Download the .pdf version.

Executive Summary

South Carolina’s General Assembly has long enjoyed a virtual monopoly of power over the state’s government and economy. The Legislature overshadows the executive branch and controls judicial branch appointments. Likewise, the Legislature directs South Carolina’s economy by means of numerous boards and regulations, as well as by distributing billions of dollars in economic incentives and tax breaks to special interests.

Appointment Power Over Hundreds of Executive and Judicial Branch Positions

1. The Legislature makes more than 420 appointments to executive branch boards and commissions—more than half as many as the governor makes.
2. The Speaker of the House and the Senate President Pro Tempore, combined, make more than 120 appointments to executive branch boards and commissions—15 percent as many as the governor himself.
3. The Legislature also exercises significant influence over the judicial branch through its exclusive control of upper-level judiciary appointments. South Carolina is the only state in the country that gives its legislature such power.

Concentrated Power in the Legislative Leadership

1. The Legislature itself is essentially run by four individuals: the Speaker of the House, the President Pro Tempore of the Senate, the Chairman of the House Ways & Means Committee, and the Chairman of the Senate Finance Committee.
2. The Speaker of the House appoints all committee members, who in turn, select the chair of each committee. This includes the chair of the House Ways & Means Committee.
3. The chair of the House Ways & Means Committee and the chair of the Senate Finance Committee exercise enormous power over state government by virtue of their positions on the Budget & Control Board (BCB).
4. Unlike the other three members of the BCB, the legislative members of the board are not elected to statewide office. In fact, the Senate Finance chair is in no way accountable to voters statewide and holds his position based solely on seniority.

Control Over the Economy, Education and Other Areas

1. The Legislature exercises tacit control over the state’s government and economy by means of 250-plus boards and commissions that regulate nearly every activity in the state. 
2. By means of such agencies as the S.C. Research Authority and the Endowed Chairs Program the legislative leadership is seeking to create a top-down, government-driven economy for South Carolina.
3. The General Assembly likewise exercises a great deal of control over K-12 school policy via the State Board of Education and over the state’s university system by means of its appointment power over higher-ed boards.
4. Finally, in the name of “job creation,” legislators have allocated more than $1.5 billion in economic incentives to favored business interests.

If one of the primary obstacles to good government in South Carolina is a state constitution that concentrates power in the Legislature, there are several statutory changes that would go a long way toward breaking the Legislature’s control over our state’s government and economy. These include: eliminating the Budget & Control Board; reforming the Senate committee selection and chairman appointment process; and increasing gubernatorial authority over executive branch boards and commissions.

Reform the South Carolina Legislature

Download the PDF.

One of the primary obstacles to good government in South Carolina is a state constitution that concentrates power in the Legislature—at the expense of both the executive and judicial branches, as well as ordinary taxpayers. This power structure goes back to colonial times and is rooted in the control exercised by large plantation owners over the state’s government and economy.[1] Today, not much has changed. The Legislature still overshadows the executive branch and controls who serves in the judicial branch. Likewise, the Legislature directs South Carolina’s economy by means of numerous boards and regulations, as well as by distributing billions of dollars in economic incentives and targeted tax wbreaks to special interests.

Legislative Control over the Executive Branch

South Carolina’s gubernatorial office has long been recognized as the weakest in the country. And although executive authority has increased somewhat over the past few decades, the Legislature is generally able to pursue its own aims, regardless of what the governor, or even the voters, of South Carolina might want. Routine encroachments of legislative power include:

• Undermining the governor’s authority to make and remove appointments—for instance, to the Ports Authority; the Aeronautics Commission; the S.C. Research Authority; and the Office of Small and Minority Business Assistance.
• Allowing local delegations consisting of as few as one legislator in each chamber to override gubernatorial vetoesof local bills.
• Using the Budget & Control Board to control state finances, as well as executive agency operations.

