By RICK BRUNDRETT The $1 billion subsidy to Scout Motors is about $300 million to $500 million more than what states normally would have to offer in grants for comparable projects, The Nerve found in a review of a newly released State Ethics Commission order. After learning in late January 2023 that the Scout electric-vehicle assembly plant now under construction near Columbia was one of four finalists for the project, S.C. Department of Commerce Secretary Harry Lightsey informed Gov. Henry McMaster and state House Speaker Murrell Smith that “similar projects typically required a commitment of between $600-$800 million in grant funding,” according to the commission’s Sept. 8 written order. Lightsey’s notification came less than two months before the Legislature passed and McMaster signed into law a $1.29 billion state appropriation for the Scout project – including $1.09 billion in state surplus funds transferred to Commerce for, among other things, land acquisition, infrastructure improvements, a rail spur bridge and a training center.The nearly $1.1 billion in surplus funds is approximately $300 million to $500 million more than what Lightsey, according to the commission’s order, told McMaster and Smith usually is required in grant commitments for similar projects, The Nerve’s review found. And it’s seven times more than the $150 million that the state of Mississippi, which lost out to South Carolina, offered in late 2022 to Scout in grant funding through special legislation, as The Nerve revealed in February this year. As The Nerve has pointed out, the $1.29 billion appropriation, which included a $200 million loan offer to Scout, works to be about $240 for every man, woman and child in South Carolina. The Ethics Commission’s order was issued in response to a joint ethics complaint filed in April this year against Scout by the South Carolina Policy Council – the parent organization of The Nerve – and the South Carolina Public Interest Foundation. But in its order, the eight-member commission – four of whose members are appointed by the governor, with the House and Senate each having two appointments – dismissed the complaint, ruling there was “no evidence” of ethics law violations by Scout in connection with the $1.29 billion appropriation. The Policy Council received the order in the mail last week. The ethics complaint, filed on April 25 this year, asked the commission to investigate whether Virginia-based Scout Motors Inc., a company created in 2022 by German-based Volkswagen, violated state ethics law by failing to register as a lobbyist principal before the Legislature and McMaster approved the state appropriation, known as Act 3 of 2023. Scout Motors first registered as a lobbyist principal on April 20, 2023 – a month after the appropriation became effective. Under state law, a lobbyist principal is defined in part as someone who “directly employs, appoints, or retains” a lobbyist to “influence by direct communication,” among other things, the “action or vote” of the governor or lawmakers “concerning any legislation.” The law requires that lobbyist principals register with the Ethics Commission within 15 days of “employing, appointing, or retaining a lobbyist.” The ethics complaint against Scout contended that a main purpose of the state ethics law in question (Section 2-17-25(A) of the S.C. Code of Laws) is to “provide the public with advance notice of the identities of companies or organizations that plan to persuade state lawmakers and/or the governor to adopt their legislative agendas.” In an April 26 letter this year to the Policy Council and Public Interest Foundation, Meghan Walker Dayson, the commission’s executive director and an attorney, said the complaint “contained facts sufficient to warrant an investigation.” The complaint cited findings in Nerve stories last year and this year about private meetings or events involving Scout Motors officials or their representatives and McMaster, his staff or lawmakers before the appropriation was approved; and the earlier incentives proposal by the state of Mississippi. The findings “raise legitimate questions about whether Scout Motors or its representatives engaged in direct communication with lawmakers and/or the governor regarding Act 3 of 2023 before the law was passed,” according to the complaint. The South Carolina Policy Council, an independent, nonpartisan research organization based in Columbia, was founded in 1986 and is “dedicated to promoting and protecting the principles of limited government and individual liberties, free markets, and traditional South Carolina values,” according to its website. The South Carolina Public Interest Foundation, based in Simpsonville and founded in 2005, is an “independent, nonpartisan private operating foundation dedicated to ensuring that South Carolina governments, agencies and officials act in strict compliance with the state Constitution and statutes,” according to its website. ‘No evidence’ The Ethics Commission, however, ultimately decided to dismiss the complaint – though a vote breakdown wasn’t provided in its Sept. 8 written order – noting that its investigation “revealed no evidence to suggest Scout ever promoted or opposed through direct communication” the “introduction or enactment of legislation” or “any covered gubernatorial action” before the company registered as a lobbyist principal in April 2023. “To the contrary, all the evidence suggests the State’s public officials and public employees were engaged in an aggressive campaign to entice Scout to set up shop in South Carolina,” the order said. The commission dismissed the complaint at its July 18 meeting – less than three months after the complaint was filed – Courtney Laster, the commission’s general counsel, said in a Sept. 19 cover letter with the order. No explanation was given in the letter why it took the commission two months to notify the Policy Council and Public Interest Foundation of its decision. Asked about the status of the commission’s investigation, Dayson, the commission’s executive director, in a written reply to The Nerve on Aug. 26 – just over a month after the commission had already decided to dismiss the complaint – said only, “The Commission has no comment at this time.” The six-page order provided no details about how many witnesses were interviewed or the identities of those questioned by commission investigators, and gave few specifics about written communications between Scout and state officials. As for three private meetings or events cited in the complaint – including a swank dinner at the Williams-Brice football stadium in Columbia in February 2023 – involving Scout or Volkswagen officials or their representatives, Commerce officials, McMaster or members of his staff, or state lawmakers, the order repeated several times without giving specifics that according to “attendees interviewed by the Commission during its investigation, Scout did not lobby” during the meeting or event in question. The order also didn’t address whether an incentives wish list, known as a “request for proposal” (RFP), submitted by Scout for the South Carolina project and which, among other things, sought a cash grant, constituted “direct communication” under state lobbying laws. The Nerve last October revealed that Scout’s RFP was submitted through a global real-estate services firm to town of Blythewood and Richland County officials in December 2022. In its February story this year, The Nerve revealed that the state of Mississippi had offered a $150 million state grant through special legislation to Scout, which had sought a cash grant for an electric-vehicle assembly plant and a battery facility as part of its RFP to that state, and set an Oct. 1, 2022, deadline to receive a response to its 53-page incentives wish list. As with the private meetings or events with S.C. officials, the RFP issue was cited in the ethics complaint. When an investigation is conducted into an ethics complaint, Ethics Commission staff can interview witnesses, subpoena evidence and take depositions to determine the facts of the alleged violation, according to the agency’s website. But under state law, records obtained by commission staff in its investigation can’t be publicly released by the commission when a complaint is dismissed unless the respondent – in this case, Scout Motors – agreed in writing to waive confidentiality and authorize the release of records. “The matter shall now be stricken from public record … unless the respondent waives the confidentiality of the existence of the complaint in writing to the Commission and authorizes the release of information about its disposition, ” Laster said in her cover letter with the dismissal order. Quick deal, big taxpayer tab As The Nerve previously reported and as was cited in the ethics complaint, the Legislature on March 15, 2023, gave final approval – just one week after it was passed by the Senate Finance Committee – to an amended joint resolution appropriating the $1.29 billion to Commerce for “Project Connect,” the code name for the planned Scout Motors assembly plant on an approximately 1,600-acre site at the town of Blythewood in Richland County. To put the $1.29 billion into context, the amount is easily larger than the entire current budgets of most state agencies. On March 20, 2023, McMaster signed the appropriation into law, effective that day. The law directed the state treasurer to transfer $1.2 billion to Commerce within five days of the law’s effective date, with the remainder of the appropriation to be dispersed within five days of the close of the state books or by Nov. 1, 2023, which ever occurred first. The Nerve in June 2023 revealed details of the 192-page state incentives agreement with Scout, which announced on March 3, 2023, plans to create a minimum of 4,000 jobs and invest a minimum of $2 billion. Records show the deal would allow the company itself to create at least 400 jobs and invest at least $400 million over an eight-year period, allowing the differences to be made up by company “affiliates” and “counted suppliers.” Up to 400 jobs could be “badge” workers, defined in the agreement as “cafeteria, security, and janitorial maintenance personnel,” according to records. In January this year, The Nerve sent written questions to Scout Motors president and CEO Scott Keogh asking, among other things, whether Scout officials or other company representatives discussed the state appropriation with McMaster or his staff or lawmakers or their staffs before the legislation was passed. No response was given. McMaster, a Republican; House Speaker Smith, R-Sumter; and Senate Finance Committee Chairman Harvey Peeler, R-Cherokee, all of whom, according to records, were listed as attendees or guests at one or more private meetings or events with Scout officials or representatives, also didn’t respond at the time to written questions sent directly to them by The Nerve. McMaster spokesman Brandon Charochak in a January email response to The Nerve said that “state officials discussed and negotiated an incentive package with Scout officials before the legislation was introduced and prior to Scout deciding on South Carolina in March 2023,” adding, “It would have been impossible or unnecessary to draft a bill otherwise.” The Ethics Commission in its Sept. 8 written order, which was signed by commission chairman Scott Frick, who is an attorney, stated in the last paragraph that the Policy Council and Public Interest Foundation “alleged that Scout likely engaged in lobbying in the days and months leading up to the passage” of the $1.29 billion appropriation. But the written complaint didn’t specifically make that allegation. Instead, the organizations jointly requested that the commission investigate whether Scout violated state ethics law in connection with the appropriation. Brundrett is the news editor of The Nerve (www.thenerve.org). Contact him at 803-394-8273 or [email protected]. Follow The Nerve on Facebook, Instagram and X (formerlyTwitter) @thenervesc. Nerve stories are free to reprint and repost with permission by and credit to The Nerve.

By RICK BRUNDRETT A global consulting firm hired by the state to investigate the mystery $1.8 billion and related financial questions was not the low bidder for the “potential” $3 million contract, records obtained by The Nerve show. But under state law, procurement officials don’t have to accept the lowest bid but instead can use other purchasing procedures depending on the situation, including issuing a “request for proposals,” which was done by the S.C. Department of Administration in awarding a contract in July to New York-based AlixPartners in connection with the investigation of the $1.8 billion. On top of that, lawmakers included a special provision in this fiscal year’s state budget which, among things, exempted the department, in awarding the contract, from using purchasing procedures under the law.In June, the department on its website called for proposals for “an independent forensic accounting firm” to “conduct a forensic accounting review of all cash and investments held in the State Treasury.” Forensic accountants can work in criminal or civil investigations, using “accounting, auditing and investigative skills when conducting an investigation,” according to the Institute of Certified Forensic Accountants. “The State does not have an understanding at this time that any criminal and/or unauthorized activity occurred,” the Department of Administration said in its  call for proposals, though adding, “It is possible that the forensic services performed by the firm could identify information suggesting conclusions contrary to the current understanding.” As The Nerve previously revealed, the S.C. Attorney General’s Office in January hired an international law firm – at a taxpayer cost that could run at least $1.8 million – to defend the state in a federal Securities and Exchange Commission (SEC) investigation in connection with the disputed $1.8 billion. The Nerve’s latest review of records provided by the Department of Administration under the S.C. Freedom of Information Act found that 10 accounting or consulting firms, including at least three with South Carolina offices, submitted proposals for the contract that ultimately was awarded to AlixPartners, which, according to its website, has 25 offices worldwide. S.C. lawmakers appropriated $3 million to the department for this fiscal year, which started July 1, for the forensic auditing contract. In its submitted request for proposal (RFP), AlixPartners listed a $2.6 million “low range” to a $2.8 million “high range” in fees for an eight-person team assigned to the project, including two firm partners. Under the July 17 award with the firm’s Washington, D.C., office, the state agreed to an amended total estimated fee of $2,796,444. Four members of the AlixPartners team, including primary contact Susan Markel, a listed partner and managing director who was the chief accountant in the SEC’s Division of Enforcement from 2003-2009, remotely attended a meeting last month of a special task force created by Gov. Henry McMaster to investigate the $1.8 billion, records show. The lowest-listed total bid in records provided to The Nerve was a $2.3 million estimate from an Ohio-based accounting firm – nearly $500,000 lower than the amended estimate in the contract with AlixPartners. An Alabama-based firm with a South Carolina office submitted a nearly $2.5 million proposal, while a London-headquartered firm through its Washington, D.C. office listed an estimate ranging from $2.44 million to $2.88 million. No total bids were listed in the other six submitted proposals, including at least two with South Carolina offices, though as with the other four RFPs provided to The Nerve, pages typically were partly or fully redacted. For example, eight pages of AlixPartners’ 20-page RFP were completely blacked out, with the remainder partly redacted. And two of the four pages of the “Record of Negotiations and Award” for the contract were partially redacted. As The Nerve previously has pointed out, the $1.8 billion equates to more than $300 for every man, woman and child in South Carolina; or, according to the South Carolina Policy Council – The Nerve’s parent organization – up to $1,440 per taxpayer, based on a formula similar to the one used for state taxpayer rebates in 2022. The  Policy Council in April recommended rebating the full amount to taxpayers if no state agencies claimed the money by June 30 of this year or if agencies couldn’t provide evidence by then of their share of the funds. No state agency has claimed its share of the $1.8 billion, a Department of Administration spokeswoman repeatedly has told The Nerve in written responses. ‘Best option’ Under state law, all state contracts must be awarded by "competitive sealed bidding,” though there are 15 specific exceptions, including a section dealing with requests for proposals. By law, a request for proposal is a “written or published solicitation issued by an authorized procurement officer for proposals to provide supplies, services, information technology, or construction,” which results in a contract “determined to be most advantageous to the State.” In contrast, an “invitation for bids” contains similar language as the RFP definition, except that a contract is awarded to the “responsible bidder making the lowest responsive bid.”  With regard to the contract awarded to AlixPartners, Department of Administration spokeswoman Brooke Bailey in a written response to The Nerve said instead of using the lowest-bidder process, a panel made up of representatives from the department, S.C. Attorney General’s Office and state Auditor’s Office collectively decided on a “solicitation for proposals” that incorporated “multiple factors with price/cost relative to qualifications and ability to perform being only one of the factors.” “AlixPartners was determined by the panel to be the best option taking all of the factors into consideration,” Bailey said, adding that the firm agreed to “cap total fees” at $3 million and to “endeavor to complete the work required at the lowest possible fee.” Asked why it was necessary to bypass the lowest-bidder process, Bailey said a state budget proviso for this fiscal year “called for an open-ended scope of review,” and that “according to the proviso, some of the components of the review could not be set unless and until the engaged accounting firm determined that such was possible.” “This type of engagement is not conducive to soliciting a fixed price bid since the level of services could not be fixed at the outset,” she said. The last line of the related budget proviso says that Department of Administration procurements related to the contract are “exempt from the purchasing procedures” under the state procurement code. The following three weighted categories, with the maximum possible score in parentheses, were used to evaluate the proposals, according to Bailey: Qualifications and experience (40) Ability to accomplish scope of work (40) Fee structure (20). As to why no total bids were listed in redacted records provided to The Nerve for six of the 10 submitted proposals, Bailey said each firm agreed to be paid “on an hourly basis for as many hours as it would take to perform the scope of work,” and that “some of the firms did not include an estimated total as part of their proposal.” “None of the initial offers that included an estimate, however, contemplated being contractually bound by their estimates to complete the entire scope of work,” she added. Hourly fees were redacted in several proposals provided to The Nerve. Bailey said state law allows vendors to exempt “what they consider privileged and confidential information.” As part of its contract, AlixPartners was required to provide the Department of Administration with an interim report by Monday of this week, with a final report due by Dec. 16. In its submitted RFP, AlixPartners said it understood the “urgency of this matter for the State of Carolina,” though the rest of the paragraph was blacked out in the document provided by the department to The Nerve. Asked for specifics about the “urgency,” Bailey cited the “importance of the engagement as well as the deadline for completing the engagement,” based on the state budget proviso and RFP, though she provided no further details. The Nerve sought comment from the other nine firms that submitted proposals but received no written responses. Secret meetings, no public answers It’s unclear whether the $1.8 billion actually exists, though S.C. Treasurer Curtis Loftis on the agency’s website says the money is “not missing or recently discovered,” and that his office has been “fully transparent about the matter.” His office, however, declined The Nerve’s Freedom of Information Act request for related bank records, noting in a July written response that the records, “to the extent they exist,” related to the $1.8 billion are exempt under the open-records law as an “attorney work product of the Governor’s Working Group.” McMaster on April 11 created a task force made up of representatives from six state agencies, including the Governor’s Office and Treasurer’s Office, to investigate the $1.8 billion and gave the panel a July 1 deadline  - which has long since passed –  to find answers. The “working group” typically had been meeting weekly since April, though their meetings were held in secret, and meeting notes released by the Department of Administration to The Nerve gave no specifics of what was discussed. The most recently released notes were from the Aug. 6 meeting, which Bailey said was the last time the group met. She didn’t respond to a follow-up question about whether the panel planned any future meetings. The $1.8 billion was the subject of a critical 116-page interim report released in April following an investigation by a Senate Finance subcommittee chaired by Sen. Larry Grooms, R-Berkeley. The report accused Loftis of failing to disclose the funds for seven years “despite his explicit statutory duty to do so.” After S.C. Comptroller General Brian Gaines in an October 2023 letter asked Loftis to investigate a related cash balance, the Senate Finance Committee researched the matter and determined the fund had a balance of about $1.8 billion, according to the subcommittee's report. That discovery followed a separate subcommittee investigation in 2022 into a $3.5 billion accounting error, which, according to the report, stemmed from an earlier conversion to a different state accounting system and occurred during the tenure of ex-Comptroller General Richard Eckstrom, a Republican who resigned in April 2023 after 20 years in office. In seeking written proposals this year for forensic accounting services, the Department of Administration in its June online post said the $1.8 billion “issue” was identified as “part of the $3.5B restatement.” According to the Senate Finance subcommittee's report, Loftis claimed during sworn testimony in April that the $1.8 billion fund earned $225 million in interest that was spent by the General Assembly. When The Nerve recently asked his agency for details about investment income from the $1.8 billion, the office in a written response said it couldn't provide that information, noting it invests in “pooled investment portfolios.” Grooms has said publicly that Loftis, a Republican who was first elected in 2010, should resign. Loftis has denied all allegations, publishing a lengthy defense on his agency’s website. Meanwhile, as The Nerve revealed in July, the Comptroller General’s Office hired two law firms to represent the agency in the related U.S. Securities and Exchange Commission investigation, which, according to records obtained from the office under the Freedom of Information Act, has been ongoing since at least last summer. A “current” maximum total of $330,000 is designated for the two firms, according to an agency spokeswoman. The SEC in a written response to The Nerve declined to say whether it was conducting an investigation. Brundrett is the news editor of The Nerve (www.thenerve.org). Contact him at 803-394-8273 or [email protected]. Follow The Nerve on Facebook, Instagram and X (formerlyTwitter) @thenervesc. Nerve stories are free to reprint and repost with permission by and credit to The Nerve.

