Ending Legal Corruption – A Progress Report

WHERE DO WE STAND ON ETHICS REFORM?

Since the Policy Council released its eight-point reform agenda in 2013, several lawmakers have been indicted and the General Assembly has passed a number of incremental reforms.

Corruption flourishes in the combination of concentrated power and secrecy. In South Carolina, the bulk of state power is firmly in the hands of a few legislative leaders who are effectively accountable to no one for the exercise of that power, and who routinely make decisions in the absence of public oversight: these officials have concentrated power and can use it, for the most part, secretly. South Carolina’s governmental problems are therefore structural, not political – they are the result of the constitutional arrangement of power than in the character or behavior of any one politician.

That’s why SCPC published its eight-point agenda four years ago. Where are we now?

(1) Restoring judicial independence

Why do we need this reform? Judges are either suspected of, or are in fact, beholden to state lawmakers. South Carolina is the only state in the nation in which lawmakers have unqualified power to unilaterally appoint state judges.  Legislative leaders and their appointees screen judicial candidates, and the House and Senate members elect them.

Consider, for instance, the case of the former House Speaker, in which a circuit court judge derailed a grand jury investigation into his conduct for the slimmest of reasons. Or take the Supreme Court’s decision to toss a slew of State House challengers from their ballots on pedantically technical grounds. Or the Supreme Court’s notorious reluctance to challenge the constitutionality of laws passed by the legislature.

Where does it stand now? A joint resolution filed in the Senate would amend the constitution to eliminate the Judicial Merit Selection Commission (or JMSC), the legislative body charged with screening and nominating judges, and give the governor the power to appoint judges with a Senate confirmation – the arrangement envisioned by the American founders. A similar joint resolution would allow the governor to appoint judges, but would simply revise the JMSC’s membership rather than eliminating it. Like other supposed “reforms” that have passed in the last few years, this would appear to transfer power to the governor but would actually leave the legislature fully in control of judicial elections.  A number of other bills would merely rearrange the existing system, but the only bill that moved during the 2017 session was H.3204, which would require the JMSC to release the full slate of qualified candidates rather than nominate its top three picks – a minor step in the right direction but one which still leaves the legislature firmly in control of the judicial branch. This bill passed out of committee but was quickly recommitted. None of the other bills made it out of committee, although lawmakers could return to them next year.

(2) Shortening the legislative session

Why do we need this reform? Nationwide, longer legislative sessions tend to produce higher levels of spending and encourage collusion between lobbyists and lawmakers. South Carolina has one of the longest sessions in the nation, with predictable results.

Where does it stand now? Last year lawmakers passed a bill to shorten session by three weeks, but the bill explicitly allows committee meetings and other legislative work outside the session and allows plenty of loopholes to lengthen session. Even this modest reform is drawing fire from lawmakers this year in the form of complaints that they now don’t have enough time to pass the budget (which is currently still in conference committee). No legislation was filed this year to shorten session further, although several bills to move the state to a biennial budget (a positive reform that would have much the same effect as shortening session) sat in committee as session ended.

(3) Making incentives transparent

Why do we need this reform? Lawmakers and other state and local officials routinely dole out tax breaks, regulatory favors, and outright public money to companies they happen to like – which usually happen to be the companies with the best lobbyists. Even though the state’s use of incentives has grown exponentially over the last 30 years, there is no empirical evidence that this practice has resulted in overall economic improvement.

In any case, however, there is no way to verify the overall benefits of incentives in South Carolina, since the whole incentives process is shrouded in secrecy. Public officials are permitted to strike deals with companies in secret, hand over public money and resources in secret, and the results of these “investments” – especially if the results aren’t good – remain confidential in perpetuity.

Where does it stand now? The last proposed reform was a bill filed two years ago – legislation based on the Policy Council’s research originally published in 2011 – which would have gone a long way toward ending the secrecy surrounding the state’s incentives process. Among the numerous provisions in that bill were requirements that all taxpayer-backed incentive agreements be considered as standalone legislation (no more last-minute goodies crammed into unrelated bills), the agreements be subject to public input during a mandatory waiting period and an independent analysis, etc. The bill would also have implemented a five-year sunset provision on all targeted incentives unless specifically renewed by the General Assembly in a public process along with reporting and accountability mechanisms. Unfortunately, that bill did not pass and no incentive reform legislation has been filed since.

