an informal chat 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 in packages and attached to various state agencies’ budgets under nondescript names.

Once the earmark money is at the agency, agency staffers contact the Legislative budget committees to ask whom to cut the checks to and for how much.

That’s how Sen. Dick Harpootlian, D-Richland, said the process worked for him in his first year in the Senate: When Sen. Hugh Leatherman, R-Florence, one of General Assembly’s most influential members, agreed to put $400,000 toward a railroad project in Harpootlian’s district in exchange for his support on a bill.

Several months later, Harpootlian got a call from the S.C Department of Public Safety and was asked where should a $400,000 check be sent.

Since Harpootlian shared his experience, The State Media Co. and its sister news organizations have investigated the secret world of hidden earmarks, revealing that powerful lawmakers have used their positions to steer tens of millions of dollars to pet projects in their districts and to organizations they share close ties with.

Following the money

In an investigation ongoing since 2019, the news organizations have found that at least $104 million in public money has been quietly distributed since 2015 around the state to lawmakers’ chosen private and public projects. The process is hidden from public view: earmarks are rarely debated or on committee agendas for discussions.

Taxpayer money has gone to a county country club, churches, nonprofits with vague mission statements and private companies with few publicly available records.

Some recipients have close ties with lawmakers, the investigation found. Examples include the House Minority Leader sending $450,000 to his now-mother-in-law’s nonprofit organization and a Republican representative steering $325,000 to a group run by his close friend and political ally. Other examples include a Richland County senator steering nearly $1 million in pass-throughs to his church’s nonprofit while serving as a board member for both, and a former Lancaster senator helping send $1 million to a nonprofit run by his wife.

While lawmakers 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.

In many cases, lawmakers’ names were not listed on 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 majority of the receiving organizations rarely submitted required reports, showing how the money was spent, according to a recent audit from the S.C. Inspector General’s Office.

The term “hidden earmarks” doesn’t always sit well with lawmakers who claim the process is already done in the open and transparent.

But it is not open. Nor is it transparent, the newspapers’ review found.

Some of those interviewed by the newspapers don’t seem to fully understand what the term “hidden earmark” means or how an earmark gets added into budgets — even though lawmakers, year after year, approve state budgets with the out-of-sight bundled earmark money.

The informal system creates clear winners and losers and often depends on political influence, critics say. And some counties benefit handsomely while others are left out entirely.

For example, Sumter and Florence counties ranked first and fourth for those receiving the most pass throughs during the 2020 budget. The counties are home to the chairmen of the Legislature’s powerful budget-writing committees — House Ways and Means chairman Rep. Murrell Smith, R-Sumter, and Senate Finance chairman Hugh Leatherman, R-Florence.

Meanwhile, some of the state’s poorest counties — Allendale, Lee and others — didn’t receive a penny in hidden earmarks, according to the newspapers’ review.

Critics call for transparency

Good government advocates say change is needed to ensure equity and transparency.

Lynn Teague, vice president of the League of Women Voters of South Carolina, said the organization would back legislation to change the current practice, noting that the group’s fundamental guidelines are based on accountability and transparency. Requiring further disclosures is the least the state could do, considering the tens of millions being doled out by agencies, she said.

“We do believe earmarks can be a good thing,” she said. “But being accountable, transparent and having ground rules ensures the public gets something meaningful for their money.”

The news organizations’ poll of lawmakers doesn’t ask if the earmarks should be banned from the budget entirely. 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. Rather, the questions revolve around whether taxpayers should know where money is going, how it is spent and who requested it.

No uniform process in the House or Senate now calls for that level of transparency, despite claims made by some lawmakers and House and Senate staffers. And current rules and laws in place — which some often cite as a reason for not needing change — aren’t being followed or enforced.

For example, House rules say project requests are supposed to be made in writing by lawmakers and later posted online. But that doesn’t always happen.

In fact, after The State filed more than 60 public records requests under the state’s Freedom of Information Act, the origins of nearly half the hidden earmarks over the past five years still remain a mystery. And each agency has its own set of procedures and requirements before sending out money, making the paper trail of pass-through funding sparse and often impossible to follow.

At times, House and Senate staffers have been unable or unwilling to answer questions about who made specific requests and why. Some lawmakers also told the newspapers they had made verbal requests and provided no documentation. And many approvals are missing from the General Assembly’s website.

Even a recent rule change from Senate Majority Leader Shane Massey, R-Edgefield — which followed The State’s initial reporting — fails to require the name of organizations receiving a hidden earmark. Omission of recipeints often occurs when agencies disperse money, making tracing the funds more difficult and making it impossible for a member of the public to know exactly who is receiving tax dollars at the direction of any specific lawmaker, the investigation found.

Sen. Harpootlian, a former prosecutor and a vocal critic of the current earmark system, said he, too, would support legislation that enforces existing rules. Criminal sanctions should be handed down for those who don’t comply, he added, while calling both parties abusers of the system.

“A system that secretly appropriates and secretly spends tens of millions of taxpayer dollars each year is corrupt by its very nature,” he said.

Reporters Emily Bohatch, Joe Bustos, Chiara Eisner, Zak Koeske, Christina L. Myers, Lucas Smolcic Larson and David Weissman contributed.