By RICK BRUNDRETT S.C. senators this year apparently had no interest in legislation to end the longstanding practice of allowing county magistrates to serve months or even years after their terms expired. There's probably good reason for their lack of enthusiasm: Senators largely control who becomes a magistrate and how long they stay on the bench. Statewide, 38 county magistrates in 17 counties are in “holdover” status – two of them serving more than 18 years past their terms in the home county of the Senate president, according to a list released this month by the S.C. Judicial Department after The Nerve filed a state Freedom of Information Act request,  Governor's Office records obtained earlier, and Senate journals. Having magistrates in holdover status gives senators more control over them, as at least one senator has acknowledged.The 38 magistrates currently in holdover status represent nearly 13% of the total 298 magistrates listed on the Judicial Department’s website. Nine magistrates have been serving at least five years past their terms, Governor's Office records show. Newly installed S.C. Supreme Court Chief Justice John Kittredge appointed seven of the holdover magistrates as the chief administrative judges of their respective counties for the remainder of this year, according to an Aug. 16 order. The Nerve in 2019 revealed that in 12 counties, one senator controls the nominations of magistrates in those counties. That includes Oconee County, where four magistrates currently are in holdover status, with two of them – Chief Judge Blake Norton and William Derrick – each serving about 18 years and four months past their terms, records show. In Oconee County, Republican Senate President Thomas Alexander, who's been in that chamber since 1994 and owned an office supply business, controls  magistrate nominations as the only senator representing that county. But some Democratic senators also have that power in their counties. Democratic Sens. Mike Fanning, who is the executive director of a nonprofit educational organization, and Ronnie Sabb, an attorney, have sole nomination control in Chester and Williamsburg counties, respectively. Two magistrates in Chester County, including Chief Judge Olivia Williford, and one magistrate in Williamsburg County have been in holdover periods ranging from about 16 months to 28 months, records show. Fanning and Sabb were first elected to the Senate in 2016 and 2014, respectively. The Nerve last week sent written questions to Alexander, Fanning and Sabb, asking them, among other things, if they believed whether keeping magistrates in holdover status gives them too much power over them. None of them responded. Magistrates in the state’s 46 counties handle traffic tickets, criminal cases with a maximum sentence of 30 days in jail and a $500 fine, and civil cases involving damages of up to $7,500. They also set bonds, issue search and arrest warrants, and conduct preliminary hearings in criminal cases. Magistrates don’t have to be lawyers – and most aren’t, records show – though those appointed in recent years must have a bachelor’s degree. The South Carolina Policy Council – the parent organization of The Nerve – last year issued a number of judicial reform proposals, including closing the magistrate-holdover loophole, and created a Judicial Reform Action Page to encourage citizen involvement. Weighty votes Under the S.C. Constitution, magistrates are appointed by the governor with “advice and consent” of the Senate, though in practice, senators control the selection process in their home counties, with the governor usually rubber-stamping magistrates nominated by senators. Magistrates serve four-year terms “and until their successors are appointed and qualified,” under state law. That means they can continue working after their terms expire if allowed by local senators. It also means senators with nomination control can fire judges in holdover status at any time. Senators have no firing authority by themselves while magistrates are serving their regular terms, though the S.C. Supreme Court can remove them for ethical violations. In recent years, magistrates typically have received the most public sanctions – usually reprimands – of any type of judge disciplined by the Supreme Court, as The Nerve previously has reported. Following a 1999 federal court ruling, votes by S.C. legislative delegations have been required to be weighted, based on the percentage of the population that delegation members represent. When it comes to nominating magistrates, senators with the most weighted votes in a county have the most power. The Nerve’s latest review found that besides Oconee, Chester and Williamsburg counties where one senator has sole nomination control, senators in 10 other counties with a total of 21 magistrates in holdover status have at least 51% of the weighted vote in their respective counties, according to Judicial Department and Senate records. That includes Darlington and Marlboro counties, which have three holdover magistrates each, including Darlington County Chief Judge Deatrice Curtis and Marlboro County Chief Judge Mia Weaver, both of whom have been serving about 16 months past their terms, Judicial Department and Governor's Office records show. Each county also has one magistrate serving in holdover status for about five years and four months. Democratic Sen. Gerald Malloy has 83.7% and 90.87% of the weighted vote in Darlington and Marlboro counties, respectively, Senate records show. Malloy, who was first elected to the Senate in 2002, also has 57.32% of the weighted vote in Lee County, which has two holdover magistrates, including Chief Judge Shirley Davidson, who's been serving about 10 years and four months past her term, according to records. Malloy, an attorney, didn’t respond to written questions last week from The Nerve. In Pickens County, Republican Sen. Rex Rice has 79.39% of the weighted voted, with Senate president Alexander having the remaining control, according to Senate records. In that county, two magistrates – Chief Judge Benjamin Dow and Associate Chief Judge Michael Baker – each have been in holdover status for about six years and four months, Governor's Office records show. Interviewed last year by The Nerve, Rice, a contractor who's been a senator since 2016, defended his practice of keeping holdover magistrates, saying then, “By having them in holdover status, my belief is they are more accountable because I could change them tomorrow.” As of February this year, there were 71 magistrates statewide in holdover status, including three in Pickens County, according to holdover lists from the Judicial Department and Governor’s Office, and Senate journal records, though Rice told The Nerve for a March story that one of the three judges was retiring. The Nerve last September revealed that in Orangeburg County, Democratic Sen. Brad Hutto, a lawyer and the Senate minority leader, for more than a year represented dozens of mainly criminal clients before magistrates whom he played a prominent role in nominating. Hutto, who's been in the Senate since 1996, acknowledged then that he and his attorney-son, who works in the same law firm, have handled many cases before magistrates whom he helped nominate, though he stressed that those judges never showed him, his son or any other lawyers in their firm any special treatment. The Nerve’s latest review found two Orangeburg County magistrates have been in holdover status for about 16 months. Hutto and Democratic Sen. Vernon Stephens have 47.03% and 52.97% of the weighted vote, respectively, in the county, according to Senate records. In last September’s Nerve story, retired Democratic Sen. John Matthews of Orangeburg County said that procedurally over the years, if a magistrate lived in Sen. Hutto’s district, Hutto would recommend that person for appointment, and he would sign off on the official nomination letter to the governor. Protecting their turf There was a legislative proposal this year aimed at ending senators’ control over holdover magistrates. But it didn’t come from the 46-member Senate. On May 7, the 124-member House – which plays no direct role in selecting magistrates – approved an amended Senate judicial-reform bill that included keeping magistrates in holdover status no longer than 14 days past their terms, with the governor making interim appointments if the deadline wasn't met because of the Senate’s failure to act. The House Judiciary Committee added the holdover proposal to the bill on May 1. But the provision was stripped out of the final Senate and conference committee – made of three senators and three House members – versions of the bill. Gov. Henry McMaster signed the bill without the provision into law on July 2. In a letter last October to senators, the Republican McMaster called for reforms in the magistrate selection process, noting that dozens of magistrates then were “acting in a holdover capacity.”  But although McMaster in his letter announced he was instituting a more detailed vetting process for magistrates, he didn’t specifically recommend banning the holdover practice and said he didn’t “presently intend to eliminate the practice” of receiving magistrate nominations from senators. The judicial reform law, which takes effect July 1, 2025, makes some changes to the screening process for higher-level judges, such as increasing the size of the Judicial Merit Selection Commission (JMSC), which nominates candidates for election by the Legislature, from 10 to 12. South Carolina and Virginia are the only two states where their legislatures play primary roles in selecting judges. The new S.C. law gives the governor four appointments to the JMSC, though three legislators – the House speaker, Senate president and Senate Judiciary Committee chairman – will effectively control the commission’s makeup with the remainder of the appointments.  Senate president Alexander will have two of those appointments. As the sole senator representing Oconee County, he also will retain his power to nominate all of his county's magistrates – and keep them in holdover status as long as he wants. Brundrett is the news editor of The Nerve (www.thenerve.org). Contact him at 803-394-8273 or [email protected]. Follow The Nerve on Facebook, Instagram and X (formerlyTwitter) @thenervesc. Nerve stories are free to reprint and repost with permission by and credit to The Nerve.

By RICK BRUNDRETT South Carolina’s top court has decided to remove itself from investigations of ethics complaints against sitting justices. But for now, members of the Supreme Court – whose six-figure salaries are paid by S.C. taxpayers – can still discipline a wayward fellow justice even with the creation of an “independent” panel to investigate the alleged ethical misconduct. And given the secrecy baked into court rules, the public will continue to be left largely in the dark when it comes to ethics complaints filed against judges at any level.Over the past 22 years, at least 90 formal complaints have been filed against S.C. appellate judges with the state office charged with investigating judicial ethics violations, according to court records reviewed by The Nerve. Yet online disciplinary orders show no one on the five-member Supreme Court or the nine-member S.C. Court of Appeals – the state’s second-highest court – received any public sanctions during the period. Of the total 90 complaints filed against appellate judges, 15 complaints were received in fiscal 2023 – the highest number since fiscal 2008 – though the annual disciplinary reports don’t specify whether the accused judges were Supreme Court or Court of Appeals members or give any specifics of the allegations. Under court rules, the Supreme Court has final say on disciplining any judge under its jurisdiction. That includes deciding whether to sanction fellow Supreme Court justices who violate ethical rules  – which, among other things, can create perceptions of favoritism. The Nerve in 2010 revealed that the Supreme Court then had rejected a recommendation by the American Bar Association (ABA) to create a special, outside court to handle ethics charges against sitting Supreme Court justices. In its September 2008 report, the ABA’s review team said a special court was needed because “allowing the Court to retain the authority to discipline one of its own members may create an appearance of impropriety.” The state’s judicial canons – the ethical rules that judges, including Supreme Court justices, are supposed to follow – require a judge to “avoid impropriety and the appearance of impropriety in all of the judge’s activities.” In an Aug. 1 order, the court, led by newly installed Chief Justice John Kittredge of Greenville, created a five-member “Independent Committee for the Supreme Court,” which will “perform all duties normally performed” by the state Office of Disciplinary Counsel (ODC) – an arm of the Supreme Court that investigates ethics complaints against lawyers and judges – to handle ethics complaints against sitting justices. “In the judgment of this Court, it is inappropriate for the ODC to handle complaints of ethical misconduct or incapacity against sitting Justices on the Supreme Court,” according to the order. “A justice system with integrity must not only be fair, it must avoid the appearance of impropriety.” Under the order, the committee is made up of lawyers who are “independent and not employed by the Judicial Branch.” But the order assigns two former ODC chiefs who once answered to the Supreme Court to lead the committee. And any hearing on ethical misconduct by a Supreme Court justice could still be handled by a panel of the 26-member Commission of Judicial Conduct, which is appointed by the high court and made up mainly of lower-court judges. A current court rule allows, though it doesn’t require, the commission chair to appoint a lawyer who isn’t a Judicial Department employee to act as the disciplinary counsel in cases involving justices. In addition, the Aug. 1. order doesn’t address whether the Supreme Court would retain final say on sanctions involving one of  its own members. Under court rules, public sanctions against judges, which typically – if there are any – make up a tiny percentage of the total number of complaints filed annually – can range from reprimands to suspension or removal from office. The Nerve recently sent written questions to Kittredge, whom the Legislature elected in March to replace retired Chief Justice Donald Beatty, asking, among other things, whether there should be a separate, independent body with the authority to issue public sanctions against Supreme Court justices who engaged in ethical misconduct. Kittredge, a former family, circuit and Court of Appeals judge who was first elected to the Supreme Court in 2008, didn’t respond to The Nerve by publication of this story. Under the S.C. Constitution, the chief justice is the administrative head of the “unified” state court system. Disciplinary secrecy Court rules generally require that complaints remain secret unless an investigative panel of the Commission on Judicial Conduct issues formal charges – which hasn't happened in recent years, records show – based on findings by the Office of Disciplinary Counsel. More common, “consent” agreements are reached between the ODC and accused judges in cases involving public sanctions. In comparison, state court lawsuits, which often involve claims of civil wrongdoing by one private party against another private party, generally are a matter of public record when filed – and remain public even if later dismissed. Kittredge didn’t respond to The Nerve’s recent questions about whether basic details of ethics allegations against any judge, including Supreme Court justices, should quickly be made public with the accused judge’s formal response. In a hearing last November before a special S.C. House committee, Kittredge – then a candidate for the chief justice seat – touted what he described as the almost “non-existent” number of ethics violations committed by state judges, as The Nerve reported then. Kittredge in that hearing didn’t address secrecy in the disciplinary process but told lawmakers that unlike low-level magistrates and municipal judges who more often come in the “crosshairs of ethical complaints,” higher-level judges are screened by the state Judicial Merit Selection Commission (JMSC) for election by the 170-member Legislature. South Carolina and Virginia are the only two states where their legislatures play primary roles in selecting judges. S.C. lawmakers this year expanded the size of the JMSC from 10 to 12 members, with the governor appointing four members, though three legislators will effectively control its makeup. By law, the Legislature sets the Supreme Court justices’ salaries, which are used to determine, based on formulas, the salaries of lower-level judges. As of March, the chief justice’s salary was $235,186, with the other four justices making $223,987, according to records released then to The Nerve under the S.C. Freedom of Information Act. The Nerve in recent years repeatedly has pointed out that the salaries of judges and higher-paid court staff have been excluded from the state salary database. In 2022, the South Carolina Policy Council -  the parent organization of The Nerve –  hired an attorney to pressure the court system to release its updated salary list. In an Aug. 14 letter to The Nerve in response to a records request under the Freedom of Information Act, Jason Bobertz, the court system’s general counsel, said Kittredge has asked the state Department of Administration to include Judicial Department employees’ salaries in the state salary database, adding the  information “should be available online at some point in the near future.” Dismissals the norm Judicial ethics in the Palmetto State is more than just a hypothetical discussion in a law school class. When the 2008 ABA report was released, the high court was led by Jean Toal, a former S.C. House member who joined the court in 1988 and became chief justice in 2000. Toal was involved in hit-and-run property damage incidents in 2001 and 2007 while she was the state’s top judge, according to media reports at the time. The Commission on Judicial Conduct cleared Toal of any ethical wrongdoing in the 2001 incident, though it was unknown whether a formal ethics investigation was done in the 2007 case, as The Nerve reported in 2010. A court rule bans accused justices from participating in their own disciplinary cases. Toal retired from the Supreme Court in 2015 but subsequently has served as a special, part-time circuit court judge.  In South Carolina, judges are required under the following ethical “canons” to: Uphold the integrity and independence of the judiciary; Avoid impropriety and the appearance of impropriety in all of their activities; Perform their judicial duties impartially and diligently; Conduct outside activities so as to minimize the risk of conflict with judicial obligations; and Refrain from inappropriate political activity. The Nerve previously has reported that the Office of Disciplinary Counsel routinely dismisses most complaints against judges, generally contending that the allegations didn’t involve ethics violations but instead were legal issues for an appellate court to decide.  The public, though, usually has no way of evaluating whether dismissed complaints were valid or spotting trends with particular judges because of court secrecy rules that prohibit court staff from releasing complaints unless formal ethics charges are filed. Individuals can publicly release details of their own complaints, though that rarely happens. Last November, The Nerve revealed that for fiscal year 2022-23, which ran from July 1, 2022, through June 30, 2023, the ODC dismissed 55% of total received and pending complaints against all types of judges. Dismissals by the Commission on Judicial Conduct’s investigative panels, composed of seven members under court rules, brought the total dismissal rate for that fiscal year to 71%, according to the commission's annual disciplinary report. Overall, there were 540 filed and pending complaints, 385 of which were dismissed, in fiscal 2023 – the highest annual totals since fiscal 2003, records show. The Nerve’s latest review of annual disciplinary reports also found that from fiscal years 2003 through 2023, 5,449 complaints, or nearly 79%, of the total 6,933 received and pending complaints during the period were dismissed. Slaps on judicial wrists Even in cases with misconduct findings, punishments typically are light. In recent years, the most common public sanction meted out was a reprimand,  records show. The Nerve in 2015 revealed that over the previous five fiscal years, no public sanctions were levied against any higher-level family, circuit, master-in-equity or appellate judges, though a total of 725 complaints were filed against those judges during the period, based on a review of Supreme Court disciplinary orders and Commission on Judicial Conduct annual reports. A later review by The Nerve found that from fiscal years 2015 through 2019, a collective 639 complaints were filed against family, circuit, administrative law and appellate judges, though none received any public sanctions. The 2019 story also revealed that over the previous 17 years, more than 250 “letters of caution” were issued – usually in secret – to judges statewide. The letters were the most common type of disciplinary action, which isn’t considered a formal sanction, taken on complaints that were not dismissed. The Commission of Judicial Conduct’s reports don’t identify judges – or even the types of judges – who received letters of caution or other private types of discipline. The Nerve’s latest review found that from fiscal years 2021 through 2023, a total of 22 letters of caution were issued. Commission investigative panels collectively met 13 times over the three-year period but filed no formal ethics charges, records show. A total of 28 complaints were filed against appellate judges during the period, though no Court of Appeals judges or Supreme Court justices received any public sanctions, according to records. In its Aug. 1 order creating a special committee to investigate complaints against Supreme Court justices, the high court described the five-member panel as “experienced and highly qualified members of the Bar,” which is the state’s professional organization for lawyers. The committee members, who under the order "shall serve on a voluntary basis without compensation," include panel chair John S. Nichols, vice-chair Lesley “Lee” Coggiola, Elizabeth “Betsy” Van Doren Gray, I.S. Leevy Johnson and Meliah Bowers Jefferson. Although the order requires that the committee members not be currently employed by the Judicial Department, Nichols and Coggiola each formerly headed the Office of Disciplinary Counsel. Johnson is a past South Carolina Bar president and law partner with Bill Toal, who is former Chief Justice Jean Toal’s husband; Jefferson was a law clerk for Jean Toal; and Gray is a former Bar president, according to online biographies. Outside of the court system, the S.C. Legislature has the authority under the state constitution, by a two-thirds vote of each chamber, to impeach and remove state judges from office for “serious crimes or serious misconduct in office.” The constitution also says that for any “willful neglect of duty” or “other reasonable cause” that is not sufficient grounds for impeachment, the governor can remove “any judicial officer” following a two-thirds vote by each legislative chamber supporting the removal. S.C. Senate Clerk Jeff Gossett in a written reply Friday to The Nerve said he wasn’t aware of any impeachment of a judge that resulted in removal from office. Nerve intern Laura Anne Kay contributed to this story. Brundrett is the news editor of The Nerve (www.thenerve.org). Contact him at 803-394-8273 or [email protected]. Follow The Nerve on Facebook, Instagram and X (formerlyTwitter) @thenervesc. Nerve stories are free to reprint and repost with permission by and credit to The Nerve.      

By RICK BRUNDRETT The S.C. taxpayer tab for outside attorneys and accountants hired in connection with investigations into the mystery $1.8 billion could run up to more than $5 million, records show. And so far, no state agencies are claiming their share of the $1.8 billion, while a state task force created by the governor more than three months ago to investigate the matter still won’t say publicly whether the money even exists.For the fiscal year that started July 1, lawmakers designated $3 million for “audit contracting” through the state Department of Administration, which later this month awarded a contract with a “potential” $3 million value to a global consulting firm to provide “forensic accounting services” in reviewing the $1.8 billion, according to online department and state budget records. Lawmakers also appropriated another $1.8 million for outside legal fees through the S.C. Attorney General’s Office, which, according to records recently provided to The Nerve by the office under the state open-records law, hired an international law firm to defend the state in a related federal Securities and Exchange Commission (SEC) investigation. The combined $4.8 million provided to the Attorney General’s Office and Department of Administration would come out of state surplus funds, budget records show. Separately, the S.C. Comptroller General’s Office hired two law firms to represent the agency in the SEC investigation, which has been ongoing since at least last summer, according to records recently provided by the office under the S.C. Freedom of Information Act. A “current” maximum collective $330,000 is designated for the two firms, according to an agency spokeswoman. The most recently available records from the Comptroller General’s and Attorney General’s offices show that a total of $747,156 as been paid to the three law firms. To put the possible total $5 million-plus taxpayer cost of the hired outside help into some context, it would be larger than the current overall budgets of several state agencies, including, for example, the State Ethics Commission and Department of Consumer Affairs.  And the disputed $1.8 billion is far more than the total budgets of most state agencies. As The Nerve previously has pointed out, it equates to more than $300 for every man, woman and child in South Carolina; or, according to the South Carolina Policy Council – The Nerve’s parent organization – up to $1,440 per taxpayer, based on a formula similar to the one used for state taxpayer rebates in 2022. The Policy Council in April recommended rebating the full amount to taxpayers if no state agencies claimed the money by June 30 or if agencies couldn't provide evidence by then of their share of the funds. Republican Gov. Henry McMaster on April 11 created a task force made up of representatives from six state agencies, including the Governor’s Office, to investigate the $1.8 billion and gave the panel a July 1 deadline – which has long since passed – to find answers, according to the Department of Administration and media reports. The “working group,” which typically has been meeting secretly on a weekly basis since April, as The Nerve previously revealed, has included staffers from the offices of the governor, attorney general, treasurer, comptroller general and auditor, as well as from the Department of Administration, according to “meeting notes” provided by the department to The Nerve. Treasurer Curtis Loftis, Comptroller General Brian Gaines, Auditor George Kennedy and Department of Administration Executive Director Marcia Adams routinely have attended meetings, records show. In a written response Friday to The Nerve, Department of Administration spokeswoman Brooke Bailey again didn’t directly answer whether the $1.8 billion actually exists, saying that the task force and the newly hired global consulting firm are “working to determine the existence, purpose and intended destination of the $1.8 billion in question.” She added that a report, based on the consulting firm’s “review of the state’s cash and investments,” is due by Dec. 31. To date, the task force is “not aware of state agencies’ claims to the $1.8 billion,” Bailey also said, repeating an earlier answer to The Nerve. ‘Attorney work product’ It’s unclear whether the $1.8 billion – if it exists – is made up of state, federal or “other” funds, which include such things as state gasoline taxes, lottery proceeds, college tuition, part of the state sales tax earmarked for K-12 education, and court fees and fines. The Nerve in May revealed that as of mid-April, the state had a total of more than $9 billion in other fund reserves. The total state fiscal 2024-25 budget, which includes state, federal and other funds, is $42.2 billion. The disputed $1.8 billion was the subject of a critical 116-page interim report released in April following an investigation by a Senate Finance subcommittee chaired by Sen. Larry Grooms, R-Berkeley. The report accused Loftis of failing to disclose the funds for seven years “despite his explicit statutory duty to do so.” After Gaines in an October 2023 letter asked Loftis to investigate a related cash balance, the Senate Finance Committee researched the matter and determined the fund had a balance of about $1.8 billion, according to the subcommittee's report. That discovery followed a separate subcommittee investigation in 2022 into a $3.5 billion accounting error, which, according to the report, stemmed from an earlier conversion to a different state accounting system and occurred during the tenure of ex-Comptroller General Richard Eckstrom, a Republican who resigned in April 2023 after 20 years in office. Grooms has said publicly that Loftis, a Republican who was first elected in 2010, should resign. Loftis has denied all allegations, publishing a lengthy defense on his agency’s website, which, among other things, contends that the $1.8 billion is “not missing or recently discovered,” and that his office has been “fully transparent about the matter.” The Nerve last month submitted a Freedom of Information Act request to the Treasurer’s Office asking, among other things, for the names of the financial institutions where the $1.8 billion, if it exists, currently is deposited. The Nerve’s request cited “SCEIS Fund 30350993,” which was identified multiple times in a March 14 letter from Loftis to Grooms. In a July 11 written response, the Treasurer’s Office denied The Nerve’s request, contending the bank records, “to the extent that they exist,” are exempt under the open-records law as “any and all records” related to the fund are considered “attorney work product of the Governor’s Working Group.” The Freedom of Information Act, however, doesn’t require the Treasurer’s Office to exempt the requested records, but only allows it to do so. SEC probe At the end of January this year, the Attorney General’s Office hired the Atlanta-based King & Spalding law firm, according to a retention agreement for "special counsel” regarding the “Securities and Exchange Commission Matter.” The firm on its website says it has more than 1,300 attorneys in 24 offices worldwide. The agreement, which the office provided earlier this month to The Nerve under the Freedom of Information Act, says the firm will “represent the State in connection with an SEC investigation, ” listing it as “In the Matter of State of South Carolina, A-04055,” though it doesn’t give details of the probe. The Nerve in June revealed that King & Spalding lawyers with experience in handling Securities and Exchange Commission matters were hired by the S.C. Attorney General’s Office to represent the state in connection with the $1.8 billion. The Nerve obtained the retention agreement after that story was published. The Attorney General’s Office earlier told The Nerve it doesn’t discuss pending investigations, while an SEC spokesman said the federal agency doesn’t comment “on the existence or nonexistence of a possible investigation.” The retention agreement appears to indicate that the investigation could be a civil or administrative case, noting that the Attorney General’s Office “in its sole discretion” could designate assistants to “oversee the litigation,” and that the office must be “included in any settlement discussions.” On its website, the SEC says its mission is to “protect investors; maintain fair, orderly, and efficient markets; and facilitate capital formation.” The SEC is responsible for bringing civil and administrative actions for violations of federal securities laws, and partners with law enforcement agencies to “bring criminal cases when appropriate,” according to its website. No one has accused any S.C. officials of any criminal wrongdoing. Asked for details about investment income from the $1.8 billion, the state Treasurer’s Office in its July 11 response to The Nerve said it couldn’t provide that information, noting the agency “does not invest by SCEIS fund, it invests in pooled investment portfolios.” Yet according to the Senate Finance subcommittee's report, Loftis claimed during sworn testimony in April that the $1.8 billion fund “earned $225 million in interest that has been spent by the General Assembly.” “If his claim is accurate, then his failure to disclose the fund may have impaired the General Assembly’s fiduciary responsibility to ensure proper application of the earnings,” the April 16 report contended. The “meeting notes” of the June  4 meeting of the governor’s task force first indicated that King & Spalding attorneys “provided legal advice” to the group, though no specifics on the discussion were listed. Firm attorneys have attended subsequent weekly meetings virtually, according to meeting notes. Under the retention agreement, five identified King & Spalding lawyers would be paid hourly rates ranging from $945 for an associate attorney to $1,405 for a firm partner, with $200-$500 hourly rates for paralegals, project assistants and other attorneys. The contract also covers approved expert and consultant fees, as well as travel and overnight lodging expenses. Republican Attorney General Alan Wilson signed the agreement on Jan. 30. Through April 30, lawyer and other personnel fees totaled $503,507, records provided to The Nerve show. Also included with those records was a formal request by Wilson’s office to the state Executive Budget Office (EBO), which is part of the Department of Administration, to use $1.8 million in non-recurring funds to “retain outside counsel to represent the State’s interests” in a “complex securities matter.” The request noted that the Attorney General’s Office “does not have the necessary expertise to defend the State in this complex securities matter,” though no details of the “matter” were provided in the document. The $1.8 million would be needed through the remainder of this calendar year, according to the request. In a recent written response to The Nerve, Assistant Deputy Attorney General Harley Kirkland said the request was made to the EBO on April 10 – the day before McMaster created the special task force, according to the Department of Administration. Kirkland said the Legislature subsequently approved the request, providing The Nerve with the conference committee’s budget version approved last month, which listed the $1.8 million only as “legal fees.” Under the retention agreement, the Attorney General’s Office “understands that the cost of handling matters is not predictable and that the Special Counsel has not made a commitment or promise as to the maximum fees and expenses necessary to complete the Matter.” Other outside help Last summer, Comptroller General Gaines hired the Wyche law firm, which has offices in Greenville, Spartanburg and Columbia, to represent his agency on “Issues Regarding SEC Investigation,” though no details of the probe were included in the copy of the agreement provided to The Nerve, which appeared to have at least one paragraph deleted. Under the Aug. 31 agreement, which involves the firm’s Columbia office, “discounted” hourly rates for firm partners and associates involved with the case were listed at $500 and $300, respectively, with hourly rates for paralegals set at $230. Other legal costs and travel expenses are covered under the agreement. From August 2023 through May this year, paid legal fees and costs totaled $170,233, according to records provided by Gaines’ office under the open-records law. Besides the Wyche firm, Gaines approved hiring the Atlanta law firm of Robbins Alloy Belinfante Littlefield to represent “certain employees” in his office in the SEC investigation, according to a May 13 agreement. As with Wyche, no details about the probe were listed in the copy of the agreement provided to The Nerve, which appeared to have several paragraphs deleted. Among other practice areas, the law firm, which bills itself as “One of Atlanta’s Leading Litigation and Regulatory Firms,”  represents “whistleblowers” in SEC cases, according to its website. Under the retention agreement, the top hourly “discounted” rate for firm partners is $595, while other attorneys who might assist would be paid $395 to $495 per hour, with legal assistants' hourly fees set at $205. The agreement also covers other related costs, including travel and lodging. Through June, the firm was paid a total of $73,416 in legal fees and costs, records from Gaines’ office show. In a written response Monday to The Nerve, comptroller general spokeswoman Kimberly McLeod said the “current” maximum amount designated for legal fees and costs is $80,000 and $250,000 for the Robbins and Wyche firms, respectively. Representatives from the state treasurer’s and auditor’s offices, as well as the Department of Administration, said in recent written responses to The Nerve that they have hired no outside attorneys to represent their respective agencies in connection with investigations into the $1.8 billion, or had no related records. Deep numbers dive Four days after last month’s related Nerve story was published, the Department of Administration formally started the process to hire an “independent forensic accounting firm” to review “all cash and investments held in the State Treasury,” according to online department records. Under the “request for proposal,” which was posted on June 24, the awarded contractor “must, as part of the forensic accounting review, provide findings and recommendations for any corrective entries and actions necessary, along with recommendations for procedures and controls to be implemented in the future.” The proposal said the $1.8 billion “issue” was identified as “part of the $3.5B restatement,” referring to the $3.5 billion accounting error that occurred during former Comptroller General Eckstrom’s tenure. “The State does not have an understanding at this time that any criminal and/or unauthorized activity occurred,” the proposal noted, though adding, “It is possible that the forensic services performed by the firm could identify information suggesting conclusions contrary to the current understanding.” Forensic accountants can work in criminal or civil investigations, using “accounting, auditing and investigative skills when conducting an investigation,” according to the Institute of Certified Forensic Accountants, which has a U.S. office in Delaware. On July 17, the Department of Administration posted an online notice that it had awarded a contract with a “potential value” of $3 million, which would run from July 18 to next June 30, to AlixPartners LLP in Washington, D.C. Among other services, the consulting firm, which is headquartered in New York and has 25 offices worldwide, on its website says its brings “hands-on experience to recommending, designing, and implementing enhancements to internal accounting controls, and conduct monitoring and testing of policies and procedures pursuant to settlement agreements.” The site also notes that many of its staff members have “extensive experience presenting to" the Securities and Exchange Commission and other regulators to “help clients restore credibility to their financial reporting.” Under a proviso in the current state budget, an interim audit report from the awarded contractor must be submitted to the governor, Senate president, House speaker and chairmen of Senate Finance and House Ways and Means committees by Sept. 30, with a final report due by Dec. 31. But the Department of Administration can “in its sole discretion” extend the audit completion date “if necessary,” according to the proviso. Brundrett is the news editor of The Nerve (www.thenerve.org). Contact him at 803-394-8273 or [email protected]. Follow The Nerve on Facebook, Instagram and X (formerlyTwitter) @thenervesc. Nerve stories are free to reprint and repost with permission by and credit to The Nerve.    