(4) Complying with the budget law

Why do we need this reform? State law requires the House and Senate appropriations committees to meet in “joint open meetings” at the beginning of each legislative session to debate the governor’s executive budget. Lawmakers ignore this law, and ignore the governor’s budget, too. The law also requires the governor to produce a full spending plan, but that practice wasn’t complied with until Gov. Sanford began producing executive budgets in the early 2000s.

The purpose and benefit of the law is to give the public some idea of what government services their elected officials consider priorities . By ignoring the law, lawmakers are able to enmesh the entire budget process in a dizzying array of committees and subcommittees, with the result that not even experienced journalists tasked with following the budget have any firm idea of what’s in it until the whole process has nearly run its course. That budgetary secrecy allows lawmakers to slip in highly questionable provisions – legislative slush fund committees, a grants to to favored nonprofits, and even de facto Medicaid expansion.

Following the law would enable citizens to see what the governor thinks the state should prioritize, and how the legislature thinks those priorities should be changed. In effect, we’d be able to follow the budget as a single, coherent spending plan.

Where does it stand now? Four years ago, the Deputy Speaker of the House, Jay Lucas – now the Speaker – called on House Ways and Means chairman Brian White to begin following the budget law. Days later, Rep. Mike Pitts called the law “antiquated” and introduced a bill to strike it from the code – thus conceding, implicitly, that it is, in fact, state law. The Restructuring Act of 2013 included a provision to strike the budget law, but then that provision was itself deleted. Late in 2014, Rep. Jonathon Hill called on members of his delegation to begin following the law, but since then there has been no effort to do so.

(5) Making the governor accountable for the executive branch

Why do we need this reform? Many agencies that perform executive functions aren’t actually accountable to the state’s chief executive. They’re accountable to one board or another, and those boards are partially or wholly controlled by legislative leaders – controlled by people, in other words, who aren’t elected statewide, who can’t be held accountable by voters who live outside their small districts, and whose names most South Carolinians have never even heard of. The result: gross inefficiency, political favoritism, and outright corruption.

Consider the debate over road maintenance. Many legislators and interest groups pushed successfully for a tax increase to fund roads,  ignoring the fact that our transportation authorities waste much of the resources they currently receive – waste enabled and encouraged by an unaccountable governance structure. The Department of Transportation (DOT) is technically an executive agency, but it’s governed by a commission largely controlled by the legislature. The inability of citizens to take complaints about road funding decisions to one accountable individual (the executive) has enabled DOT and other transportation authorities to prioritize needless expansions over maintenance, and to favor politically influential counties.

The roads bill passed by the General Assembly and signed by the governor this year increased fuel and other related transportation taxes and fees, but it’s worded so that most of the new revenue could be diverted to the State Transportation Infrastructure Bank, or STIB. The bill did eliminate the Joint Transportation Review Committee (JTRC), a ten-member board composed entirely of legislators and legislative appointees and was tasked with screening and approving DOT commission candidates before they could be officially appointed by the legislative congressional districts. This was one of the key sources of the legislative stranglehold on the transportation system. In addition to eliminating the JTRC, the bill gave the governor the power to appoint commissioners and to fire them at will. These changes offer modest improvements to a still very much backward and unaccountable system. The logic behind the changes – that the system should be accountable to the governor – should have led lawmakers to place the commission entirely under the governor and eliminate the commission altogether. Even under this year’s bill, the governor’s appointees must still be confirmed by the legislative congressional districts, making it difficult for the governor to exercise true accountability.

Over the past few years, citizens have voted for the governor to appoint the adjutant general and the lieutenant governor. There is still a raft of constitutional officers (officials elected by the entire state) who should be appointed rather than elected, including the superintendent of education. Making the superintendent appointed by the governor takes both a constitutional amendment and a bill changing the state code. Both these bills were filed and passed their respective chambers this year, and will no doubt be taken up next year.