In particular, the Legislature exercises tacit control over the state’s government and economy by means of the 250-plus boards and commissions that regulate nearly every activity in the state. There is an Education Board, Energy Board, Medical Examiners Board, even a Board of Distribution of Dead Human Bodies and a Perpetual Care Cemetery Board.

If both the legislative and executive branches share blame for this vast proliferation of regulatory bodies, the Legislature is ultimately responsible for creating these agencies and their corresponding regulatory and licensing/fee requirements. In particular, the Legislature uses these regulatory boards to control various executive branch functions. We have already mentioned legislative attempts to manipulate appointments to the

Ports Authority, the S.C. Research Authority and other boards. Even more telling is the sheer number of appointments made by the Legislature. Based in our analysis, the Legislature makes more than 420 appointments to executive branch boards and commissions. This is compared to more than 780 by the governor..[2] In other words, the Legislature makes more than half as many appointments as does the governor

Gubernatorial vs. Legislative Appointments to Executive Branch Boards/Commissions

Properly speaking, the legislative branch is responsible for making the law while the executive branch is responsible for enforcing the law. Accordingly, the executive branch is supposed to exercise sole responsibility over routine administrative government activities. At the very least, the governor should have controlling authority over every board and commission, with the power to make a majority of appointments and to remove these appointments at will. In South Carolina, that is not the case. In fact, the Speaker of the House and Senate President Pro Tempore combined make more than 120 executive branch appointments, 15 percent as many as the governor himself.

Legislative Control over the Judicial Branch

The Legislature exercises significant control over the judicial branch through its exclusive control over upper-level judiciary appointments. In fact, South Carolina is the only state in the country that gives its legislature such power. (Virginia’s General Assembly also appoints judges, but the governor may fill unexpired terms.) In practice, this means the judiciary is subordinate to the Legislature.

Theoretically, the Judicial Merit Selection Commission provides guidance and vets potential judges, who are then elected in a joint session of the General Assembly. But the 10-member commission itself is controlled by the legislative leadership, with the Speaker of the House making five appointments, the chairman of the Senate Judiciary Committee making three appointments, and the Senate President Pro Tempore making two appointments. In addition, the Legislature exercises control over the judiciary by means of the state budget (the department’sbudget has been cutby more than $20 million since 2000).

Legislative Control over State and Local Government

The Budget & Control Board

In addition to the budget, the primary means by which the Legislature controls state government is via the Budget & Control Board (BCB). The BCB is theonly entity of its kindin the country. The board is made up of five elected officials: the governor, the treasurer, the comptroller general, the chairman of the Senate Finance Committee, and the chairman of the House Ways & Means Committee. In addition to making a wide array of state budgetary decisions, the BCB also holds power over many functions that in other states belong to a cabinet-level Department of Administration. These functions include: building and operational maintenance, administration of the State Health Plan and state employee retirement systems, procurement for all agencies, and some human resources duties. Moreover, while its own agency budget is relatively small, the BCB actually controls billions in state funding.

Research by the Policy Council has detailed some of the inefficiencies arising from the BCB’s administrative control over executive agencies.[3] The BCB also exercises significant power over state finances and, when the Legislature is out-of-session, is even empowered to make budget cuts.

The deeper problem is that the BCB undermines gubernatorial authority by delegating executive functions to five individuals, two of which are drawn from the legislative leadership. The result is a fragmentation of executive authority and a resulting loss of accountability. In practice, a coalition comprised of the chairman of the Senate Finance Committee, the chairman of the House Ways & Means Committee, and the state treasurer have consistently used their BCB voting powers to override the governor’s policies—a constitutionally questionable practice.

Education and Other Local Matters

The General Assembly has frequently passed legislation that interferes in local matters. Examples from the 2010 session include: dictating county budget priorities (cf. FY2011 budget, proviso 86.6); intervening in local school board controversies (H 4431 and H 4432); and passing constitutionally questionable laws tailored for individual counties (H 3624).