By RICK BRUNDRETT Update 7/3/24: Four days after we published this story on a global law firm with experience in federal securities investigations that has advised a state task force on the mystery $1.8 billion, the state issued a formal request for proposals – due by July 9 – to hire an “independent forensic accounting firm” to review “all cash and investments held in the State Treasury,” according to S.C. Department of Administration records. The final state budget version for fiscal 2024-25, which started July 1, designates $3 million to the department for “audit contracting.” The task force created by Gov. Henry McMaster to investigate an unclaimed $1.8 billion is getting advice from an international law firm that specializes in defending clients facing possible or actual federal investigations, records show. The Atlanta-based King & Spalding firm also has ties to former President Donald Trump’s 2020 re-election campaign, according to media reports and court records.At the June 4 meeting of the “working group,” which McMaster created on April 11, King & Spalding attorneys “provided legal advice” to the group, which included representatives from the governor’s and attorney general’s offices; S.C. Treasurer Curtis Loftis, state Comptroller General Brian Gaines, state Auditor George Kennedy and S.C. Department of Administration Executive Director Marcia Adams, as well as staff members from those agencies, according to written meeting notes. The meeting notes, which were provided last week to The Nerve by the Department of Administration, described the King & Spalding firm as “Counsel for the State engaged by the Attorney General’s Office.” The document gave no details of the legal advice provided to the task force. The three King & Spalding lawyers identified in the meeting notes handle legal matters for the firm’s “Special Matters and Government Investigations” section, according to the firm’s website. The site also notes that two of the lawyers – listed as partners in the 1,300-plus attorney firm, which has 24 offices in the U.S., Europe, Asia and the Middle East – work in the “Securities Enforcement and Regulation” section. The firm’s “Special Matters and Government Investigations” team is “dedicated to advising entities and individuals across sectors who are facing the reality or threat of a government investigation,” according to the site. “Collectively, we have handled investigations before 73 of the 93 U.S. Attorney’s Offices and every litigating division of the Justice Department,” the site says. “We likewise have represented clients in investigations conducted by all 12 of the SEC's (U.S. Securities and Exchange Commission) offices and all of the SEC’s specialized enforcement units.” Two of the three attorneys listed in the June 4 meeting notes – firm partners Aaron Lipson and Carmen Lawrence – are former regional SEC officials, according to the website. Lipson led the enforcement program at the SEC’s Atlanta regional office; Lawrence was the director of the SEC’s Northeast regional office. King & Spalding's “Securities Enforcement and Regulation” section “advises leading public companies, financial institutions, regulated entities, boards of directors, auditors and senior executives, officers and directors in all types of securities law enforcement matters,” according to the website. On its website, the SEC says its mission is to “protect investors; maintain fair, orderly, and efficient markets; and facilitate capital formation.” Written notes from the June 11 task force meeting, which were provided Wednesday to The Nerve by the Department of Administration, listed Lawrence and the other King & Spalding attorney, Kimberly Wade, who is a senior associate in the firm, as attending the meeting remotely. Both lawyers work in the firm’s New York office; Lipson is based in Atlanta, according to the firm’s website. The site says Wade “focuses on white-collar criminal defense litigation, internal and government investigations, corporate compliance, and regulatory matters,” noting, among other things, that she “works with clients facing government investigations conducted by various divisions” of federal or state agencies, including the SEC. Asked last week if the Securities and Exchange Commission has opened an investigation into the disputed $1.8 billion, a spokesman in the agency’s Washington, D.C. office said in a written response to The Nerve, “The SEC does not comment on the existence or nonexistence of a possible investigation.” In April, the FitsNews site reported, citing “multiple sources familiar with the status of the inquiry,”  that SEC investigators were conducting a “non-public review” of South Carolina’s finances, including the $1.8 billion. No one has accused any S.C. officials of any criminal wrongdoing. The Nerve this week sent written questions to Loftis, Gaines and Kennedy about whether they or their staff members have been interviewed by SEC investigators; and, if so, what was the nature of the inquiries.  Kennedy referred The Nerve’s questions to the state Attorney General’s Office, as did comptroller general spokeswoman Kimberly McLeod, Department of Administration spokeswoman Brooke Bailey and King & Spalding spokesman Timothy Vaughn, who works in the firm’s New York office. Loftis didn’t respond. Robert Kittle, spokesman for Attorney General Alan Wilson, in a written response Tuesday to The Nerve said that “we don’t comment on ongoing investigations.” The Nerve’s unanswered questions to Wilson’s office included why the King & Spalding firm was hired, and the taxpayer costs of retaining the firm. The Nerve’s request for the formal retention agreement with the firm, which likely would include details of any attorneys’ fees to be paid, was forwarded to the office’s Freedom of Information Act section, Kittle said. As for ties to Trump, the King & Spalding firm was one of three major law firms hired by Trump’s re-election campaign in 2020, according to an article in Politico. King & Spalding represented the campaign in a North Carolina pre-election appellate case challenging the extension of a deadline to count absentee ballots in the 2020 election, according to media reports and court records. The U.S. 4th Circuit Court of Appeals in Richmond, Va., rejected the appeal, records show, though Trump won the presidential election that year in North Carolina, as he did in 2016. Last month, the Republican Wilson visited Trump’s criminal hush-money trial in New York, publicly describing the proceedings as a “sham,” according to media reports. Trump, who is the presumptive GOP nominee in the upcoming November presidential election, was convicted by a jury of 34 counts of falsifying business records to influence the outcome of the 2016 election – the first former U.S. president to be convicted of a felony, though he has denied any wrongdoing and is expected to appeal the verdict. McMaster, a Republican who is a former U.S. attorney for South Carolina and state attorney general, was one of Trump’s earliest supporters in 2016 and was named by Trump in January 2023 to lead his 2024 re-election campaign in South Carolina, according to media reports. Trump won the Palmetto State’s 2016 and 2020 elections. McMaster, Wilson and Loftis were among a group of South Carolina Republicans who appeared at a Trump rally in New Hampshire in January this year ahead of the presidential primary there, according to a Washington Post story. Many questions, few answers Meanwhile, in her written response last week to The Nerve, Department of Administration spokeswoman Bailey again didn’t directly answer whether the disputed $1.8 billion actually exists and didn’t respond to a question about whether there is a deadline for the task force to complete its work, though she reiterated her response in a Nerve story earlier this month that the group was “not aware” of any state agency claims to the money. McMaster gave the task force a July 1 deadline to find answers, according to media reports. The Nerve has repeatedly pointed out the secrecy of the task force meetings – which now total at least nine since mid-April – citing a South Carolina Press Association attorney’s concerns about compliance with the state’s open-records law. The Nerve, through its parent organization, the South Carolina Policy Council, is an associate member of the association. As with previous meeting records, the June 11 meeting notes provided to The Nerve offered no specific findings. It’s unclear whether the $1.8 billion, if it exists, is made up of state, federal or “other” funds, which include such things as state gasoline taxes, lottery proceeds, college tuition, part of the state sales tax earmarked for K-12 education, and court fees and fines. The Nerve in May revealed that as of mid-April, the state had a total of more than $9 billion in other fund reserves. The $1.8 billion represents more than $300 for every man, woman and child in the state; or, according to the Policy Council, up to $1,440 per taxpayer, based on a formula similar to the one used for state taxpayer rebates in 2022. The Policy Council in April recommended rebating the full amount to taxpayers if no state agencies claim the money by June 30 or if agencies can’t provide evidence by then of their share of the funds. The $1.8 billion was the subject of a critical 116-page interim report released in April following several months of investigation by a Senate Finance subcommittee chaired by Sen. Larry Grooms, R-Berkeley. The report accused Loftis of failing to disclose the fund for seven years “despite his explicit statutory duty to do so.” Grooms has said publicly that Loftis, a Republican who was first elected in 2010, should resign. In a lengthy response posted on the Treasurer’s Office website, Loftis denied the allegations, contending the money was “not missing or recently discovered,” and that his office has been “fully transparent about the matter.” After Gaines last October asked Loftis to investigate a cash balance in the disputed fund, the Senate Finance Committee researched the matter and determined the fund had a balance of about $1.8 billion, according to the subcommittee’s report. Grooms in an opinion column published last month by the (Charleston) Post and Courier newspaper said he “increasingly” believes that “this supposed money does not exist.” Brundrett is the news editor of The Nerve (www.thenerve.org). Contact him at 803-394-8273 or [email protected]. Follow The Nerve on Facebook and X (formerlyTwitter) @thenervesc. Nerve stories are free to reprint and repost with permission by and credit to The Nerve.

By RICK BRUNDRETT A task force created by Gov. Henry McMaster to investigate a mysterious $1.8 billion that reportedly is in a state account has met secretly at least six times in less than two months but hasn’t yet publicly released any specific findings. As The Nerve revealed last month, the “working group” that met behind closed doors three times in April included the following agency heads who attended most or all of the meetings either in person or virtually: S.C. Treasurer Curtis Loftis, state Comptroller General Brian Gaines, state Auditor George Kennedy and S.C. Department of Administration Executive Director Marcia Adams, according to meeting notes released by the Department of Administration under the state’s open-records law.The Nerve recently followed up with another Freedom of Information Act request to the department and received meeting notes for the task force's May 3, 14 and 21 meetings. But as with the first batch of records, the latest documents revealed no detailed findings.  In response, The Nerve sent written questions to the above four agencies, as well as to the Governor’s Office and S.C. Attorney General’s Office, which have sent representatives to every meeting, records show. In South Carolina, the governor, attorney general, treasurer and comptroller general are popularly elected, though Gaines was appointed last year by McMaster after the then-comptroller general resigned. The Nerve asked each agency the following main questions: Does the $1.8 billion actually exist? Have any state agencies to date claimed any part of the $1.8 billion? Does your agency support issuing rebates to state taxpayers for all unclaimed amounts of the $1.8 billion? Other than the Department of Administration, none of the agencies responded. In a written response last Thursday, Department of Administration spokeswoman Brooke Bailey said the department was addressing The Nerve’s questions “on behalf of all agencies participating in the working group.” Bailey didn’t directly answer and didn’t respond to a follow-up request for a direct answer to the question about whether the $1.8 billion actually exists, saying only in her email response last week, “Various employees continue to work to determine the existence, purpose and intended destination of the $1.8 billion in question.” As for the question about state agency claims to the money, she replied, “We are not aware of state agencies’ claims to the $1.8 billion.” Bailey didn’t specifically address whether any unclaimed money would be returned to state taxpayers, saying, “If the $1.8 billion is determined to exist, the General Assembly and Governor will make decisions regarding any of these funds.” Bailey didn’t respond to a follow-up question about whether there are any formal or informal deadlines for the task force, which the Republican McMaster created on April 11, to complete its work. McMaster gave the group a July 1 deadline to find answers, according to earlier media reports. To put the $1.8 billion into perspective, it represents more than $300 for every man, woman and child in the state, or, according to the South Carolina Policy Council - the parent organization of The Nerve - up to $1,440 per taxpayer, based on a formula similar to the one used for state taxpayer rebates in 2022. The Policy Council in April recommended rebating the full amount to taxpayers if no state agencies claim the money by June 30 or if agencies can’t provide evidence by then of their share of the funds. Behind closed doors The task force’s secret, recurring meetings were to be held in a fourth-floor room in the Edgar Brown Building on the State House grounds, according to records from the first meeting. Bailey in her written response last week said a “calendar place holder has been established” for the meetings every Tuesday morning in the Brown building “through June 25.” "These meetings are not open to the public,” Bailey said, contending that the involved state agency employees’ “efforts in this regard have been and will continue to be within the scope of their normal employment with their respective agencies.” Meeting notes for the May 21 meeting show that 30 employees of the six participating agencies attended the closed-door meeting either in person or virtually, including agency heads Loftis, Gaines, Kennedy and Adams. Taylor Smith, an attorney for the South Carolina Press Association, told The Nerve for last month’s story that even if the private meetings aren’t a technical violation of the state’s open-records law, “it certainly violates the spirit of the (law) and the general notions of transparency that preserve the state citizenry’s trust in the performance of their elected officials.” The Nerve, through the Policy Council, is an associate member of the press association. The Freedom of Information Act generally requires that meetings of public bodies be open to the public, with advance notice and posting of meeting agendas. It also requires public bodies to create minutes of meetings and make them publicly available. The disputed $1.8 billion made headlines after a critical 116-page interim report released in April following several months of investigation by a Senate Finance subcommittee chaired by Sen. Larry Grooms, R-Berkeley, accused state treasurer Loftis of failing to disclose the funds for seven years “despite his explicit statutory duty to do so.” Grooms has said publicly that Loftis, a Republican who was first elected in 2010, should resign. Loftis in a lengthy response posted on the Treasurer’s Office website denied the allegations, contending the money was “not missing or recently discovered,” and that his office has been “fully transparent about the matter.” After comptroller general Gaines last October asked Loftis to investigate a cash balance in the disputed fund, the Senate Finance Committee researched the matter and determined the fund had a balance of about $1.8 billion, according to the subcommittee’s report. The discovery followed a separate subcommittee investigation into a $3.5 billion accounting error, which according to the report, stemmed from an earlier conversion to a different state accounting system. That error occurred during the tenure of ex-Comptroller General Richard Eckstrom, a Republican who resigned in April 2023 after 20 years in office. McMaster appointed Gaines to fill Eckstrom’s seat. One of the unanswered questions about the disputed $1.8 billion is whether it is made up of state general or “other" funds, federal money, or a combination of the revenue sources. Other funds include such things as college tuition, lottery proceeds, state gasoline taxes, part of the state sales tax earmarked for K-12 education, and court fees and fines. The Nerve last month revealed that as of mid-April, there was a collective $9.3 billion in other fund reserves among state agencies or major divisions – excluding the Treasurer’s Office – plus two separate state accounts, which overall worked out to be about $1,700 for every man, woman and child in South Carolina. A six-member, House and Senate conference committee is scheduled to meet Wednesday to resolve differences between the chambers’ respective versions of the $41 billion-plus total state budget for fiscal 2024-25, which includes state, federal and a proposed $14.1 billion in other funds. The new fiscal year starts July 1. Brundrett is the news editor of The Nerve (www.thenerve.org). Contact him at 803-394-8273 or [email protected]. Follow The Nerve on Facebook and X (formerlyTwitter) @thenervesc. Nerve stories are free to reprint and repost with permission by and credit to The Nerve.