(6) Ending lawmakers’ power to police themselves

Why do we need this reform? In South Carolina, state lawmakers adjudicate each other’s ethics violations. Obvious ethics and even criminal violations are overlooked and lawmakers generally go unpunished except in the most egregious cases of misconduct. In general, elected officials shouldn’t have a special set of laws and be answerable to their own tribunals . The legislative ethics committees should be abolished, and legislators accused of ethics violations should have to answer to a fully independent authority.

The House Ethics Committee did eventually get tough on the former House Speaker (emphasis on the word “eventually”), but the committee did nothing when he was still in charge. Indeed, the legislature’s ethics committees are prone to crack down on either (a) lawmakers who have little power within the legislative system, or (b) public officials or candidates who aren’t lawmakers.

Where does it stand now? Last year the General Assembly passed legislation purporting to address this problem by allowing the State Ethics Commission – which oversees all public officials other than lawmakers – to investigate complaints against lawmakers. It allows the Commission to investigate complaints, that is, but would leave the power to punish members with lawmakers. The legislation also changed the makeup of the Commission, moreover, to make half its members appointed by the legislature – thus defeating the whole point of putting an outside authority in charge of lawmakers’ ethics violations. Even as miniscule as last year’s “reforms” are, lawmakers are dragging their feet about enacting them. The law took effect April 1 of this year, but the legislative session ended before the Senate approved the new commissioners. In effect, South Carolina is currently without an Ethics Commission at the same time the law giving the Commission – for the first time ever – jurisdiction to investigate lawmakers went into effect.

(7) Requiring elected officials to disclose all sources of income

Why do we need this reform? South Carolina’s disclosure laws are extremely lax – in fact, until last year South Carolina was the only state in the nation where elected officials were not required to disclose anything about how they earn income. While elected officials now have to disclose their personal income, most of the loopholes allowing for undisclosed conflicts of interest remain, and South Carolina lawmakers have taken full advantage of them for decades. (Consider the case, for example, of Sen. Hugh Leatherman.)

Where does it stand now? While a bill passed last year that requires the disclosure of private sources of income (with some exceptions), it did not mandate the disclosure of all potential conflicts of interest – a key difference. Under current law, any income that an elected official would report on an IRS tax form must be disclosed, but the IRS is interested in whether you pay your taxes to the federal government, not on whether you’re violating state ethics laws. So the law can be easily skirted by simply running all questionable income sources through an LLC and reporting the LLC as the payment source.

While lawmakers do have to report direct government income sources, they do not have to report indirect government income or economic benefit, leaving a large classification of potential conflicts of interest completely undisclosed. These loopholes could be easily closed by simply mandating the disclosure of all direct and indirect government and lobbyist principal income, and anything short of that cannot be considered true reform or true transparency.

(8) Strengthening the state’s Freedom of Information law

Why do we need this reform? Lawmakers are functionally exempt from the state’s open records requirements, meaning they can keep secret all their dealings with lobbyists and special interests. Moreover, state agencies can charge citizens for fulfilling FOIA requests, which can discourage them from seeking information.

Where does it stand now? A modest reform to the state’s FOIA law passed this year tightening the time period during which agencies must respond, and forbidding agencies from charging exorbitant rates for fulfilling requests.

The bill’s original language would have created an “Office of FOIA review.” Ostensibly this would allow citizens to ask the state to force agencies to comply with the FOIA law, but it would also allow agencies to take citizens to court for filing “frivolous” requests. That provision was struck, but the legislation still allows public bodies to seek relief from “unduly burdensome, overly broad, vague, repetitive, or otherwise improper requests.” That term “improper’ is itself overly broad, seeming as it does to allow agencies to take recourse against citizens for ill-defined reasons.

Further, the law did nothing to eliminate the current exemption for legislators’ “working papers” from FOIA requests. A bill pre-filed for the 2015-2016 session would not only have failed to remove this exemption, but actually extended it to all elected or appointed officials and their staff. An identical bill in the House this year did not leave committee, but could pass next year.

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