Especially as it relates to education, the General Assembly exercises a great deal of control over school policy via the State Board of Education. The Board’s 16 members are elected by their respective legislative delegations, with the governor appointing only 1 at-large member. In addition, the legislative leadership plays a significant role in administering education policy via the Education Oversight Committee. The leadership itself appoints 8 of the committee’s 18 members.

Legislative control over South Carolina’s higher educational system is even more complete. According to the Association of Governing Boards of Universities and Colleges, 71 percent of higher education board members nationwide are appointed by governors, typically with legislative confirmation of gubernatorial appointees. In South Carolina this ratio is reversed, with the Legislature appointing 78 percent of higher-ed board trustees at the state’s 10 leading public universities and colleges. As such, South Carolina is one of only three states (along with Minnesota and North Carolina) in which the majority of public higher-educational board trustees are directly appointed by the Legislature.

Legislative Control over the State’s Economy

Here it is only possible to provide a sketch of how the Legislature directs South Carolina’s economy. This control is essentially exercised in two ways:

1. By means of numerous regulatory bodies and licensing requirements
2. By using public dollars to invest in and subsidize research not supported by the free market; and to award targeted tax breaks and special incentives to private entities

We have already mentioned how the Legislature exercises control over the state’s economy by means of numerous regulatory boards. Unleashing Capitalism, an economic blueprint for restoring free-market principles to South Carolina, explains how this tangle of regulations impacts business:

Many citizens are unaware of the extent to which the federal and state government intervenes in our daily lives. Indeed, government affects almost everything we do, either directly or indirectly. Government taxes almost all monetary transactions, it licenses workers in a wide variety of industries, it regulates technical aspects of many types of consumer products. Government even controls individuals’ behavior on private property. Seldom do voters consider the aggregate monetary and non-monetary costs of government regulation.

All in all, the regulatory burden imposed by the Legislature, and accompanying boards and commissions, costs state businesses billions in lost productivity—with small businesses impacted the most.[4] This is in addition to the federal regulatory burden, w is estimated at between $1.1 trillion and $1.2 trillion nationwide.

The second way in which the Legislature controls the economy is via government driven economic development policies. More precisely, such policies entail using government power (via grants, taxes, fees, regulations, etc.) to provide or promote services that are better left to the free market. By interfering in the economy, government not only wastes tax dollars (by inefficiently allocating resources), it also picks winners and losers in the marketplace. Thus, the objections to a state-run economy are both economic and moral.

Legislative leaders make no secret of their desire to create a top-down economy in South Carolina. Unveiled as part of a “knowledge-economy jobs plan,” the legislative leadership has proposed using a pyramidof 35 state and local entities to essentially plan the state’s economy.

At the top of the pyramid is the South Carolina Research Authority (SCRA). The Authority is a nonprofit entity that manages federal research projects and collaborates with industry and universities. Thus far the Authority has developed several research parks in an attempt to imitate the success of such places as Research Triangle Park in North Carolina and Silicon Valley in California. “Think of the SCRA as the central nervous system of state government’s involvement in the economy,” writes investigative reporting Web site The Nerve. “Created in 1983 under state legislation, the Research Authority extends far-reaching tentacles throughout the business world in South Carolina.”

The Legislative leadership directly appoints two members of the SCRA’s Board. But the Board also includes five university presidents, as well as the chairman of the Commission on Higher Education. As indicated above, the Legislature appoints the majority of trustees on the state’s higher-education boards.

The Legislature also exercises influence over SCRA by means of the state budget. To begin with, the SCRA was created with a taxpayer funded grant of 1,400 undeveloped acres of land and $500,000. More recently, during the 2010 legislative session, lawmakers passed a joint resolution (S 1190) transferring 109 acres ofland to the SCRA. Originally dedicated to a failed farmer’s market project, the land is being paid for via a 2 percent tax increase on prepared food/beverages sold in Richland County. In addition, the 2010 Legislature also tried to give the SCRA the power to conduct economic development and educational improvement activities in counties along I-95, in conjunction with a proposed I-95 Corridor Authority (cf. S 1323). The endeavor failed, but may be resurrected next session.