Editor’s note: This is the first investigative story in a two-part package on massive state financial accounts. The other story can be found here. By RICK BRUNDRETT S.C. lawmakers don’t talk much publicly about this part of the state’s coffers, though it’s a huge chunk of money. Known as “other” funds, the revenues include such things as college tuition, lottery proceeds, state gasoline taxes, part of the state sales tax earmarked for K-12 education, and court fees and fines. Many state agencies don’t spend all of their available other funds in a fiscal year, with some of them ending the year with relatively large surpluses.As of a month ago, the state had a total of more than $9 billion in other fund reserves, The Nerve found in a review of S.C. Department of Administration records obtained under the state Freedom of Information Act. That amount, which was as of April 18, works out to be approximately $1,700 for every man, woman and child in the state. In comparison, the state ended fiscal 2021 with $5.6 billion in total other-fund surpluses, as The Nerve revealed then. The 2023-24 fiscal year runs from July 1, 2023, through June 30 of this year. The Nerve’s latest review found that other fund surpluses among 104 state agencies or major divisions, plus two separate state funds for county road projects and state employee benefits, collectively totaled $8 billion to start this fiscal year, growing to a total of $9.3 billion last month after cash receipts and payments, along with listed “net” transfers, were taken into account. The overall figures don’t include $2.91 billion as of last July 1 or $3.27 billion as of April 18 this year in collective other-fund balances with the state Treasurer’s Office, according to Department of Administration records. The Nerve today has a separate investigative story on a disputed $1.8 billion state account managed by the Treasurer’s Office. The Nerve’s latest review also found that a special joint legislative panel that had been recommending whether to approve mid-year requests by state agencies to increase their other fund spending was discontinued about four years ago after 10 years in existence. For this fiscal year, lawmakers approved a total of nearly $14 billion in other fund spending, which represents more than a third of the $41 billion total state budget. For the 2024-25 fiscal year, the House and Senate have proposed $14.1 billion and $13.3 billion, respectively, in other fund spending. A legislative conference committee is expected to work out differences between the House and Senate versions of the state budget for the fiscal year that starts July 1. Fat piggy banks Excluding the Treasurer’s Office, The Nerve’s review found that state agencies with at least $1 billion in other fund reserves as of July 1, 2023, or April 18 this year included the departments of Transportation and Health and Human Services, as well as the University of South Carolina’s Columbia campus. Twenty state agencies had other fund surpluses of at least $100 million as of April 18. Among agencies that listed surpluses at the start of this fiscal year, the Commission on Prosecution Coordination had the lowest total reserves – $10,094, according to Department of Administration records. The median, or midway point, of surpluses among all agencies as of last July 1 was $6.9 million. In a written response last month to The Nerve, Department of Transportation spokeswoman Kelly Moore said DOT's total other-fund reserves ($1.96 billion as of last July 1, $2.04 billion as of April 18) were comprised mainly of the Infrastructure Maintenance Trust Fund, Highway Fund and non-federal aid funding. “The cash balance we have coincides with the contract commitments we have made for engineering and construction contracts,” Moore said. The Nerve in January reported that the department has continued to move slowly with repaving or rebuilding bad roads and bridges statewide with money from the Infrastructure Maintenance Trust Fund (IMTF), created with a 12-cent-per-gallon, or 75%, hike over six years in the base state gasoline tax. The increase took effect on July 1, 2017, as approved by lawmakers. The Nerve’s January story noted that the cash balance in the IMTF as of last Nov. 30 was $1.41 billion. The surplus as of April 30 this year was $1.51 billion, according to the state Comptroller General’s Office. In an April 26 written response, Health and Human Services spokesman Jeff Leieritz told The Nerve that the agency’s $1.15 billion other-fund reserves as of last July 1 and April 18 included about $387 million that has “already been committed to projects that have not been fully paid out as of today.” “The vast majority of this one-time funding will be invested in the state’s healthcare infrastructure to address identified gaps in the state’s behavioral healthcare system and improve access to care in rural and underserved areas of South Carolina,” he said. Medicaid enrollment in South Carolina increased from 1.04 million in February 2020 to 1.34 million full-benefit members in May 2023 – an approximately 30% jump, Leieritz said, adding that full-benefit membership as of last month was about 1.17 million. USC spokesman Jeff Stensland in a written response last month to The Nerve said he couldn’t comment on the Department of Administration’s other-fund-surplus figures for the university’s main campus because “we have no context for what they pulled so far.” Department of Administration records show the university’s main campus had other fund surpluses of $738.5 million and $1.22 billion as of last July 1 and April 18, respectively. In comparison, Clemson University had other fund reserves of $279.9 million and $221.8 million on those respective dates. Stensland didn’t respond to a question about why the university maintains relatively large other-fund surpluses annually. Clemson spokesman Joe Galbraith didn’t provide an explanation on Clemson's numbers when asked last month by The Nerve. Oversight lacking? Asked about specifics on mid-year transfers into other fund accounts, the Department of Administration in a written response last month said: “We are not able to provide information on where those transfers come from. Each agency would have to provide the documentation for each transfer into or out of a fund.” The Nerve’s review found a total of $745.6 million in “net” transfers among the 104 state agencies or divisions and two separate state funds as of April 18. The Department of Administration wasn’t alone in being unable to provide certain details of agencies’ other-fund accounts. When asked, for example, about current surpluses in those accounts, the S.C. Treasurer’s Office in a March written response referred The Nerve to the state Comptroller’s General Office, which, in turn, directed The Nerve to the Executive Budget Office within the Department of Administration. Under state law, lawmakers must appropriate “all anticipated federal and other funds for the operations of state agencies,” which are required to provide to the governor, as part of their budget submissions, "detailed statements of the sources of all federal and other funds contained in their budgets.” For the 2010-11 fiscal year, lawmakers created the joint, eight-member “Other Funds Oversight Committee,” made up the Senate Finance Committee chairman or his designee, the House Ways and Means Committee chairman or his designee, two other members of those budget-writing committees, and the majority and minority leaders of their respective chambers or their designees. The committee was authorized to review all mid-year, other-fund-increase requests by state agencies and make recommendations to the state budget office, as The Nerve previously reported. For 10 years, the committee operated under annual state budget provisos, though it was discontinued in the fiscal 2020-21 budget year, records show. “They have not met in several years,” Senate Clerk Jeff Gossett confirmed in a recent email to The Nerve. The Nerve last week asked the Department of Administration, under the Freedom of Information Act, for any mid-year, other-fund-increase requests since July 1, 2021, submitted by state agencies to the Executive Budget Office, as had been done in previous years. Brundrett is the news editor of The Nerve (www.thenerve.org). Contact him at 803-394-8273 or [email protected]. Follow The Nerve on Facebook and X (formerlyTwitter) @thenervesc. Nerve stories are free to reprint and repost with permission by and credit to The Nerve.  

Editor’s note: This is the second investigative story in a two-part package on massive state financial accounts. The other story can be found here. By RICK BRUNDRETT A task force created last month by Gov. Henry McMaster to investigate a reportedly unclaimed $1.8 billion in a state account has met secretly at least three times, though an attorney for the state press association says those meetings should be open to the public. Written notes provided on May 3 to The Nerve by the S.C. Department of Administration, which is part of the governor’s Cabinet, show that the closed-door meetings on April 16, 23 and 30 of the “working group” included S.C. Comptroller General Brian Gaines, state Auditor George Kennedy and Department of Administration Executive Director Marcia Adams, with the last two meetings attended in person or remotely by state Treasurer Curtis Loftis.The S.C. Freedom of Information Act (FOIA) generally requires that meetings of public bodies be open to the public, with advance notice and posting of meeting agendas. In a written response on May 3, Department of Administration spokeswoman Brooke Bailey said sections of the open-records law cited by The Nerve were “not applicable.” “On April 11, Governor McMaster brought employees of certain state agencies together and asked that they devote their time to determining the existence, purpose and intended destination of the $1.8B in question,” Bailey said. “Different employees of those agencies have at various times worked independently and/or in a group in response to the Governor’s request.” “The employees’ efforts in this regard have been and will continue to be within the scope of their normal employment with their respective agencies,” Bailey added. The “Working Group Meeting Notes” show that each of the first three meetings were held from 10 a.m. to noon. Records from the first meeting on April 16 indicated that the recurring meetings were to be held in a fourth-floor room in the Edgar Brown Building on the State House grounds. The state’s open-records law requires public bodies to create minutes of meetings and make them publicly available. Department of Administration records also show that the April meetings included staffers of the Governor’s Office and S.C. Attorney General’s Office, in addition to employees of the Department of Administration and state treasurer’s, comptroller general’s and auditor’s offices. No specific findings about the $1.8 billion were listed in the documents, which included various bullet points under headings such as “Agency Progress Report,” “Discussion” or “Action Items.” The Nerve on May 6 asked Taylor Smith, who operates the Meriwether law firm in Columbia and is an attorney for the South Carolina Press Association, to review the task force meeting notes and offer his opinion about whether the private meetings violated the FOIA. The Nerve, through its parent organization, the South Carolina Policy Council, is an associate member of the press association. “Even if these ‘meetings’ don’t violate SCFOIA because this ‘working group’ is not somehow considered a public body for the Act’s required compliance, it certainly violates the spirit of the Act and the general notions of transparency that preserve the state citizenry’s trust in the performance of their elected officials,” Smith said in a prepared response to The Nerve. “It’s important to remember,” Smith continued, “that SCFOIA sets out the legal floor for transparency of the state’s governing bodies,” adding that the task force "could always be more  transparent and hold public meetings,” going behind closed doors to discuss only the “most sensitive topics relative to this investigation into this matter of significant public interest.” The Nerve last week submitted Freedom of Information Act requests to the Department of Administration for a list of upcoming “Working Group” meetings and notes of any meetings held since April 30. Official finger-pointing A critical 116-page interim report released last month after several months of investigation by a Senate Finance subcommittee chaired by Sen. Larry Grooms, R-Berkeley, accused state treasurer Loftis of failing to disclose the $1.8 billion fund to the Legislature and “to the people of South Carolina over the last seven years despite his explicit statutory duty to do so.” The April 16 Constitutional Budget Subcommittee report also claimed that Loftis’ “reckless plan to release on the internet highly sensitive financial information on the State,” which, according to the report, occurred after a contentious April 2 subcommittee hearing at which Loftis testified, “calls into questions his current judgement (sic) and temperament.” In a recent column in the (Charleston) Post & Courier newspaper, Grooms, who chairs the Senate Transportation Committee and has been in office since 1997, said Loftis should resign. Grooms contended in the piece that he “increasingly” believes that “this supposed money does not exist.” In a lengthy response posted on the Treasurer’s Office website, which was released the day after the six-member, bipartisan subcommittee’s report, Loftis denied the allegations, contending that the $1.8 billion is “not missing or recently discovered,” and that his office has been “fully transparent” about the matter, noting there has “never been an audit finding or recommendation regarding this fund.” “As the elected Treasurer of the State of South Carolina, I remain committed to ensuring the funds that I (have)custody(of) are properly managed and investigated,” Loftis, a Republican who was first elected in 2010, said on the website. After Gaines, the state comptroller general, in an October 2023 letter asked Loftis to investigate a cash balance in the disputed fund, the Senate Finance Committee researched the matter and determined the fund had a balance of about $1.8 billion, according to the subcommittee's report. That discovery followed a separate subcommittee investigation into a $3.5 billion accounting error, which, according to the report, stemmed from an earlier conversion to a different state accounting system and occurred during the tenure of ex-Comptroller General Richard Eckstrom, a Republican who resigned in April 2023 after 20 years in office. The South Carolina Policy Council in April recommended rebating the disputed $1.8 billion to taxpayers – noting it could be as much as $1,440 per taxpayer, based on a formula similar to the one used for state taxpayer rebates in 2022 – if no state agencies claim the money by June 30 or if agencies can’t provide evidence by then of their share of the funds. $1.8B in ‘other’ funds? In a written response in March to The Nerve, the Treasurer’s Office said the $1.8 billion is classified as  “‘other’ state funds in the General Ledger,” though the comptroller general classified it as general funds in that office’s Annual Comprehensive Financial Report. “Other” funds include such things as college tuition, lottery proceeds, state gasoline taxes, part of the state sales tax earmarked for K-12 education, and court fees and fines. For the fiscal year that ends June 30, lawmakers approved a total of nearly $14 billion in other fund spending. That represents more than a third of the total $41billion state budget, which includes state, federal and other funds. A footnote in the April 16 Senate Finance subcommittee report said because the $1.8 billion has “not been identified as to agency ownership and fund,” it “may consist” of federal, general and other funds, “each of which have specific requirements for disposition of earnings.” Asked whether the $1.8 billion was included in other-fund-surplus amounts recently provided to The Nerve by the Department of Administration, the Treasurer’s Office in a May 1 written reply said, “We can’t comment on a report that we didn’t generate.” Department of Administration records show that as of April 18, the Treasurer’s Office had a total of $3.27 billion in other fund reserves. The Nerve today has a separate investigative story on state agency other-fund surpluses. Brundrett is the news editor of The Nerve (www.thenerve.org). Contact him at 803-394-8273 or [email protected]. Follow The Nerve on Facebook and X (formerlyTwitter) @thenervesc. Nerve stories are free to reprint and repost with permission by and credit to The Nerve.

May 16, 2024 MEDIA RELEASE The following is a joint statement issued by the South Carolina Policy Council and South Carolina Public Interest Foundation in response to a recent opinion column submitted by S.C. Commerce Secretary Harry Lightsey to at least two news outlets in the state:The South Carolina Policy Council and South Carolina Public Interest Foundation last month jointly submitted a formal complaint to the S.C. State Ethics Commission regarding Scout Motors’ electric-vehicle assembly plant under construction in Richland County. The commission’s executive director in an April 26, 2024, letter notified the two organizations that the complaint “contained facts sufficient to warrant an investigation.” The Policy Council and The Nerve – the investigative news arm of the Policy Council – each published the complaint on their respective websites on April 29, 2024. On May 6, 2024, and May 9, 2024,  two South Carolina media outlets published an opinion column by S.C. Commerce Secretary Harry Lightsey addressing the complaint. Mr. Lightsey’s column, however, contains a number of mischaracterizations about the complaint, including: Most importantly, contrary to what Mr. Lightsey claimed, the Policy Council and Public Interest Foundation did not jointly file a complaint against Scout for “allegedly failing to register as a lobbyist principal.” Rather, the complaint asks the commission only to investigate whether Scout failed to register as a lobbyist principal under state ethics law before the Legislature and Gov. Henry McMaster last year approved a nearly $1.3 billion appropriation (Act 3 of 2023) for the project – a massive amount of state tax dollars and unprecedented among recent incentives deals, which Mr. Lightsey failed to mention. Mr. Lightsey stated that Scout wasn’t involved in his direct meetings about the project with the Republican and Democratic caucuses of the state House and Senate before the chambers passed Act 3 of 2023 and therefore wasn’t required by law to register as a lobbyist principal. The complaint, though, doesn’t mention those closed-door meetings. Instead, it lists three other private meetings or events between Scout officials or its representatives and Gov. McMaster, his staff or lawmakers before the appropriation was approved. Mr. Lightsey stated that Scout wasn’t involved in a “lengthy debate” in both the House and Senate before Act 3 of 2023 was passed (which took only one week for both chambers) and therefore wasn’t required by law to register as a lobbyist principal. But as with the earlier closed-door caucus meetings, the complaint doesn’t address whether Scout was involved with the open House and Senate debates but rather lists three separate private meetings or events between Scout officials or its representatives and Gov. McMaster, his staff or lawmakers before the appropriation was approved. Mr. Lightsey claims that the “main purpose of filing the complaint appears to be primarily to create an opportunity to publicly smear Scout and rehash long-standing grievances the Policy Council has with the confidential, competitive process of economic development recruitment and with economic development incentives.” The Policy Council and Public Interest Foundation strongly reject that they intended to “publicly smear” Scout with the filing of the complaint. Neither organization as a matter of principle opposes any company locating or expanding in South Carolina but believes all such businesses must comply with state ethics laws if applicable. As for the Policy Council’s “long-standing grievances,” the organization for nearly 40 years has stood firmly for the principle of free market enterprise and remains a leading champion for our vital business community but believes that the current incentives process lacks transparency and accountability to taxpayers. In the end, the Policy Council and Public Interest Foundation respect the purpose and procedures of the State Ethics Commission and will cooperate fully with its investigation of the filed complaint against Scout Motors Inc. South Carolina citizens and taxpayers deserve answers in this case. The South Carolina Policy Council is a Columbia-based, nonprofit, nonpartisan research organization founded in 1986 on the principles of limited government, free market enterprise, and individual liberty and responsibility. The Nerve, which has been operating since 2010, focuses on government waste, lack of transparency, conflicts of interest and abuse of power in South Carolina. The South Carolina Public Interest Foundation, which was founded in 2005 and is based in Simpsonville, is an independent, nonpartisan private operating foundation dedicated to ensuring that South Carolina governments, agencies and officials act in strict compliance with the state Constitution and statutes.    

By RICK BRUNDRETT The South Carolina Policy Council – the parent organization of The Nerve – and the South Carolina Public Interest Foundation have jointly filed a state ethics complaint against Scout Motors related to the $1.29 billion state appropriation last year for the company’s electric-vehicle assembly plant under construction near Columbia, according to a press release issued today. The written complaint, which was submitted to the State Ethics Commission and included with the press release, asks the commission to investigate whether Virginia-based Scout Motors Inc., a company created in 2022 by German-based Volkswagen, violated state ethics law by failing to register as a lobbyist principal before the S.C. Legislature and Gov. Henry McMaster approved the appropriation, known as Act 3 of 2023.The complaint cites findings in Nerve stories last year and this year about meetings or events involving Scout Motors officials or their representatives and McMaster, his staff or lawmakers before the appropriation was approved; and an earlier incentives proposal by the state of Mississippi. The findings “raise legitimate questions about whether Scout Motors or its representatives engaged in direct communication with lawmakers and/or the governor regarding Act 3 of 2023 before the law was passed,” the complaint contends. A main purpose of the state ethics law in question (Section 2-17-25(A) of the S.C. Code of Laws) is to “provide the public with advance notice of the identities of companies or organizations that plan to persuade state lawmakers and/or the governor to adopt their legislative agendas,” the  complaint concludes. The complaint and press release note that a lobbyist principal under state law is defined in part as someone who “directly employs, appoints, or retains” a lobbyist to “influence by direct communication,” among other things, the “action or vote” of the governor or lawmakers “concerning any legislation.”  The law requires that lobbyist principals register with the Ethics Commission within 15 days of “employing, appointing, or retaining a lobbyist.” Scout Motors first registered as a lobbyist principal with the commission a month after the $1.29 billion appropriation became effective on March 20, 2023, according to the complaint, citing commission records. As The Nerve previously has pointed out, the appropriation works out to be approximately $240 for every man, woman and child in South Carolina. The South Carolina Public Interest Foundation, based in Simpsonville and founded in 2005, is an “independent, nonpartisan private operating foundation dedicated to ensuring that South Carolina governments, agencies and officials act in strict compliance with the state Constitution and statutes,” according to its website. The South Carolina Policy Council, a nonprofit, nonpartisan research organization based in Columbia, was founded in 1986 on the “principles of limited government, free market enterprise, and individual liberty and responsibility,” according to its website. Big taxpayer gift, few answers As The Nerve previously reported, and as cited in the ethics complaint, the S.C. Legislature on March 15, 2023, gave final approval – just one week after it was passed by the Senate Finance Committee – to an amended joint resolution appropriating $1.29 billion in actual and projected state surplus funds to the S.C. Department of Commerce for “Project Connect,” the code name for the planned Scout Motors plant on an approximately 1,600-acre site at the town of Blythewood in Richland County. The total appropriation included $1.09 billion for land acquisition and site improvements, a rail spur bridge, road access, soil “stabilization,” water and wastewater infrastructure, a training center and “any such other purpose as is necessary and recommended” by the Department of Commerce. Commerce was appropriated another $200 million to loan to Scout Motors for “additional soil stabilization,” to be “paid back in full.” On March 20, 2023, McMaster signed the appropriation into law, effective that day. The law directed the state treasurer to transfer $1.2 billion to Commerce within five days of the law’s effective date, with the remainder of the appropriation to be dispersed within five days of the close of the state books or by Nov. 1, 2023, which ever occurred first. The Nerve last June revealed details of the 192-page state incentives agreement with Scout Motors, which announced on March 3, 2023, plans to create a minimum of 4,000 jobs and invest a minimum of $2 billion, though, among other things, the deal would allow the company itself to create at least 400 jobs and invest at least $400 million over an eight-year period, allowing the differences to be made up by company “affiliates” and “counted suppliers.” Up to 400 jobs could be “badge” workers, defined in the agreement as “cafeteria, security, and janitorial maintenance personnel.” The Nerve on Jan. 9 this year sent written questions to Scout Motors president and CEO Scott Keogh asking, among other things, whether Scout officials or other company representatives discussed the appropriation with McMaster or his staff or lawmakers or their staffs before the legislation was passed. No response was given. The Nerve sent written questions the same day to McMaster; Trey Walker, his chief of staff; and Brandon Charochak, the governor’s communications director, asking, among other things, whether the governor or staff members discussed the legislation with Scout officials or their representatives before the law’s passage. “Of course, state officials discussed and negotiated an incentive package with Scout officials before the legislation was introduced and prior to Scout deciding on South Carolina in March 2023,” Charochak said in an email response on Jan. 12. “It would have been impossible or unnecessary to draft a bill otherwise.” Charochak didn’t respond to a follow-up written question asking for clarity whether his email statement meant that Scout officials or their representatives specifically discussed the legislation with McMaster, his staff or lawmakers before the law was approved. House Speaker Murrell Smith, R-Sumter, and Senate Finance Committee Chairman Harvey Peeler, R-Cherokee, didn’t respond to written questions sent to them in January. The Nerve also sought comment that month from ex-House members Boyd Brown and Jim Merrill, who work for the Columbia-based lobbying firm, Tompkins Thompson & Brown, and were listed by Scout Motors initially on April 20, 2023, and on Jan. 5 and Feb. 22 of this year, as lobbyists for the company, along with Warren Tompkins and Michael Thompson, who also is a former House member.  In text responses, Brown and Merrill directed The Nerve to contact Scout officials. Online commission records show that last year, Scout Motors paid Brown, Merrill and Tompkins a total of $52,500. Behind closed doors The Nerve in its October story revealed, based on records obtained from the Governor’s Office and town of Blythewood under the state Freedom of Information Act, various closed-door meetings or events involving Scout Motors officials or their representatives, McMaster or his staff, or state lawmakers, including, as cited in the ethics  complaint: Oct. 25, 2022: A private meeting in Washington, D.C., involving a Scout Motors official and representatives of the Governor’s Office and the S.C. Department of Commerce. Feb. 2, 2023: A private dinner at the Governor’s Mansion involving McMaster, Walker, Keogh and other company leaders, U.S. Sen. Lindsey Graham, and other state and local officials. Feb. 26, 2023: A private event at the Williams-Brice football stadium in Columbia, billed as a “Confidential Economic Development Dinner,” involving at least 31 invited guests, including McMaster and various staff members; Keogh, eight other Scout or Volkswagen executives, and a Volkswagen board member; and nine state lawmakers, including House Speaker Smith; Senate President Thomas Alexander, R-Oconee; and Sen. Peeler. In addition, The Nerve reported that on Jan. 31, 2023, Smith and Peeler held a conference call on the project with the “Commerce team,” the identities of whom weren’t identified, according to a Governor’s Office timeline. On Feb. 14 and Feb. 16, 2023, Smith and Peeler met privately at the Governor’s Office with the “Commerce team,” the timeline noted. In February this year, The Nerve revealed that the state of Mississippi, which, as also stated in the ethics complaint, was competing against South Carolina and other states for the project, had offered $150 million in state grant funding through special legislation, according to a company incentives wish list known as a “request for proposal” (RFP). The RFP was obtained from the Mississippi Development Authority under that state’s open-records law. The listed deadline for the state of Mississippi to complete its RFP was Oct. 1, 2022 – 24 days before the private meeting in Washington, D.C., involving a Scout Motors official and representatives of the S.C. Governor’s Office and S.C. Department of Commerce. JLL Inc., a Chicago-based, global real-estate services firm, also provided on behalf of Scout Motors a request for proposal to Richland County and Blythewood officials in December 2022, as the October Nerve story noted. The Nerve in January this year sent written questions to JLL officials about whether they discussed the $1.29 billion appropriation with McMaster or his staff, or state lawmakers or their staffs, before the law was passed, though no response was provided. The incentives wish lists submitted to South Carolina and Mississippi included requests for cash grants, highway interchanges, a test track and commercial helipad, a truck staging area, a 40,000-square-foot training center along with taxpayer-funded employee training and recruitment, a state-constructed daycare center for employees, and various state and local tax breaks. The South Carolina Policy Council last December published recommendations to improve transparency in the state incentives process, including holding public hearings on incentives prior to approval, and requiring independent, third-party reviews of proposed deals to determine true costs and benefits. Ethics investigations Under state law, the eight-member State Ethics Commission is made up of four appointees by the governor and two each by the Senate and House, with consent of the Legislature. No more than two of the governor’s appointees can be members of the governor’s political party, and the law requires that the House and Senate each make one appointment based on the recommendation of the members of the largest minority political party in their respective chambers. Current lawmakers or ex-lawmakers out of office for less than eight years; relatives of lawmakers, the governor or other statewide elected officials; or those who registered as lobbyists within four years of being appointed to the commission aren’t eligible to serve on the commission, under the law. Their terms are for five years. The commission, which currently is chaired by Scott Frick, is one of the state’s smallest agencies with a current total budget of about $2.6 million and 21 employees as of April 17, state records show. Generally, after an ethics complaint is filed with the commission, the alleged violator is given the opportunity to file a formal response, according to the commission’s website. The commission’s executive director – currently Meghan Walker Dayson – reviews the  complaints to determine whether there are sufficient facts presented to constitute a potential violation and warrant an investigation. If an investigation is conducted, commission staff can interview witnesses, subpoena evidence and take depositions to determine the facts of the alleged violation, according to the website. When the investigation is completed, the commission reviews the evidence to determine if there is probable cause to hold a hearing on the allegations before a three-member panel of the commission. Hearings are similar to courtroom proceedings in which testimony is taken under oath, and evidence is presented. The commission can take certain disciplinary actions upon a guilty finding of an alleged violation, such as issuing a public reprimand, ordering restitution or levying a maximum civil penalty of $2,000, according to the commission’s website. Under state law, a person who fails to register with the Ethics Commission as a lobbyist principal can face a civil fine of $100 if no filing was submitted within 10 days of the established deadline, which can grow to a maximum of $5,000 if the required statement wasn’t filed after notice was given. Brundrett is the news editor of The Nerve (www.thenerve.org). Contact him at 803-394-8273 or [email protected]. Follow The Nerve on Facebook and X (formerlyTwitter) @thenervesc. Nerve stories are free to reprint and repost with permission by and credit to The Nerve.

By RICK BRUNDRETT Update: 6/5/24 - The S.C. Legislature voted to elect state Court of Appeals Judge Letitia Verdin to a Supreme Court seat held by John Kittredge, who was elected in March as the top court's next chief justice. Verdin was the sole candidate for Kittredge's seat after the other two nominees - Blake Hewitt and Jocelyn Newman - dropped out, which often happens before judicial elections based on unofficial vote tallies. Update: 5/9/24 - The Judicial Merit Selection Commission voted to nominate the following candidates for the June 5 election in the Legislature for a Supreme Court seat, according to a JMSC release: Court of Appeals judges Blake Hewitt of Conway and Letitia Verdin of Greenville, and Circuit Court Judge Jocelyn Newman of Columbia. Three other candidates - Administrative Law Court Chief Judge Ralph King "Tripp" Anderson of Columbia, and circuit judges Deadra Jefferson of Charleston and R. Keith Kelly of Spartanburg, who is an ex-House member, were found qualified but not nominated, according to Erin Crawford, the commission's chief attorney, in a written response to The Nerve. Under state law, a maximum of three candidates can be nominated for a judicial seat filled by the Legislature. The Supreme Court seat to be filled in the June 5 election currently is held by John Kittredge, who was elected in March as the top court’s next chief justice. Update: 4/17/24 – A day after this story was published, S.C. lawmakers rejected a bid by James Smith, a former state House member and Democratic nominee for governor, to become a 5th Circuit Court judge, voting 94-57 to restart the screening process for the seat. Since 2016, Ralph King “Tripp” Anderson unsuccessfully has tried three times to get a seat on the S.C. Supreme Court – the state’s top court. Each time, the legislatively controlled Judicial Merit Selection Commission (JMSC) found Anderson, the state Administrative Law Court's chief judge, qualified and nominated him twice for election by the S.C. Legislature, though the commission later rescinded his second nomination, records show. In Anderson’s third try last year for a Supreme Court seat, he was the only one of four qualified candidates who wasn’t nominated. Anderson, of Columbia, has been on the six-member Administrative Law Court (ALC), which among its duties hears administrative appeals from certain state agencies, since 1994 and has been its chief judge since 2009. This year, he is making his fourth run for the Supreme Court.Anderson is vying against five other sitting judges – whose candidacies were announced last week by the JMSC – for the soon-to-be vacant seat of John Kittredge, who was elected by lawmakers last month to become the next chief justice. Kittredge on Aug. 1 will take the seat of Donald Beatty, who is retiring  because of the mandatory retirement age of 72 for full-time judges. The election for Kittredge’s seat is tentatively set for June 5. South Carolina and Virginia are the only states where their legislatures play primary roles in electing judges. Although Anderson is expected to be re-elected to the ALC in an election scheduled for Wednesday in the Legislature, as he is the only candidate for that seat, he likely will face long odds again to win a Supreme Court seat in a subsequent election. That’s in large part because under a nearly 30-year-old state law, the JMSC can nominate only three qualified candidates for any judicial seat under its jurisdiction. And Anderson isn’t alone among qualified candidates who didn’t get nominated in recent years. The Nerve’s review of JMSC qualification reports published from January 2018 through January this year found that a total of 58 candidates, including Anderson, were qualified but not nominated by the commission in elections for 25 family, circuit, Administrative Law Court, Court of Appeals and Supreme Court seats. For this year’s judicial elections, the commission qualified but didn’t nominate 10 circuit court and two Court of Appeals candidates. Of the 58 total qualified  but unnominated candidates in The Nerve’s review, 46, or nearly 80%, sought circuit court seats. Those judges typically hear criminal cases with possible sentences of more than 30 days in jail and civil cases involving more than $7,500. The Nerve’s review found that of the total 336 candidates qualified by the commission since 2018, the unnominated candidates represented more than 17% of the group. The Nerve in recent weeks sent written inquiries to more than a dozen unnominated candidates in recent years about their views on the nominee cap. Most didn’t respond, and the remainder declined comment. As The Nerve has reported over the years, JMSC deliberations typically are done behind closed doors, and state law and court rules generally protect the secrecy of candidate records used in screening hearings. The law and commission rules also make it difficult for citizens to testify at or even attend hearings, which are held on the State House grounds in downtown Columbia during regular business hours and aren’t livestreamed. And while official JMSC qualification reports provide background information on the candidates and indicate how they met nine criteria under state law, such as experience and judicial temperament, the records give no explanations why the commission nominated certain candidates over others. ‘Internally rigged system’ Lawmakers critical of the three-nominee cap contend many qualified candidates never make it to an election in the Legislature, and that state law gives too much power to the 10-member Judicial Merit Selection Commission – six of whom must be lawmakers. Currently, all six legislators on the commission are lawyers. Sen. Josh Kimbrell, R-Spartanburg, co-sponsored a bill that, among other things, would have repealed the nominee cap, though it has remained stuck this year in a Senate Judiciary subcommittee chaired by Sen. Scott Talley, R-Spartanburg, an attorney who is a JMSC member. The full Judiciary committee is chaired by Sen. Luke Rankin, R-Horry, an attorney who currently is the JMSC’s vice chairman. Under state law, the House speaker appoints five members of the JMSC, with the Senate Judiciary Committee chairman and Senate president having three and two appointments, respectively. Voters in 1996 approved a constitutional amendment that requires the Legislature to elect judges from among candidates qualified and nominated by the commission. A related 1996 law, which took effect in 1997, set the current nominee cap of three per judicial seat. “Repealing the cap is a good thing,” Kimbrell told The Nerve last week. “Historically, what’s happened is that it’s kind of about races that have been set up: You have two liberal candidates and one conservative candidate. (By repealing the cap), you would have a broader scope, more candidates, more choices; and the whole body (of the Legislature) needs to vote on that.” Contacted last week by The Nerve, Rep. Joe White, R-Newberry, who was the lead sponsor of another judicial reform bill, which was co-sponsored by 33  mostly Republican House members but hasn't made it out of the House Judiciary Committee, contended that attorney-lawmakers on the JMSC who practice criminal defense law “obviously are not excited about putting a constitutionally conservative attorney on the bench.” “It is almost impossible to get a successful, constitutionally conservative lawyer to file to become a judge because they realize the JMSC is stacked against them,” White said. House minority leader Todd Rutherford, D-Richland, a criminal defense lawyer who serves on the commission, was the subject of controversy last year as the attorney for a convicted murderer who was released from prison 16 years before his sentence was set to end after now-retired Circuit Court Judge Casey Manning issued a secret order for his release, which the Supreme Court later voided. Those events spurred nine of the state’s 16 solicitors in an October letter to Sen. Rankin and House Speaker Murrell Smith, R-Sumter, to call for the immediate removal of lawyer-lawmakers from the JMSC – which didn’t happen. White said even if the commission nominates three candidates for a judicial seat, lawmakers often pressure the less-favored candidates to withdraw before an election, telling them, “If you ever want to be a judge in the future, you need to drop out now.” “So it’s an internally rigged game,” White said. That includes the upcoming election to fill Kittredge’s Supreme Court seat, White contended. Kittredge’s successor will serve the remainder of his 10-year term, which will expire on July 31, 2028, according to the JMSC. White said one of the six announced candidates for the Supreme Court seat, whom he declined to identify, was told when he applied that “he could file, but this is going to be a woman’s seat this time.” Last year, South Carolina made national news when the five-member Supreme Court became the only all-male top state court with the election of Gary Hill to replace Kaye Hearn, who retired because of the mandatory retirement age. Besides Anderson, the other five announced Supreme Court candidates are Court of Appeals judges Blake Hewitt of Conway and Letitia Verdin of Greenville, and circuit court judges Deadra Jefferson of Charleston, R. Keith Kelly of Spartanburg and Jocelyn Newman of Columbia, according to a JMSC press release. Screening hearings for the candidates are scheduled for May 9. Insider edge Ex-lawmakers or relatives of sitting or former lawmakers, or those who have professional or personal ties to legislators, typically have a good chance of becoming judges, as The Nerve repeatedly has pointed out in recent years. This year, for example, Kelly, who is one of the six announced Supreme Court candidates in the election tentatively set for June 5, is a former House member. So is James Smith, who is the lone candidate for a 5th Circuit Court seat to be filled in Wednesday’s scheduled election after the only other nominated candidate withdrew in January, according to Judicial Merit Selection Commission records. White told The Nerve that it “wouldn’t surprise” him if Smith, who was the unsuccessful Democratic nominee for governor in 2018, doesn’t receive a majority vote during a joint session of the Republican-controlled Legislature, contending that Smith’s supporters are pushing him because he’s “an intelligent, left-leaning attorney.” Lawmakers on Wednesday are expected to vote on 33 family, circuit, Administrative Law Court and Court of Appeals seats. As of last Wednesday, there were a total of 42 candidates, though 15 other nominees had withdrawn in 11 races, JMSC records show. Judges in the state's “unified” court system who are elected in a joint session of the Legislature receive annual salaries of at least $200,000. Current judicial salaries are as follows, according to records released last month by the S.C. Court Administration Office after The Nerve submitted a request under the state open-records law: Supreme Court chief justice ($235,186), other Supreme Court justices ($223,987), Court of Appeals chief judge ($221,747), other Court of Appeals judges ($218,387), circuit court judges ($212,787), and family court judges ($207,187). S.C. Judicial Department salaries for judges and court staff making at least $50,000 are exempt from the online state salary database, as The Nerve has pointed out. Supreme Court justices serve 10-year terms; the terms for the above lower-court judges are for six years. The six members of the Administrative Law Court – an executive branch agency that is not part of the “unified” court system – serve five-year terms. Last year, Chief Judge Anderson’s salary was $164,816, according to his annual income-disclosure statement submitted to the State Ethics Commission. Public ‘deceived’ The South Carolina Policy Council – the parent organization of The Nerve – last April proposed a number of judicial reforms, including removing lawyer-lawmakers from the Judicial Merit Selection Commission, and repealing or raising the nominee cap. It recently created a “Judicial Reform Action Page” to encourage citizen involvement. Although various judicial reform bills were introduced this year in the Legislature, only one – S. 1046 – likely has any chance of becoming law given an April 10 deadline for one chamber to get its bills over to the other chamber, White told The Nerve. As for the three-nominee cap, the original version of S. 1046, which was sponsored by Sen. Greg Hembree, R-Horry, and co-sponsored by 21 mostly Republican senators, would have repealed the cap entirely, though under the version passed by the full Senate last month, the cap would be raised to six nominees. The bill is now in the House Judiciary Committee, chaired by Rep. Wes Newton, R-Beaufort, who is an attorney. A special House committee studying judicial reform recommended in February, among other things, that the nominee cap be removed. But a subsequent House bill, which would repeal the cap, hasn’t moved out of the House Judiciary Committee. White said he expects some version of the Senate bill that’s now in the House Judiciary Committee to pass this year, though he contended the current version is  “so watered down it’s not a very good bill.” He said he plans to offer an amendment at the subcommittee or committee levels, or on the House floor if necessary, to repeal the nominee cap. Lawmakers this year “want to go home and say, ‘We passed judicial reform,’” White said, noting that 91% of voters in the Republican presidential primary election in February indicated on an advisory ballot question that they supported increasing the “independence and accountability” of the state’s judiciary by “improving transparency and reducing conflicts of interest” in screening and electing judges. Still, White said he’s not optimistic that many significant changes will be made this year even with the possible passage of the Senate bill. “The public will once again be deceived into believing we have reformed the judicial system,” he said. Brundrett is the news editor of The Nerve (www.thenerve.org). Contact him at 803-394-8273 or [email protected]. Follow The Nerve on Facebook and X (formerlyTwitter) @thenervesc. Nerve stories are free to reprint and repost with permission by and credit to The Nerve.

By RICK BRUNDRETT S.C. officials want to spend millions of state tax dollars on a new “clean electricity” strategy that includes a type of nuclear technology currently not in use by any U.S. utility, an investigation by The Nerve has found. In recently passing its version of the nearly $41 billion total state budget for fiscal 2024-25, which starts July 1, the Republican-controlled S.C. House designated $50 million out of a state “rainy-day” fund for the "South Carolina Nexus for Advanced Resilient Energy,” or “SC Nexus” for short.In an application submitted last year – which The Nerve recently reviewed – for federal designation as an inaugural “Tech Hub,” the S.C. Department of Commerce said the state’s expanding manufacturing sector, along with the scheduled closure of two of three regional coal plants by 2030, “provides opportunity to innovate, scale, and export new electricity technology and intellectual property.” That includes developing “small nuclear” technology, according to the application, which listed nuclear power company Westinghouse as an industry “partner” of SC Nexus and noted the company’s efforts to obtain federal approval to test its “small modular reactor” (SMR) model. Westinghouse has a facility near Columbia that manufactures nuclear fuel assemblies used in power plants throughout the U.S. But a U.S. Nuclear Regulatory Commission spokesman told The Nerve earlier this month that Westinghouse’s AP300 SMR model has not been approved, and that only one other SMR design by another company has been certified, though it’s not currently in commercial use by any utility in the country. Westinghouse was in the spotlight seven years ago with the failed $9 billion V.C. Summer nuclear-expansion project in Fairfield County – a joint project involving private utility South Carolina Electric & Gas and state-owned utility Santee Cooper. The project collapsed in July 2017 several months after Westinghouse, which was supposed to construct two large reactors at the plant site, filed for bankruptcy. Asked if any of SC Nexus’ listed industry “partners,” including Santee Cooper and Virginia-based Dominion Energy, which acquired SCE&G after the V.C. Summer project was abandoned, are planning to use SMRs in South Carolina, Commerce spokeswoman Kelly Coakley in a written response last week directed The Nerve to contact the utilities to "determine how they are considering using or deploying SMRs.” “Each industry partner plays a critical role in SC Nexus,” according to the application for federal Tech Hub designation, which Coakley said Commerce submitted in August. Representatives for Dominion, Santee Cooper and Westinghouse, which is headquartered in Pennsylvania and recently was sold to two Canada-based companies, didn’t respond to The Nerve’s written requests last week for comment. Duke Energy, which also is listed in the federal application as an industry “partner” with SC Nexus, said SMRs will “play a significant role in our Carolinas operations,” according to a utility spokeswoman who was quoted in a November story in the E&E (energy and environment) News publication. The Nerve last week sent written questions to Charlotte-based Duke Energy seeking specifics about potential SMR plans for South Carolina but received no response. Asked whether the S.C. Department of Commerce plans to use existing state funds toward the development or use of SMRs in the Palmetto State, Coakley in her written response said that “at this time, no determination has been made as to how funds would be used.” In the federal application, Commerce said the “ambition” of SC Nexus is to “create a globally leading hub driving innovation in core technologies that enable an end-to-end resilient, sustainable energy ecosystem across clean-electricity generation, distribution, and grid-scale storage.” Besides “small nuclear” technology, other “technology-focused initiatives” include efforts to develop “innovative and accelerated processes to manufacture, test, and certify components” for “offshore wind, hydrogen, batteries, and photovoltaic (PV) solar,” according to the application, which noted SC Nexus is made up of more than 30 members, including government agencies, universities, private industry and the Savannah River National Laboratory. The U.S. Department of Commerce’s Economic Development Administration (EDA) in October approved South Carolina’s application for designation as one of 31 inaugural “Regional Technology and Innovation Hubs” under the 2022 CHIPS and Science Act, which authorized $10 billion to launch regional Tech Hubs nationwide. Coakley in her written response said with the Tech Hub designation, SC Nexus, which geographically covers the Midlands and Upstate in South Carolina, as well as Augusta-Richmond County in Georgia, last month applied for approximately $40 million to $70 million in initial federal funding expected to be awarded to each of five to 10 designated hubs. The Nerve recently sent written questions to Republican Gov. Henry McMaster and House Speaker Murrell Smith, R-Sumter, about the potential use of small modular reactors in South Carolina, as well as a related House bill sponsored by Smith and co-sponsored by more than 60 mostly Republican House members, which critics contend would create another V.C. Summer-type debacle for ratepayers. Neither McMaster nor Smith responded. ‘Transformative potential’ McMaster in his state budget proposal released in January recommended $15 million for SC Nexus as a required state match to be eligible for federal funding. Coakley said Commerce in its budget recommendation sought a total of $10 million in recurring state funds and another $40 million in non-recurring dollars. The House’s state budget version allocates a total of $50 million for SC Nexus out of the state Capital Reserve Fund, which represents more than 12% of the House’s proposed appropriation for the “rainy-day” fund for next fiscal year. State voters in 2022 approved increasing the Capital Reserve Fund from 2% to 3% of general fund revenues from the latest completed fiscal year. To put it into some perspective, the proposed $50 million is larger than the total current budgets of several dozen state agencies. “SC Nexus is the culmination of groundwork laid in prior years through the collaborative public-private initiatives,” McMaster wrote in his budget proposal, contending that “no endeavor illustrates our state’s leadership better.”  McMaster in his proposal said the state Commerce department developed SC Nexus in “collaboration with our research institutions of higher education, technical colleges, state agencies, the Savannah River National Laboratory, economic development non-profits, and private businesses,” though he provided no specifics about potential projects. Likewise, a controversial House energy mega-bill also lacks details on proposed SC Nexus projects. The House Labor, Commerce and Industry Committee last week passed an amended version of the bill, which is expected to be debated this week by the full House. The bill notes that the Legislature “acknowledges the transformative potential of advanced nuclear generation, such as small modular reactors.” Separately, the lawmakers last month approved a joint resolution that originated in the Senate supporting the goals of SC Nexus, including the “development and commercialization of small modular nuclear reactors.” But neither piece of legislation provides specifics about how SMRs would be used in South Carolina or any details on Westinghouse’s SMR plans. Outside of SC Nexus, critics of the House bill contend that the bill would put many utility ratepayers in South Carolina on the financial hook if Dominion Energy and Santee Cooper, which is headquartered in Berkeley County, are allowed to construct a large natural gas plant in Colleton County. Last week, the South Carolina Policy Council – the parent organization of The Nerve – released an analysis of the bill, drawing similarities to a 2007 state law that made the failed V.C. Summer project possible and contending, among other things, that the legislation would put broadly defined economic needs at the center of ratemaking decisions, which could conflict with consumer interests. No use in U.S. Unlike the much-larger reactors used at commercial nuclear plants, many small modular reactors, which have up to 300 megawatts of electric capacity per unit, can be factory-assembled and transported to locations for industrial applications or to serve remote areas with limited grid capacity, according to the International Atomic Energy Agency (IAEA). One megawatt is one million watts of electricity. Elsewhere in the world, SMRs are under construction or in the licensing stage in Argentina, Canada, China, Russia and South Korea, the IAEA noted in an article last September. In a March 11 written response to The Nerve, U.S. Nuclear Regulatory Commission (NRC) spokesman Scott Burnell said the NRC has “yet to receive” an application from Westinghouse to “certify (approve) the AP300 for general U.S. use, nor to approve construction and/or operation of the design at a specific site.” Burnell said only one SMR design by Portland-based NuScale Power Corp. currently has been certified by the NRC, though he added no U.S. utilities have applied to use that model. In November, NuScale and the Utah Associated Municipal Power Systems jointly announced they were scrapping the years-long planned “Carbon Free Power Project,” which was to be based on NuScale's SMR model. NuScale blamed the failed project on high inflation costs for certain parts, according to media reports; Burnell told The Nerve that the company was working with the project on "pre-application activities until late last year." Last May, Westinghouse submitted a “pre-application Regulatory Engagement Plan” to the NRC for its SMR model, which noted that the SMR “conceptual design phase” would be based on “proven AP1000 plant technology,”  according to the application, which was reviewed by The Nerve. The much-larger AP1000 model was planned for the two reactors in the now-abandoned V.C. Summer project. Burnell said Westinghouse’s AP1000 design, which he noted was certified at the end of 2011, currently is used in Georgia. The 1,114-megawatt reactor began operating last summer with two existing reactors at the Vogtle nuclear plant near Waynesboro, Ga.; another AP1000 reactor was expected to go online at the site by this year, according to an August U.S. Energy Information Administration release, which said the expansion project ran into “significant construction delays and cost overruns.” Similar issues also plagued the failed V.C. Summer project, though the S.C. Public Service Commission over the years approved nine rate hikes for SCE&G customers to help finance the project, which was made possible by the quietly passed 2007 state law known as the Base Load Review Act, as The Nerve reported. Asked how a pre-application differs from a formal licensing application, Burnell in his written response said pre-applications “help ensure applicants and the NRC staff have a common understanding of the issues involved in certifying a reactor design or applying for permission to build/operate a reactor.” Burnell said pre-application reviews are done at the request of the applicant, which would have to “make a decision on when to move to a full, formal application that undergoes a separate review.” Asked how long the pre-application review period could take, he replied, “Westinghouse is in the best position to offer an estimate of how long they expect to continue pre-applications with the NRC; the agency has no set timetable for such work.” The are two basic NRC review paths that Westinghouse could take to gets its reactor design certified and obtain a construction permit and operating license,  both of which could take at least six years based on agency review goals, Burnell said, though he added the timetable could be shortened if certain review stages overlap. 'Global leader' In her written response last week to The Nerve, Commerce spokeswoman Coakley said as a federally designated “Tech Hub,” SC Nexus will be able to directly apply for future Tech Hub funding and will have “priority status for other federal grants.” She added that the federal Economic Development Administration will provide SC Nexus “support in attracting foreign direct investment," though she didn't provide details on what types of projects would receive that funding. Under Commerce’s $50 million state budget proposal, $10 million in recurring funds would be used to set up a division within the agency, including the creation of six full-time positions; and implementing a state grants program “related to the SC Nexus mission,” Coakley said. The other $40 million in proposed nonrecurring state funds under the Commerce plan would be used to provide matches for federal grants and support the state grants program, she said. Commerce’s total state budget for this fiscal year, which includes state, federal and “other” funds, is nearly $316 million – one of the larger overall budgets among state agencies. SC Nexus’ first six projects – the provided descriptions of which are laden with technical jargon – include, according to Coakley: The Carolina Institute for Battery Innovation (CIBI): The University of South Carolina will “expand pilot manufacturing infrastructure to accelerate innovation and commercialization of Battery Energy Storage Systems (BESS) at reduced costs and with improved features.” H2 Resilience Demonstrator and Testbed (H2RDT): Rolls-Royce plans to work with “experienced third parties” to construct a “replicable modularized Hybrid Energy Storage System (HESS”) at its Aiken campus for “H2 firms to affordably demonstrate and test HESS components.” Economic Development through Grid Emulation (EDGE): An “upgrade to Clemson University’s existing eGRID testing facility” for GRTs (Grid Resilience Technology) will create a “versatile, reconfigurable, and mobile 25MW test facility and real-time power grid emulator.” The Grid Enabled Cyber Operations (GECO) Range: The Savannah River National Laboratory will develop a “full-scale multi-modal grid operations center to conduct cyber-physical assurance on grid hardware and software, and train grid cyber defenders.” The Entrepreneurship and Innovation eXchange (eiX): The state-created South Carolina Research Authority will support the “region’s GRT entrepreneurs and businesses” by “intentionally connecting them to mentorship, subject matter experts, and intellectual property; providing comprehensive training to launch and grow their businesses; and increasing capital formation, deployment and access.” The Education and Workforce Center (EWC): The S.C. Technical College System will “house initiatives that elevate citizen awareness of GRT careers, advance current and future GRT workers’ technical and soft skills and address the lack of critical support services to workforce engagement.” “S.C. Commerce assessed what is needed for the state to fully take advantage of and realize the long-term benefits of being recognized as a global leader in advanced energy,” Coakley said about agency’s $50 million budget proposal. Any state funding for SC Nexus for the fiscal year that starts July 1 would have to be approved by both legislative chambers and McMaster. The Senate currently is considering its version of the state budget. Brundrett is the news editor of The Nerve (www.thenerve.org). Contact him at 803-394-8273 or [email protected]. Follow The Nerve on Facebook and X (formerlyTwitter) @thenervesc. Nerve stories are free to reprint and repost with permission by and credit to The Nerve.