Another agency being used by the Legislature to direct the state’s economy is the S.C. Centers of Economic Excellence (CoEE). Also known as the Endowed Chairs Program, the CoEE allows USC, Clemson and the Medical University of South Carolina to tap into more than $200 million in taxpayer funds to hire research experts with the goal of spurring economic development.

In the end, both the SCRA and the Endowed Chairs Program are trying to hit upon the “next big thing” that will bring prosperity to South Carolina. The likely result will be wasted tax dollars as state bureaucrats prop up companies the private sector is unwilling to support.

Unleashing Capitalism extensively documents the state’s attempts to pick winners and losers in the marketplace by means of targeted tax cuts and subsidies. In the name of “job creation,” legislators have allocated more than $1.5 billion in economic incentives to favored business interests. This system of patronage benefits lobbyists and lawmakers at the expense of ordinary businessmen who would be better served by broad based tax cuts and regulatory reform.

Finally, the Legislature exercises influence over numerous economic sectors and activities by means of various agencies over which it has appointment power, such as the Ports Authority Review and Oversight Commission, the Transportation Infrastructure Bank, the Public Service Commission, and the Retirement System Investment Commission.

Conclusion

It is likely that good government in South Carolina will ultimately require constitutional reform. But even as we work toward this reform, there are several statutory changes that would go a long way toward breaking the Legislature’s control over our state’s government and economy. They include:

• Eliminating the Budget & Control Board
• Limiting session length to 45 legislative days
• Requiring a recorded vote on every bill and joint resolution
• Reforming the Senate committee selection and chairman appointment process
• Reviewing all boards and commissions and increasing gubernatorial appointments to various agencies
• Reviewing and sunsetting onerous regulations and licensing requirements (such as the required 1,500 hours of training for cosmetologists)
• Abolishing theEducation Oversight Committee
• Enactingeconomic incentive transparency legislation

The consolidation of power in the legislative branch makes reforming state government more difficult in South Carolina than anywhere else. Given the impotence of the executive and judicial branches, the best chance for reform must come from within the Legislature itself. In practice, this means reform-minded legislators being held accountable by the people they represent. In other words, the best chance for reform in South Carolina lies with the people of South Carolina.

Appendix: Legislative Appointments to Select Boards and Commissions

Legislative Power in South Carolina

Nothing in the foregoing should be construed as an attempt to aid or hinder passage of any legislation.

Copyright © 2010 South Carolina Policy Council.

[1]See C. Blease Graham, “South Carolina’s Constitutions,” citing David D. Wallace, South Carolina: A Short History, p. 345.

[2]This calculation is based on analysis of appointment powers made to 165 boards and commissions, as identified in the 2010 Legislative Manual and crosschecked against state statutes. The governor’s office, however, reports that there are more than 250 statewide boards and commissions. We have excluded agencies and departments from our count—such as the Department of Insurance and the S.C. Law Enforcement Division. We have also excluded Budget & Control Board divisions, such as Office of Human Resources and Information Technology; although the BCB itself is included in the final count.

[3]Cf. “Budget & Control Board Billing Should Be Transparent, Competitive” (June 2009).

[4]The fines/fees, or Other Funds, portion of the budget alone runs about $7 billion each year. These fines/fees do not directly correlate with the cost of the state’s regulatory burden, but give a sense of the fiscal impact of such regulations. At the federal level, the regulatory burden is estimated at 40 percent to 50 percent of total government spending (see “Ten Thousand Commandments: 2009,” Competitive Enterprise Institute). A 2005 study by the Small Business Administration found that the cost of federal regulatory burdens are much higher for small businesses: $7,647 per employee, compared to $5,282 per employee for firms with 500 employees or more.