By RICK BRUNDRETT Update: 3/13/24 - A total of 66 county magistrates statewide remain in "holdover status," according to an updated list released by the S.C. Court Administration office. The latest list was provided after The Nerve on Feb. 23 submitted a written request under the state Freedom of Information Act. Dozens of county magistrates statewide continue to serve months or even years after their terms have expired – giving S.C. senators who control their nominations the power to fire them at any time. As of last week, 71, or a nearly a quarter, of the 300 magistrates statewide identified on the S.C. Judicial Department’s website remained in “holdover status,” The Nerve found in a review of the most recently available holdover lists from the department and Governor’s Office, as well as Senate journals, which record official actions of senators while the 46-member chamber is in session.The percentage of judges in holdover status changed little from when The Nerve examined those records last year. Over the past two months, senators reappointed two judges in holdover status – both of whom had been serving nearly a year past their terms – plus confirmed four new judges for seats that had been on the holdover lists. Oconee County magistrates Blake Norton and William Derrick each have been serving almost 18 years beyond when their last terms expired – the longest holdover periods among all magistrates, records show. Senate President Thomas Alexander, a Republican who joined the Senate in 1994 and has been the chamber’s top officer since 2021, has sole control over magistrate nominations in his home county. Alexander didn’t return a written message last week from The Nerve seeking comment. The Nerve in 2019 revealed that in 12 counties, one senator controls the nominations of magistrates in those counties. In Pickens County, three magistrates each have been serving nearly six years past their terms, The Nerve’s latest review found. In a written response last week to The Nerve, Sen. Rex Rice, R-Pickens, who largely controls magistrate nominations in his county, said one of the three magistrates is retiring, and that he plans to go through “evaluations and reappointments at that time.” He added his reasons for keeping the other two judges in holdover status have remained the same since interviewed last year. “By having them in holdover status, my belief is they are more accountable because I could change them tomorrow,” Rice, a contractor who controls nearly 80% of the weighted senatorial delegation vote in his county, said at the time. At least one magistrate in 22 of the state’s 46 counties was in holdover status as of last week, The Nerve’s latest review found. Magistrate judges handle traffic tickets and other relatively minor criminal and civil cases. They don’t have to be lawyers, though those appointed in recent years must have a bachelor’s degree. Under the S.C. Constitution, magistrates are appointed by the governor with “advice and consent” of the Senate, though in practice, senators control the selection process in their home counties. Magistrates serve four-year terms “and until their successors are appointed and qualified,” under state law, which means they can continue working after their terms expire if allowed by their local senators. It also means senators with nomination control can fire those judges in holdover status at any time. Senators have no firing authority by themselves while magistrates are serving their regular terms, though the S.C. Supreme Court can remove them for ethical violations. Magistrates’ pay varies widely statewide. The Nerve last year reported, for example, that for most Oconee County magistrates, their annual pay ranged from $54,489 to $89,357, according to the fiscal year 2022 wage-and-salary survey by the South Carolina Association of Counties (SCAC). In comparison, the annual salary for most Richland County magistrates for that fiscal year was $114,231, according to the SCAC report. As of last week, at least five magistrates in that county were in holdover status for 10 months, records show. ‘Not an indictment’ The Senate on Thursday began debate on a judicial reform bill, which, among other things, would strip Senate delegations’ control over magistrate nominations and redistribute it among House and Senate members serving their respective counties. The bill, however, would allow magistrates to remain indefinitely in holdover status. “It is essential, it is absolutely critical to our form of government and democracy in South Carolina and America that the public have confidence in their judicial system and how that judicial system is elected,” Sen. Greg Hembree, R-Horry, a former longtime solicitor and the bill’s lead sponsor, told his Senate colleagues in summarizing the bill. “And if we have an opportunity to build that trust, to take those steps to try to increase that confidence, then it’s our obligation to do it.” Debate on judicial reform is expected to resume this week in the Senate. Hembree, who chairs the Senate Education Committee, pointed out that the Legislature’s judicial-reform efforts are “not an indictment of our current judiciary.” Yet in the statewide Republican presidential primary last month, a nonbinding advisory question asking whether the state should adopt reforms to “increase the independence and accountability” of the state’s judiciary was approved by 91% of the cast votes. The Nerve last month before the primary election detailed how lawmakers over the years have favored ex-legislators, relatives and others with ties to current or former lawmakers when electing judges. Attorney James Smith of Columbia, a former House member and unsuccessful Democratic gubernatorial candidate in 2018, is the sole candidate for a 5th Circuit Court seat after the other nominee dropped out, which is commonly done by candidates after tallying legislators’ expected votes before elections. As The Nerve has pointed out over the years, South Carolina and Virginia are the only states where their legislatures play primary roles in electing judges. The South Carolina Policy Council – the parent organization of The Nerve – last April proposed a number of judicial reforms, including closing the holdover loophole and ending Senate delegation control over the magistrate nomination process. It recently created a “Judicial Reform Action Page” to encourage citizen involvement. Besides reporting on the holdover-status problem last year, The Nerve in a companion investigative story revealed that longtime senator-lawyer Brad Hutto, D-Orangeburg, for more than a year represented dozens of mainly criminal clients before magistrates whom he played a prominent role in nominating. Hutto, the Senate’s Democratic minority leader, acknowledged that he and his attorney-son, who works in the same law firm, have handled many cases before Orangeburg County magistrates whom he helped nominate, though he stressed that those judges haven’t shown him, his son or any other lawyers in their firm any special treatment. As of last week, three Orangeburg County magistrates were among at least 43 judges statewide in holdover since last April 30, records show. Spartanburg County led all counties with at least 17 magistrates in holdover status – all of them serving past their April 30 term-expiration dates, records show. Other reform efforts Less than three weeks after The Nerve in September published the story on Sen. Hutto and the companion magistrate-holdover piece, Gov. Henry McMaster in a letter to senators called for reforms in the magistrate selection process, pointing out that his "relatively recent predecessors adopted or acceded to a custom of senatorial deference, whereby a local senator or county senatorial delegation is relied upon as the sole source for nominations." McMaster, a Republican, in his letter contended that candidates have not been "sufficiently vetted in recent years" and noted that dozens of magistrates have been "acting in a holdover capacity" after their four-year terms have expired. He said future candidates who are considered by him for appointment will be required to complete "more detailed applications" and "waive confidentiality protections" for "any attorney or judicial disciplinary proceedings." The governor, however, said he didn’t “presently intend to eliminate the practice” of receiving magistrate nominations from senators. Lawmakers in both chambers have introduced a variety of judicial reform bills this legislative session, though they have yet to make any significant changes. The legislation includes a bill co-sponsored by Sens. Wes Climer, R-York, and Josh Kimbrell, R-Spartanburg, which, among other proposed reforms, would prohibit lawyer-senators from representing clients for fees before magistrates if they voted to confirm those judges within the preceding 12 months. The bill, which was introduced last year, hasn’t moved out of the Senate Judiciary Committee, chaired by Sen. Luke Rankin, R-Horry, who is an attorney. In an interview with The Nerve last week, Climer contended that Rankin is a “liberal who doesn’t believe what the rest of the caucus believes, so the habit has been to do whatever you need to get a bill out of Judiciary, and then you fix it as soon as it gets to the (Senate) floor.” As for the current Senate floor debate on judicial reform, Climer said it didn’t matter to him whose bill ultimately is approved “as long as the bill is sufficiently brought to be widely amendable.” Climer, who chairs the Senate Agriculture and Natural Resources Committee, last October threatened to filibuster judicial elections this year in the Legislature unless there were judicial reforms. Elections for state Supreme Court, Court of Appeals, Administrative Law Court, circuit and family court seats that normally would have been held early last month were postponed, as The Nerve reported then. The Legislature last week approved an amended resolution to elect the next Supreme Court chief justice – expected to be current Justice John Kittredge of Greenville, who is the sole candidate for that seat – in a joint session scheduled for Wednesday. Other lower-court seats are set to be filled in elections scheduled for April 17. Climer said he doesn’t believe magistrates should be kept in holdover status, adding, “I would love to accomplish that with judicial reform.” There are no York County magistrates in holdover status, according to the most recently available holdover lists from the Judicial Department and Governor’s Office. Those lists were released under the S.C. Freedom of Information Act (FOIA) to The Nerve last July after the year’s legislative session had ended. The Nerve has pending FOIA requests to the Governor’s Office and the Judicial Department for updated holdover lists. The Governor’s Office last month referred The Nerve to state court officials for updated records. Brundrett is the news editor of The Nerve (www.thenerve.org). Contact him at 803-394-8273 or [email protected]. Follow The Nerve on Facebook and X (formerlyTwitter) @thenervesc. Nerve stories are free to reprint and repost with permission by and credit to The Nerve.

By RICK BRUNDRETT Update: 3/14/24 - Following is an updated list of the salaries of higher-level state judges, which was released by the S.C. Court Administration office following a Feb. 2 written request by The Nerve under the state Freedom of Information Act: Supreme Court chief justice ($235,186), Supreme Court justices ($223,987), Court of Appeals chief judge ($221,747), Court of Appeals judges ($218,387), circuit court judges ($212,787), family court judges ($207,187). Judicial elections that were expected to occur today in the S.C. Legislature have been postponed indefinitely, the apparent outcome of a threatened filibuster last year by a state senator pushing for judicial reform. But whenever the next elections are held, lawmakers could put a former longtime legislator on the bench – in keeping with their longstanding practice of favoring ex-lawmakers and others with legislative ties for court seats.Ex-House member and attorney James Smith of Columbia, who was the unsuccessful Democratic nominee in the 2018 governor’s election, is the sole candidate for a 5th Circuit Court seat after the only other nominated candidate dropped out – a common move before elections by nominees after tallying expected legislative votes. A majority of the total votes cast in a joint session of the House and Senate is required to win a judicial election. As The Nerve has pointed out over the years, South Carolina and Virginia are the only states where their legislatures play primary roles in selecting judges. By law, six of the 10 members of the S.C. Judicial Merit Selection Commission (JMSC), which nominates candidates for election in the Legislature, must be lawmakers. Currently, all six legislators on the JMSC are attorneys, including its chairman and vice chairman. Normally, the scheduling of annual judicial elections isn’t controversial. But lawmakers couldn’t agree to formally schedule judicial elections that were expected to be held today after Sen. Wes Climer, R-York, threatened last October to filibuster the elections unless there were judicial reforms. “My position is we can’t have elections until we have reform,” Climer told The Nerve when contacted Tuesday morning before the start of that day’s legislative session in Columbia. “And reform is underway in the House and Senate, so we’ll have to see.” Climer said he and Sens. Josh Kimbrell, R-Spartanburg, and Rex Rice, R-Pickens, objected to consideration of a House-passed resolution scheduling elections for today for all currently open seats; and that he was the main sponsor of another resolution, which was co-sponsored by 23 other senators, to have an election today only for the next chief justice of the S.C. Supreme Court. Neither concurrent resolution passed by Tuesday, and no new election date has been proposed. Meanwhile, a House special committee appointed by House Speaker Murrell Smith, R-Sumter, released 16 judicial-reform recommendations last week. And a  Senate Judiciary Committee panel on Tuesday met to consider 16 Senate judicial-reform bills. Climer told The Nerve he doesn’t believe that ex-lawmakers, including former Rep. Smith, who served as an infantry officer in 2007 in Operation Enduring Freedom in Afghanistan, should get preferential treatment for judicial seats. “James Smith is a fine man who has served our country and state nobly,” Climer said. “But he has absolutely no business serving on the judiciary in the state of South Carolina.” Currently, 53, or 31.3%, of 169 seats in the Legislature (one House seat is open) are held by lawyers. In comparison, attorneys in South Carolina as of May 2022 represented 3.7 jobs per 1,000 jobs among all occupations in the state, according to the U.S. Bureau of Labor Statistics, which listed a total of 7,940 lawyers, not including judges, statewide at the time. Historically, it’s been a relatively easy pathway from the 170-member Legislature to the bench. For example, former Supreme Court Chief Justice Jean Toal, who, acting as a special circuit court judge, last week denied a new trial motion by convicted murderer and disgraced attorney Alex Murdaugh, is an ex-House member who went straight from the Legislature to the Supreme Court in 1988. Toal, who was elected chief justice in 1999, retired from the Supreme Court in 2015 after reaching the mandatory retirement age of 72. Former Rep. Smith, who served in the House from 1996 to 2018 and afterward as an assistant to then-USC President Bob Caslen, was among 58 nominated candidates for 34 judicial seats in the latest round of judicial elections, though as of Monday, 13 nominees had dropped out, according to a candidate list provided to The Nerve by the JMSC. A total of 26 family, circuit, Administrative Law Court, Court of Appeals and Supreme Court seats were uncontested as of Monday, with races involving two or three candidates for eight seats. Besides former Rep. Smith, unopposed candidates included Supreme Court Justice John Kittredge of Greenville, who is expected to be selected as the next chief justice to replace Donald Beatty, who faces the mandatory retirement age this year. Kittredge was the sole nominee for Beatty's seat. As of last fiscal year, which ended on June 30, 2023, judicial salaries were as follows, according to a salary list provided then to The Nerve by the S.C. Court Administration office: family court judges ($197,321), circuit court judges ($202,654), Court of Appeals judges ($207,987), Court of Appeals chief judge ($211,187), Supreme Court justices ($213,321), and Supreme Court chief justice ($223,987). Judicial salaries are exempt from the online state salary database maintained by the S.C. Department of Administration. The Nerve recently asked for an updated judicial salary list from the state Court Administration office but was instructed by a court spokeswoman to mail a written request to the office. The Nerve has submitted a formal request under the S.C. Freedom of Information Act, which is pending. As for judicial elections, the S.C. Constitution requires that the Legislature elect only those candidates nominated by the Judicial Merit Selection Commission. Under state law, House Speaker Smith, who is an attorney and a former JMSC chairman, controls the appointments of five members – three of whom must be current lawmakers – to the 10-member JMSC, while Senate Judiciary Committee Chairman Luke Rankin, R-Horry, who is a lawyer, has the authority to make three appointments – all of whom must be sitting senators – and currently serves as the JMSC vice chairman. Senate President Thomas Alexander, R-Oconee, controls the other two JMSC appointments by law. The South Carolina Policy Council – the parent organization of The Nerve – last year proposed a number of judicial reforms, including overhauling the JMSC. Who you know Besides Rankin, the other lawyer-lawmakers on the JMSC include Rep. Micah Caskey, R-Lexington, who serves as its chairman; Sens. Ronnie Sabb, D-Williamsburg, and Scott Talley, R-Spartanburg; and Reps. Todd Rutherford, D-Richland, and Jay Jordan, R-Florence. In a letter last October to Rankin and House Speaker Smith, nine of the state’s 16 chief solicitors urged the two powerful lawmakers to immediately replace all six lawyer-lawmakers on the commission with six non-attorneys. “The public is weary of JMSC members having their family and friends elected to the bench,” the solicitors wrote. In his interview Tuesday with The Nerve, Climer said he believes lawyer-lawmakers should not vote for judges in elections in the Legislature if they practiced law before them within the last year, and that they should be banned from appearing before judges for at least a year if they voted for them.  “There’s a reason we don’t let Shane Beamer or Dabo Swinney pick the refs for the Clemson-Carolina game, and there’s a reason lawyer-legislators should not be picking judges,” Climer added. Among its 16 recommendations released last week, the special judicial-reform committee created in October by House Speaker Smith, formally called the “Ad Hoc Committee to Examine the Judicial Selection and Retention Process in South Carolina,” proposed reducing legislative appointments to the JMSC and adding appointments by the governor. But it didn’t recommend banning lawyer-legislators from serving on the commission. The Nerve in 2019 reported that Smith – before he became the House speaker – was the JMSC chairman when Supreme Court Justice George James, who was a partner in a Sumter-based law firm where Smith also was a partner, was being screened for his first full 10-year term on the state’s top court. There are other examples of relatives or legal colleagues of current or ex-lawmakers who were elected to the bench, including, as The Nerve has pointed out in recent years: Spartanburg County Master-in-Equity Judge Shannon Phillips, who worked in the law office of Sen. Talley and was quietly nominated by the county’s legislative delegation, of which Talley is a member, as The Nerve revealed in 2021, noting his appointment to the JMSC two months before the panel qualified Phillips for the seat. Talley is the chairman of the Senate Judiciary subcommittee that met Tuesday to consider Senate judicial-reform bills. Circuit Court Judge Maite Murphy, wife of Rep. Chris Murphy, R-Dorchester, an attorney and former JMSC member. Recently retired Supreme Court Justice Kaye Hearn, wife of former Republican Rep. George Hearn of Horry County, who is an attorney. Court of Appeals Judge Stephanie Pendarvis McDonald, who was a longtime attorney at a Charleston law firm where current Sen. Sandy Senn, R-Charleston, is a senior partner. Circuit Court Judge Diane Goodstein, wife of former House member and ex-senator Arnold Goodstein, who represented Charleston County as a Democrat and was the longtime attorney for the Charleston County Aviation Authority. Circuit Court Judge Jennifer McCoy, wife of former Rep. Peter McCoy, R-Charleston, who later became the U.S. attorney for South Carolina. Circuit Court Judge Walt McLeod IV, son of former Democratic House member and lawyer Walt McLeod of Newberry County. Circuit Court Judge Courtney Clyburn Pope, daughter of Rep. Bill Clyburn, D-Aiken. Administrative Law Court Judge Milton Kimpson of Columbia, brother of ex-Sen. Marlon Kimpson, D-Charleston, who is an attorney. Judge Kimpson was one of two remaining nominees in an election that was expected to be held today for an at-large circuit court seat, according to the JMSC candidate list as of Monday. Insider track The Nerve in recent years also has reported about the following current judges who are ex-lawmakers, all having served in the House: Supreme Court Chief Justice Donald Beatty; Court of Appeals Judge Paula Thomas; Circuit Court judges Paul Burch, J. Derham Cole, William Keesley, R. Keith Kelly, J. Cordell Maddox and Roger Young; Family Court Judge James McGee; Horry County Master-in-Equity Judge Alan Clemmons; and Laurens County Magistrate Mike Pitts. The Nerve in 2022 revealed that the Horry County legislative delegation secretly nominated the Republican Clemmons, an attorney and former JMSC chairman who served in the House for 18 years before his sudden resignation in 2020, as the county’s master-in-equity judge.   Master-in-equity judges have the same authority as circuit court judges in non-jury civil cases, typically handling foreclosures and other real estate cases, but are selected through a different process compared to other judges. They are appointed by the governor and confirmed by the Legislature, but their selection is largely controlled by county legislative delegations, made up of senators and House members representing their respective counties, after the JMSC qualifies candidates. A select group of lawmakers also controls the nominations of county magistrates, who handle traffic offenses and other minor criminal and civil cases. In 2019, for example, The Nerve revealed that in 12 counties, one senator controls the nominations of magistrates. That elite legislative club includes Sen. Danny Verdin, R-Laurens, who quietly nominated Pitts to a Laurens County magistrate seat in 2019 after the Republican Pitts resigned his House seat earlier that year. As with master-in-equity judges, the governor typically rubber stamps magistrate candidates nominated by lawmakers. Last year, The Nerve revealed that longtime senator-lawyer Sen. Brad Hutto, an Orangeburg Democrat, represented dozens of clients for more than a year before Orangeburg County magistrates whom he played a prominent role in nominating. Less than three weeks after that story and a companion investigative piece were published, Republican Gov. Henry McMaster called for reforms in the magistrate selection process. None of McMaster’s proposals, however, would ban Senate delegations from nominating magistrate candidates or ex-lawmakers from becoming magistrates. Reform proposals Various judicial reform bills have been introduced during the 2023-24 legislative session, including: S. 879, sponsored by Sens. Dick Harpootlian, D-Richland; Mia McLeod, I-Richland; and Climer, which would reduce the total number of lawmakers serving on the Judicial Merit Selection Commission from six to four and ban lawyer-legislators from serving on the commission. The bill was referred to the Senate Judiciary subcommittee chaired by Talley, a JMSC member. S. 871, sponsored by McLeod, which would ban lawyer-legislators from voting in judicial elections. The bill was referred to Talley’s subcommittee. H. 4183, sponsored by Rep. Joe White, R-Newberry, and co-sponsored by 33 other House members, which would ban lawyer-lawmakers from serving on the JMSC and would give the governor six of the 10 appointments to the commission. The bill has been stuck since last year in the House Judiciary Committee, chaired by Rep. Wes Newton, R-Beaufort, who is an attorney. H. 4585, sponsored by Reps. Ashley Trantham, R-Greenville, and John McCravy, R-Greenwood, which would increase the waiting period from one year to two years for ex-lawmakers who want to run for judicial seats and require that they had served their full last-elected terms. The bill was referred to the House Judiciary Committee. Meanwhile, the South Carolina Policy Council has proposed a number of judicial reforms, such as: Banning lawyer-lawmakers from serving on the JMSC and giving the governor the power to appoint the majority, if not all, of the commission members. Requiring a majority of each legislative chamber to elect judges, replacing the current process of a joint-session majority vote, which gives the far-larger House more voting power compared to the Senate. Reforming the magistrate selection process by removing county Senate delegations from the selection process. The Policy Council has said it supports S. 178, sponsored by Climer and Kimbrell, contending it’s the most representative of reform among the bills in Talley’s subcommittee, though stressing that comprehensive changes likely won’t occur through a single bill. Among other things, S. 178 would: Reduce the size of the JMSC from 10 to seven commissioners and allow the governor to appoint its members. Prevent sitting legislators, their immediate family members or their business associates from serving on the JMSC. Repeal the cap preventing more than three candidates from being nominated per open seat. Whether lawmakers will pass any significant judicial-reform legislation this year remains to be seen. Climer told The Nerve on Tuesday that the next round of judicial elections likely won’t be held until “later in the year.” “But,” he added, “we have to see where judicial reform plays out legislatively.” SCPC policy analyst Sam Aaron contributed to this story. Brundrett is the news editor of The Nerve (www.thenerve.org). Contact him at 803-394-8273 or [email protected]. Follow The Nerve on Facebook and X (formerlyTwitter) @thenervesc. Nerve stories are free to reprint and repost with permission by and credit to The Nerve.

By RICK BRUNDRETT The $1 billion taxpayer-funded gift that S.C. lawmakers last year approved for the Scout Motors electric vehicle plant was seven times more than what officials in Mississippi, which lost out to South Carolina, were willing to offer in state grant funding through special legislation, records obtained by The Nerve show. And, in addition to the vehicle assembly plant, Scout Motors, which German-based Volkswagen created in 2022, sought Mississippi incentives for a battery cell production “giga” factory, according to the company’s incentives wish list, known as a “request for proposal” (RFP), which The Nerve obtained earlier last month from the Mississippi Development Authority (MDA) under that state’s open-records law.Meanwhile, Virginia-based Scout Motors on Wednesday filed a petition – which named The Nerve’s editor multiple times – in a Jackson, Miss., court seeking an immediate protective order that would ban “public production, in response to the pending records request and future requests, of unredacted copies of the RFP.” “The information was exchanged for the sole purpose of assessing the potential for a business arrangement between Scout Motors and the State of Mississippi,” Christopher Condon, the company’s chief financial officer, said in an affidavit that was included with the protective order petition. “Otherwise, Scout Motors keeps such information confidential and out of the public domain.” The petition identified projected “funding, taxes, exemptions, credits, and similar financials” offered by the Mississippi Development Authority as “proprietary and confidential information” contained in the incentives wish list. As The Nerve pointed out, however, in a story Wednesday about Scout Motors’ notice of intent to file a protective order petition, there is no “pending records request” by The Nerve given that the Mississippi Development Authority on Jan. 10 released the company’s RFP, which contained redactions, based on an open-records request initially made on Dec. 6. Wednesday’s story cited a letter to Scout Motors’ attorneys from Alan Dye, an attorney with the Washington, D.C.-based Webster, Chamberlain & Bean law firm, which represents the South Carolina Policy Council – The Nerve’s parent organization – who said the Policy Council would fight any legal action taken against The Nerve. In a letter today to Dye in response to Wednesday’s story and Dye’s letter, Jason Fortenberry, one of Scout Motors’ lawyers in Jackson, Miss., denied that Scout Motors threatened to file a protective order petition if The Nerve didn’t drop or revise its request for information, or if The Nerve published information that it had already received. Instead, Fortenberry said, the company is “exercising its statutory right to prevent disclosure of confidential information that your client has not received and is not entitled to receive.” “The Nerve is entitled to notice of Scout Motors’ Petition, but your client is not a necessary party to Scout Motors’ lawsuit,” Fortenberry informed Dye, adding that The Nerve is “free to review, hold, or publish the unredacted information that has been provided by the MDA, and Scout Motors is neither requesting nor demanding that you relinquish or withhold any such information.” The protective order petition named The Nerve’s editor nine times. The formal notice of intent to file the petition, which was submitted to The Nerve on Jan. 24, named The Nerve’s editor four times. In their written response included in the incentives wish list submitted by JLL Inc., a Chicago-based, real-estate services firm representing Scout Motors, Mississippi officials said if the company, identified only in the document by its code name “Project Connect,” selected the Magnolia State, the state would “initiate special legislation” for $150 million in Mississippi Major Economic Impact Authority (MMEIA) “Inside the Fence” grant funding. The MMEIA is under the “purview” of the Mississippi Development Authority, according to the RFP. Scout Motors gave the state an Oct. 1, 2022, deadline to respond to its 53-page incentives wish list. Scout Motors in the RFP noted that the “cooperation/revenues of both companies” – the proposed vehicle assembly plant and the battery cell production “giga” factory – would be “limited to app. 25%.” The South Carolina RFP didn’t specify the proposed battery plant. In comparison, the S.C. Legislature in just one week last March approved $1.09 billion in state surplus funds – seven times more than the proposed $150 million in Mississippi state grant funding – for the Scout Motors project in Richland County, identified only in the joint resolution by its “Project Connect” code name. In addition, the legislation authorized another $200 million in state surplus funds to the S.C. Department of Commerce to loan to Scout Motors. The total $1.29 billion appropriation works out to be about $240 for every man, woman and child in South Carolina, as The Nerve noted in a June story revealing details of Scout Motors’ incentives agreements. Wish list details  As The Nerve revealed in October, Scout Motors’ South Carolina incentives wish list, which was submitted through JLL Inc., served as the framework for the taxpayer-backed incentives later approved by state and local government officials. The Nerve obtained the RFP, which gave S.C. officials a deadline of Jan. 6, 2023, to respond, as part of nearly 1,000 emails provided by the town of Blythewood, where the assembly plant is being constructed, under the S.C. Freedom of Information Act. State and local officials in the October story acknowledged that companies seeking to locate or expand in South Carolina routinely submit written incentives wish lists for major projects. That story also revealed how state and local officials, including Gov. Henry McMaster, kept the Scout Motors project secret from the public for months. Eight days after the story was published, Blythewood voters overwhelmingly ousted incumbent town Mayor Bryan Franklin. Following a meeting in Washington, D.C. on Oct. 25, 2022, involving a Scout Motors official and representatives from the S.C. Governor’s Office and the state Department of Commerce, Commerce officials learned that the company was “interested” in the Palmetto State for its electric vehicle plant, according to records obtained for the October story. That meeting occurred 24 days after the listed deadline by Scout Motors to Mississippi officials to respond to the company’s incentives wish list. The proposed $150 million in Mississippi state grant funds, had the state been selected, would have been designated for “infrastructure needs, site preparation costs, relocation of machinery, equipment, and key personnel, workforce recruitment and training assistance, or other project costs negotiated between” the company and the Mississippi Development Authority, according to the Mississippi RFP. The document identified Marshall County in northern Mississippi as the local funding entity. “The company could direct grant assistance funds to areas of greatest need,” Mississippi officials wrote in the RFP. Mississippi officials in the RFP projected that total funding of up to $100 million would be needed for the construction of two highway interchanges and separate site preparation work. It was unclear in the document whether certain projects with estimated price tags would have been covered under the proposed $150 million in state grant funding or with other public funds. In comparison, under the S.C. legislation – which was passed less than two weeks after Scout Motors publicly announced the Richland County project last March 3 – the nearly $1.1 billion in state surplus funds can be used for such things as land acquisition, a rail spur bridge, road “access and improvements,” soil “stabilization,” water and wastewater infrastructure, a training center and “any other such purpose as is necessary and recommended” by the state Department of Commerce. As The Nerve revealed in June, although the state incentives agreement requires that Scout Motors create a minimum 4,000 jobs and invest at least $2 billion at the town of Blythewood site over eight years, the deal allows the company itself to create a minimum 400 jobs and invest at least $400 million, with the differences to be made up by company “affiliates” and “counted suppliers.” And as many as 400 positions could be “badge” employees, such as janitors, security officers and cafeteria workers, employed by third parties, under the agreement. The incentives wish lists submitted to South Carolina and Mississippi contain a plethora of requests, such as cash grants, highway interchanges, a test track and commercial helipad, a truck staging area, a 40,000-square-foot training center along with taxpayer-funded employee training and recruitment, a state-constructed daycare center for employees, and various state and local tax breaks. Both RFPs also specified that state and local officials comply with the “German Supply Chain Due Diligence Act,” which deals with environmental, human rights and property rights issues. As The Nerve previously reported, some legal observers have characterized the law as reflecting the “environmental, social and governance” (ESG) movement. But there are some differences between the incentives wish lists. For example, when it came to limiting potential competitors near the selected site, both RFPs sought to ban automotive “original equipment manufacturers” within 45 miles of their respective locations. But although the South Carolina incentives agreement prohibits providing “discretionary” incentives or credits to “competitive vehicle production facilities” within 75 miles of the Richland County site for two years after Scout Motors started production, Mississippi officials rejected the company’s anti-competition request, writing in its RFP, “The State of Mississippi does not ascribe to placing limits on commerce or trade.” In a Jan. 23 email, The Nerve asked Scout Motors’ president and CEO Scott Keogh whether South Carolina’s $1 billion-plus appropriation for the project compared to the proposed $150 million in Mississippi state grant funding was the deciding factor in choosing the Palmetto State. The RFP that the Mississippi Development Authority released to The Nerve was attached to the email. Keogh did not respond. The next day, The Nerve received a notice of intent from Scout Motors’ lawyers in Jackson, Miss., to file a protective order petition. ‘Confidential and proprietary’ In the petition filed Wednesday in the Hinds County Chancery Court in Jackson, Miss., Scout Motors contended that the Mississippi RFP “contains a variety of confidential and proprietary information,” and that the company “keeps such information confidential to avoid its abuse or manipulation.” “If a fully unredacted copy of the RFP were to become public, Scout Motors’ hard-earned competitive advantage would be lost,” the petition stated, adding, “Accordingly, the Court should enter an order that protects the RFP from full, unredacted public disclosure.” In his response letter Wednesday to Scout Motors’ attorneys, Dye said The Nerve obtained information about the company’s Mississippi incentives wish list through a “perfectly proper public records request,” and that after about a month of “consideration by the (Mississippi) Development Authority’s counsel, The Nerve received documents which redacted all proprietary information contained in the requested documents.” “Therefore, it is under no obligation not to disclose the information provided,” Dye wrote. Dye advised the attorneys that The Nerve would publish stories on details of the Mississippi proposed incentives compared to South Carolina’s offer “for the benefit of the South Carolina public,” as well as stories about any legal actions taken against The Nerve. Brundrett is the news editor of The Nerve (www.thenerve.org). Contact him at 803-394-8273 or [email protected]. Follow The Nerve on Facebook and X (formerlyTwitter) @thenervesc. Nerve stories are free to reprint and repost with permission by and credit to The Nerve.

By RICK BRUNDRETT Scout Motors is threatening to take The Nerve to court if it publishes “confidential and proprietary” information contained in an incentives wish list that the Volkswagen company submitted to the state of Mississippi, which lost out to South Carolina for an electric vehicle assembly plant. In a Jan. 24 formal notice of intent to take legal action, Jason Fortenberry, one of the Jackson, Miss., attorneys representing Scout Motors, warned The Nerve that the company will file a protective order petition in the Hinds County Chancery Court in Jackson by tomorrow unless The Nerve “withdraws or modifies” its request for the incentives wish list.The Nerve, however, already had obtained the wish list, known as a “request for proposal” (RFP), on Jan. 10 after initially submitting a written request to the Mississippi Development Authority on Dec. 6 under that state’s open-records law. The Nerve plans to publish details of the RFP in a separate story tomorrow, revealing some significant differences between the taxpayer-backed incentives that Scout Motors sought in Mississippi and South Carolina. “The Nerve is a long-standing publication that will not be intimidated by threats to impair its First Amendment right to inform policymakers and the citizens of South Carolina about matters of public interest,” wrote Alan Dye, an attorney with the Washington, D.C.-based Webster, Chamberlain & Bean law firm, which represents the South Carolina Policy Council, the parent organization of The Nerve, in response to the legal notice from Scout Motors’ attorneys. “Our client will not be withdrawing or revising its request,” Dye continued in his letter, which was transmitted today to Scout Motors’ attorneys in Jackson. “It will be publishing stories in forthcoming editions of The Nerve which analyze, for the benefit of the South Carolina public, the terms of the Scout Motors proposal to the State of Mississippi as compared to proposals Scout Motors has made in South Carolina. “In addition, The Nerve will be publishing stories recounting Scout Motors’ attempt to deny The Nerve’s First Amendment rights by seeking to compel it to suppress information which would be valuable to South Carolina policymakers and citizens.” On its website, the Webster, Chamberlain & Bean law firm says it works with nonprofit organizations "on a daily basis.” The Columbia-based Policy Council is a nonprofit, nonpartisan research organization founded in 1986. Virginia-based Scout Motors, which the German-based Volkswagen Group created in 2022 as an independent company, contended in its notice of intent that a protective order was necessary because The Nerve’s “request, if fully responded to, would require the production of documents that contain Scout Motors’ trade secrets, confidential and proprietary commercial information, and confidential and proprietary financial information.” The notice didn’t identify specifics of that information in the Scout Motors’ document provided to The Nerve, though Fortenberry listed the following examples: Confidential and proprietary financial information, including costs and expenses; Confidential information regarding proprietary designs and processes; and Confidential and proprietary strategies for pricing, marketing, management, and cost-containment. Since its launch in January 2010 with a week-long investigative series on the massive incentives deal to bring a Boeing airplane assembly plant to South Carolina, The Nerve has focused on the taxpayer costs and the lack of transparency by state and local government officials involving incentives deals with typically large corporations. In his letter to Scout Motors’ attorneys, Dye said The Nerve obtained information about the company’s Mississippi incentives wish list through a “perfectly proper public records request,” and that after about a month of “consideration by the (Mississippi) Development Authority’s counsel, The Nerve received documents which redacted all proprietary information contained in the requested documents.” “Therefore, it (The Nerve) is under no obligation not to disclose the information provided,” Dye continued. “In addition, since the Development Authority has already redacted all proprietary information, there is no basis for a protective order, even if such an order were to be enforceable in South Carolina, which is doubtful.” Dye concluded that if Scout Motors requests a protective order or injunction against The Nerve to prevent it from publishing stories on the Mississippi incentives wish list, the Policy Council will “take whatever legal steps are necessary to defend against the issuance of any such order or injunction.” Last year, The Nerve published three investigative stories (here, here and here) about the Scout Motors electric-vehicle assembly plant now under construction at the town of Blythewood in Richland County, as well as other electric-vehicle-related projects. Among other things, The Nerve revealed that the incentives wish list that Scout Motors submitted to state and local government officials in South Carolina served as the framework for the more than $1 billion in taxpayer-backed incentives approved last year for the assembly plant. An October story noted that S.C. officials believed then that Mississippi was the other finalist state for the project. The Nerve in a story last month cited a national incentives expert who said companies through hired consultants routinely submit incentives wish lists to states with the intent to get the best taxpayer-funded deals for the companies. The Nerve obtained Scout Motors’ RFP for the South Carolina project as part of nearly 1,000 emails provided last year by the town of Blythewood under the S.C. Freedom of Information Act. But the S.C. Department of Commerce, which is the main state agency typically involved in major incentives deals, has declined to release the document to The Nerve for any deal. Commerce contends that the state’s open-records law allows it to keep RFPs secret, though The Nerve has pointed out that public agencies aren’t required to do so under the law. Brundrett is the news editor of The Nerve (www.thenerve.org). Contact him at 803-394-8273 or [email protected]. Follow The Nerve on Facebook and X (formerlyTwitter) @thenervesc. Nerve stories are free to reprint and repost with permission by and credit to The Nerve.

By RICK BRUNDRETT In recently announcing his proposed nearly $41 billion total state budget for fiscal 2025, Gov. Henry McMaster recommended using a projected $500 million school-fund surplus for emergency bridge replacement and repairs. “Many of these bridges are 60, 70 and even in excess of 80 years old and are crumbling before our eyes each day,” McMaster said in a Jan. 5 press release. “Too many have been closed, while others are in such a state of disrepair that the required restrictions render them useless for commercial trucking, school buses, or fire trucks needed to serve our state’s increasing population.” Yet The Nerve found in a review of S.C. Department of Transportation records that as of Nov. 30, only three of 25 designated bridge projects have been completed with revenues collected under the 2017 gas-tax-hike law – money that lawmakers promised would be used to fix the state’s crumbling roads and bridges. The Nerve’s latest review also found that DOT has continued to move slowly on repaving or rebuilding roads statewide with those funds.As of Nov. 30, the cash balance in a special fund created with the gas-tax-hike law, which raised the state gasoline tax a total of 12 cents per gallon over six years – a 75% jump from the base 16 cents – plus increased other vehicles taxes and fees – was $1.41 billion, DOT records show. The surplus, which the agency says will be used for pending vendor payments, represented 37% of the $3.81 billion in total collected revenues as of Nov. 30. Meanwhile, in a DOT press release issued today, agency Secretary Christy Hall, who was appointed by then-Republican Gov. Nikki Haley, announced her retirement, effective March 31, after serving about 10 years in the position. McMaster, a Republican, in the release described Hall as “one of the greatest transportation secretaries in state history.” Her annual salary is $309,920, according to the state salary database. The American Society of Civil Engineers in its 2021 report card gave South Carolina’s roads and bridges overall grades of “D” and “C,” respectively. On its website, DOT says 80%, or 33,600 miles, of the state’s 42,000 miles of roads need to be resurfaced or rebuilt, with a 10-year goal to bring half of those roads up to a “good” rating. The 10-year plan also calls for 465 of 750 “structurally deficient” bridges to be replaced. But DOT also designated nearly $292 million of gas-tax-hike revenues for interstate widenings – not for repairing existing roads or bridges – which represented 7.6% of the total $3.82 billion in total project “commitments” as of Nov. 30, agency records show. The state DOT Commission approved an additional $775 million for this fiscal year for an “accelerated pavement improvement program,” the seventh year of the program, according to the agency’s website. In her written 2023 “State of South Carolina’s Road and Bridge Network” report, Hall listed 199 bridges as having been “completed” – though the funding sources weren’t identified – with another 75 bridges “under construction,” contending that a five-year, $200 million annual “surge” in bridge funding was needed. DOT maintains more than 8,400 bridges statewide. But The Nerve’s latest review of DOT records found that as of Nov. 30, $28 million, or less than 1%, of the $3.82 billion in total project “commitments” under the gas-tax-hike law was designated for “additional bridge projects.” Those records show that out of 25 designated bridge projects statewide, only three have been completed – one each in Anderson, Charleston and York counties. The Nerve’s review also found a relatively slow pace of completing road projects. As of Nov. 30, the total value of completed “pavements” projects in the state’s 46 counties was $1.26 billion, which represented 40.3% of the total $3.13 billion in estimated preliminary and construction costs of all projects in that category. Thirty-four counties fell below the 50% completion mark, including the larger counties of Spartanburg (25%), Greenville (32.3%), Richland (38.3%), Horry (47.6%) and York (47.6%). And the total approximately 7,750 miles of designated “pavements” projects statewide as of Nov. 30 represented less than 25% of the total miles of roads that DOT says has to be repaved or rebuilt. In announcing his version of the state budget for fiscal year 2024-25, which starts July 1, McMaster recommended that the Republican-controlled Legislature pass stand-alone legislation that would “reallocate” at least $500 million from the state Homestead Exemption Fund to DOT for emergency bridge replacement and repairs. It was the single-largest proposed expenditure listed under his “Executive Budget Highlights.” Lawmakers in 2006 passed a law eliminating all school operating property taxes for owner-occupied homes and increasing the state sales tax by a penny to make up the difference, with those revenues to be deposited in the Homestead Exemption Fund. In recent years, the fund has recorded a surplus, with an estimated total balance of $568.5 million by June 30, increasing to a projected $650.4 million by the end of next fiscal year, based on figures from the state Revenue and Fiscal Affairs Office. McMaster proposed using $550 million, mainly in other state surplus funds, for the current fiscal year for bridge maintenance, though lawmakers rejected that plan in passing their respective budget versions. Instead, lawmakers in one week last March passed an amended resolution – with McMaster’s signature – designating $1.29 billion in projected and actual state surplus funds to bring a Scout Motors electric-vehicle assembly plant to South Carolina. As The Nerve last year pointed out, the nearly $1.3 billion works out to be approximately $240 for every man, woman and child in the state. Looking at it another way, it represents more than 90% of the surplus as of Nov. 30 in gas-tax-hike revenues that are supposed to be used to fix deteriorating roads and bridges statewide. McMaster’s proposed total state budget for next fiscal year is $40.88 billion, with includes state, federal and “other” funds. The 124-member House currently is crafting its own budget version for fiscal 2025, which likely will be changed by the 46-member Senate, with differences to be worked out in a conference commitment before going to McMaster for his veto consideration. This fiscal year’s total state budget is $41.07 billion. The South Carolina Policy Council – the parent organization of The Nerve – has proposed that any increase in the state’s general fund for fiscal 2025 be limited to the rate of population growth plus inflation. Brundrett is the news editor of The Nerve (www.thenerve.org). Contact him at 803-394-8273 or [email protected]. Follow The Nerve on Facebook and X (formerlyTwitter) @thenervesc. Nerve stories are free to reprint and repost with permission by and credit to The Nerve.

 To Our Readers: The Nerve is not planning to publish new stories this week and next in observance of the Christmas and New Year’s holidays. Thank you very much for all your support this year, and we are planning more hard-hitting stories for 2024 to hold politicians and other public officials accountable. So stay tuned!  In the meantime, feel free to revisit some of our top stories from 2023:ESG battles heating up over state pension plan Senators feast on taxpayer-funded earmarks for pricey projects House follows Senate in earmark money grab Governor’s vetoes don’t touch hundreds of millions in earmark spending Federal school-choice suit raises questions about future court, legislative actions S.C. counties spending above inflation, population growth Under the hood: Huge taxpayer tab, ESG mandates in Scout Motors deal Hidden currents: How S.C. officials kept electric vehicle project secret Electric bus maker required to do less for taxpayer-backed incentives What S.C. officials don’t ‘really, really’ want you to know about incentives Courting favor? Senator’s cases before magistrates raise ethics questions S.C. senators maintain strong grip on local magistrates Supreme Court justice defends secretive disciplinary system

By RICK BRUNDRETT Update: 12/13/23 - Several hours after this story was published, Envision AESC announced in a state Department of Commerce press release that it would create an additional 450 jobs at its electric vehicle battery plant under construction in Florence County, bringing the total promised new jobs to 1,620, and double its originally announced $810 million investment to $1.62 billion. But as the story below points out, based on records presented at last week's state Joint Bond Review Committee meeting, Envision could receive $120 million in state taxpayer-funded bond proceeds if it creates 800 jobs and invests $800 million - less than what the company originally announced. The latest Commerce press release said the State Fiscal Accountability Authority at its meeting yesterday approved the bond issuance.   “Tell me what you want, what you really, really want.” It’s not entirely clear if Gov. Henry McMaster, 76, is a devoted fan of the 1990s British pop group, Spice Girls, but he gave a short, modified version of their 1996 hit song, “Wannabe,” at a recent meeting of the Greater Cayce-West Columbia Chamber of Commerce, according to a story published by the South Carolina Daily Gazette. The Republican McMaster used the song’s lyrics to describe the state’s position on providing taxpayer-funded training to companies seeking to locate or expand in South Carolina – which is commonly part of large incentives deals and can total in the millions of dollars, as The Nerve has pointed out over the years.“Tell us what you want, what you really, really want; and we’ll train them, and we’ll send them to you,” McMaster said at the Chamber of Commerce event, which drew laughter from the business audience, the Daily Gazette reported. But as The Nerve revealed in an October story on the $1-billion-plus, taxpayer-funded deal to bring a Scout Motors electric-vehicle assembly plant to Richland County, what large companies “really, really want” from state and local  government officials typically is revealed in secret incentives “wish lists,” formally known as “requests for proposals” (RFPs) or “requests for information” (RFIs). Scout Motors, which German-based Volkswagen launched last year as an independent company, pretty much got what it wanted, The Nerve found in comparing state and local incentives agreements to the company’s RFP, which was included with nearly 1,000 emails provided by the town of Blythewood under the S.C. Freedom of Information Act (FOIA). The Nerve’s October story revealed that state and local government officials kept Scout Motors’ RFP and other details secret for months before the project was publicly announced on March 3 this year. Less than two weeks later, the S.C. Legislature quickly passed – without advance public hearings – an amended resolution authorizing nearly $1.3 billion in state surplus funds to help the company, which works out to be about $240 for every man, woman and child in the state. Scout Motors says it plans to invest $2 billion and create 4,000 jobs with the project, though as The Nerve revealed in June, a state incentives agreement provides relatively easy paths for the company to meet is job creation and investment requirements. The Nerve last month asked the S.C. Department of Commerce under the FOIA for any RFPs or RFIs submitted by companies for other announced, electric-vehicle-related projects statewide. McMaster in October 2022 – about two weeks before the first recorded meeting between state officials and Scout Motors representatives – issued an executive order committing the state to promote the electric vehicle industry. Less than 15 minutes after The Nerve’s FOIA request was submitted via email, Commerce’s chief lawyer, Karen Manning, denied the request, contending in her response that RFPs or RFIs were exempt under a provision of the FOIA dealing with “memoranda, correspondence, documents, and working papers relative to efforts or activities of a public body and of a person or entity employed by or authorized to act for or on behalf of a public body to attract business or industry to invest within South Carolina.” The Nerve in its response said while the FOIA allows public agencies to withhold those records, it doesn’t require them to do so. The Nerve also pointed out that Scout Motors’ RFP was released by the town of Blythewood under the FOIA, though Manning wasn’t swayed by that argument, noting, “A previous disclosure by the Town of Blythewood of information that is exempt under state law does not create an obligation by any other public body to disclose exempt public records.” Contacted last week by The Nerve, Greg LeRoy, executive director of Washington, D.C.-based Good Jobs First, which he founded in 1998 and which, according to its website, has “fought for reforms to increase transparency around the use of public money used in the name of economic development,” said the public should have access to RFPs or RFIs submitted by companies for taxpayer-funded incentives. “Our experience is that such documents are almost always fair game after a deal is awarded,” he said in his written response. Asked how often companies submit RFPs or RFIs for state or local incentives, LeRoy replied: “It is, sadly, all too common for companies to create an incentives wish list. Indeed, that is part of the role the site consultant plays: knowing each state’s menu of incentives and making sure the company doesn’t ‘leave money on the table.’” S.C. Commerce and Richland County officials told The Nerve for its October story that companies commonly submit incentives wish lists. Scout Motors’ RFP was provided through Chicago-based JLL Inc., a global real-estate services firm. The Nerve reported then that S.C. officials believed that Mississippi was the other finalist state for the Scout Motors plant. The Nerve recently submitted an open-records request to the Mississippi Department of Agriculture & Commerce for any RFPs or RFIs submitted by Scout Motors but was informed by agency lawyer Rebecca Wilson that it had “no records responsive to your request.” Another related open-records request is pending with the Mississippi Development Authority. Earlier this month, the South Carolina Policy Council – The Nerve’s parent organization – published detailed recommendations to “facilitate transparency and public input in the incentives process, as well as bring accountability to projects once approved,” contending that if S.C. officials “insist on providing incentives,” taxpayers “cannot be left in the dark.” New $50M taxpayer gift Meanwhile, incentives secrecy continues to be the norm in the Palmetto State. Last week, for example, a 10-member legislative panel, known as the Joint Bond Review Committee (JBRC) and chaired by Sen. Harvey Peeler, R-Cherokee, who also is the Senate Finance Committee chairman, recommended approval of an additional $50 million in taxpayer-funded bonds for the Envision Automotive Energy Supply Corporation (AESC) to locate an electric vehicle battery plant in Florence County. Envision, which along with McMaster announced the project on Dec. 6, 2022, was among the group of electric-vehicle-related projects covered in The Nerve's denied FOIA request last month for any RFPs or RFIs. In documents provided for the JBRC meeting, Commerce wasn’t completely transparent about which company was seeking more taxpayer help. In an included Nov. 3 letter to JBRC and the State Fiscal Accountability Authority (SFAA) officials, Manning said the requested additional $50 million in taxpayer-funded bonds was “in connection with a significant confidential economic development project that consists of an investment in the State of South Carolina by manufacturers of electric vehicle batteries.” The letter didn’t identify the company, though Commerce in another meeting document listed it as “AESC Japan Ltd and affiliates.” A state incentives agreement provided by Commerce to The Nerve in October under the FOIA listed the company as “Envision AESC US LLC,” previously identified as “Project Gemini.” The Japan-based battery business, which was launched in 2007 as a joint venture involving Nissan, NEC Corp. and a subsidiary of NEC, was sold to China's Envision Group in 2018, according to a Reuters story last year. The latest requested $50 million in bonds for Envision is on top of more than $70 million in taxpayer-funded bonds approved for the company last year by the JBRC and five-member SFAA, which includes McMaster, who chairs that panel. Records provided for last week’s JBRC meeting show that with projected interest, the collective $121 million in bonds would cost S.C. taxpayers a total of $180.5 million over 20 years – more than the total annual budgets of dozens of state agencies. Among other awarded incentives, the Envision project was approved last year for a $135 million state “closing fund” grant and 40 years of reduced property taxes through a county fee-in-lieu-of-taxes (FILOT) agreement. In a Commerce press release last December, Envision said it would create 1,170 jobs and invest $810 million to “support the company’s multi-year partnership with the BMW Group.” But under the state incentives agreement dated Nov. 30, 2022, if Envision instead created 400 jobs and invested $400 million by a required deadline, it would not have to repay the full amount of the $135 million state grant or the first $70.3 million in bond funds. Under the revised maximum $121 million bond proposal, Envision would have to create at least 800 jobs and invest a minimum $800 million – less than what was originally announced by the company. In a written response last week to The Nerve, Rick Harmon, who is the JBRC's research director and the SFAA’s liaison, said the additional requested $50 million in bonds would be on today’s scheduled SFAA meeting agenda. He said he didn’t know the identity of the company requesting the money until informed by The Nerve. The five-member SFAA – made up of the governor, state treasurer and comptroller general, and chairmen of the House Ways and Means and Senate Finance committees – likely will approve the additional taxpayer-funded bonds for Envision, given the SFAA’s past actions on similar requests. If you wanna be my lover, you have got to give – so the Spice Girls’ “Wannabe” song goes. Brundrett is the news editor of The Nerve (www.thenerve.org). Contact him at 803-394-8273 or [email protected]. Follow The Nerve on Facebook and X (formerlyTwitter) @thenervesc. Nerve stories are free to reprint and repost with permission by and credit to The Nerve.

By RICK BRUNDRETT At a recent S.C. House special committee hearing on judicial reform, Supreme Court Justice John Kittredge touted the “almost non-existent” number of ethics violations committed by state judges. “Each week, members of the judiciary receive a report of all the ethical violations of judges around the country, and regrettably, it’s a pretty long list,” Kittredge said at the Nov. 7 hearing, the first of two public meetings held so far by the committee. “But what you don’t see on that long list for every other state in the country,” Kittredge, 67, of Greenville, continued, “is you don’t see reports of South Carolina judges being reprimanded, being sanctioned, being removed.” Kittredge, who is expected to be elected by the Legislature in early 2024 as the next chief justice, didn’t mention, however, that court officials typically receive hundreds of complaints annually against judges but seldom find any ethics violations.And the public never learns about the specifics of the vast majority of those cases because of court secrecy rules. Under those rules, as set by the five-member Supreme Court, complaints against taxpayer-funded judges – who make six-figure salaries in higher-level courts – have to be filed with the Office of Disciplinary Counsel (ODC), a branch of the Supreme Court. Complaints must be kept confidential by court officials unless formal ethics charges are issued later by a panel of the 26-member Commission on Judicial Conduct, which is appointed by the Supreme Court, or the high court imposes a public sanction. But formal charges or public sanctions rarely are issued against judges, court records reviewed by The Nerve show. Public discipline by the Supreme Court can range from reprimands to suspension or removal from office. Year after year, the ODC dismisses most complaints, usually contending that the allegations didn’t involve ethics violations but instead were legal issues for an appellate court to decide. Yet because dismissed complaints are secret under court rules – unless released by the complainants themselves, which typically doesn't occur – the public often has no way of evaluating whether those complaints had any merit or spotting trends involving certain judges. By contrast, for example, state court lawsuits, which often involve claims of civil wrongdoing by one private party against another private party, generally are a matter of public record when filed – and remain public even if later dismissed. In South Carolina, judges are required under the following ethical “canons” to: Uphold the integrity and independence of the judiciary; Avoid impropriety and the appearance of impropriety in all of their activities; Perform their judicial duties impartially and diligently; Conduct outside activities so as to minimize the risk of conflict with judicial obligations; and Refrain from inappropriate political activity. For fiscal year 2022-23, which ended June 30, the ODC dismissed 297, or 55%, of 540 total pending and received complaints against judges after an “initial review,” claiming it had “no jurisdiction,” and dismissed two other cases for “lack of evidence” after an investigation, according to an annual disciplinary report. Commission on Judicial Conduct (CJC) investigative panels, composed of seven members under court rules, dismissed another 86 complaints, according to the CJC report, which didn't identify panel members. In total, 385, or 71%, of all complaints were dismissed during the fiscal year. Of the 11 complaints not dismissed – 2% of the total – seven resulted in private "letters of caution," and three were closed “due to Death,” though no specifics were provided in the report. CJC investigative panels met a total of four times last fiscal year, issuing no formal ethics charges. There were no full CJC meetings or disciplinary hearings, according to the report. No judges were suspended or removed from office during fiscal 2022-23, and there was one public sanction – a reprimand of former Greenwood County Magistrate Walter R. Martin for using profanity in court and having a separate outburst involving the chief county magistrate and a scheduling clerk, court records show. The Supreme Court imposed the August 2022 reprimand after accepting an “Agreement for Discipline by Consent” between Martin and the ODC, currently headed by William Blitch Jr. Consent agreements are common in cases involving public sanctions, The Nerve found in reviewing ethics cases over the years. Last month, S.C. House Speaker Murrell Smith, R-Sumter, who is a lawyer, created a 13-member, bipartisan special committee to study judicial reform, formally titled the “Ad Hoc Committee to Examine the Judicial Selection and Retention Process in South Carolina.” Given Kittredge's remarks at the Nov. 7 hearing, it remains to be seen whether any legislation dealing with judicial discipline will result from scheduled committee meetings.  System with ‘teeth’? As with last fiscal year, court officials in previous years have leaned heavily toward dismissing judicial complaints. The Nerve, for example, in 2021 revealed that in previous 10 fiscal years, nearly 85% of the total 3,016 received and pending complaints were dismissed – the vast majority by the ODC, with the remainder dropped by CJC investigative panels. The Nerve’s review of annual disciplinary reports then found as many as 97 private caution letters were issued over the decade, though no judges – or even the types of courts in which they served – were identified in the reports. Of the sanctions imposed during the period by the Supreme Court, reprimands – the least-serious public sanction – were the most common, with magistrates typically on the receiving end. Magistrates, who don’t have to be attorneys, are considered among the lowest-level judges in South Carolina, handling traffic offenses and other minor criminal and civil cases. By law, the governor appoints magistrates with advice and consent of the S.C. Senate. In two investigative stories published in September (here and here), The Nerve detailed senators’ control over the magistrate appointment process; less than three weeks later, Gov. Henry McMaster announced a reform plan requiring a more-detailed vetting of magistrate candidates. The South Carolina Policy Council – the parent organization of The Nerve – earlier this year recommended changes in the magistrate appointment system. In a just-released online poll by the Policy Council, 98% of respondents in the category of legal reform agreed or strongly agreed that lawyer-lawmakers should not present cases in front of judges they helped put on the bench, which was the focus of one of The Nerve's investigative pieces in September. In his remarks at the Nov. 7 House special committee hearing, Justice Kittredge said the reason that magistrates and municipal judges more often come in the “crosshairs of ethical complaints” is because of the “absence of vetting on the front end.” In contrast, Kittredge said, higher-level judges, which include family, circuit and appellate judges, are screened and nominated by the state Judicial Merit Selection Commission (JMSC) for election by the 170-member Legislature. But under state law, just three lawmakers – the House speaker, the Senate president and the Senate Judiciary Committee chairman – control appointments to the 10-member JMSC, six of whom must be lawmakers. All current six lawmakers are attorneys. As The Nerve revealed in 2010, national legal organizations, including the American Bar Association (ABA), don’t classify South Carolina as having a true merit selection system because lawmakers control the appointment to and dominate the makeup of the JMSC. South Carolina and Virginia are the only two states where their legislatures play primary roles in selecting judges, as The Nerve has pointed out over the years. In September, the South Carolina Policy Council released its findings of a comparison of the two states’ systems, noting that South Carolina falls short in its judicial nomination process and election rules. Kittredge told the House special committee that some critics have claimed the current judicial disciplinary system is a “judge-friendly environment,” given the Supreme Court’s oversight of the ODC. But Kittredge, who served on the Family Court, Circuit Court and Court of Appeals before his election to the Supreme Court in 2008, rejected that view, contending that current disciplinary rules “mirror the ABA standards.” “We have a real system with teeth,” he said. In a 2008 report, however, an ABA review team recommended that a special outside court be created to handle any ethical complaints against Supreme Court justices – a proposal that never was implemented by the high court, led then by Chief Justice Jean Toal, as The Nerve revealed in 2010. Toal, who joined the Supreme Court in 1988 and became chief justice in 2000, was involved in high-profile, hit-and-run property damage incidents in 2001 and 2007. The Commission on Judicial Conduct cleared Toal of any ethical wrongdoing in the 2001 incident, though it was unknown whether a formal ethics investigation was done in the 2007 incident, as The Nerve reported then. Toal retired from the Supreme Court in 2015 but subsequently has served as a special, part-time Circuit Court judge. In 2019, current Chief Justice Donald Beatty, who was elected to his seat in 2016 and next year faces a mandatory retirement age of 72 as a full-time judge, assigned Toal to oversee all asbestos litigation filed in the state. A report released in December 2022 by the American Tort Reform Foundation ranked South Carolina’s asbestos litigation as among the eight-worst “judicial hellholes” in the nation. A press release about the report contended that South Carolina has “developed a reputation for bias against defendants” with “unfair trials, severe verdicts, and a willingness to overturn or modify jury verdicts to benefit plaintiffs.” The South Carolina Policy Council cited the ranking in a report released last month calling for reforms in the state’s civil liability laws. Protected process The secrecy of South Carolina’s judicial disciplinary process is baked in court rules from start to finish. Here’s a sampling: Members or staff of the Supreme Court, Commission on Judicial Conduct or Office of Disciplinary Counsel “shall not in any way reveal the existence of the complaint, while the matter remains confidential,” except to those “directly involved in the matter and then only to the extent necessary for a proper disposition of the matter.” Outside of public hearings after ethics charges are authorized – which rarely happens – CJC deliberations and records of those meetings “shall not be disclosed.” If a CJC investigative panel finds “reasonable cause” that a judge committed misconduct but determines that “public discipline is not warranted,” it can inform the judge of its intent to impose a "confidential admonition as a final disposition on the matter(s).” If a disciplinary agreement between the judge and ODC is rejected by the Supreme Court, or if it results in a private admonition, a “deferred discipline agreement” or a letter of caution by an investigative panel, the agreement “shall not be available to the public at any time, nor shall any statement or other documents in mitigation filed therewith.” If allegations of “incapacity” are raised during public misconduct proceedings, “all records, information, and proceedings relating to these allegations shall be held confidential.” The Judicial Department’s website lists Circuit Court judges Thomas Cooper, who is classified as an "active/retired" judge, and George McFaddin as the CJC’s chairman and vice-chairman, respectively, though it doesn’t name any of the other 24 members. Under court rules, the commission is made up of 14 judges, four attorneys who never held judicial office and eight members of the general public – all of whom are appointed by the Supreme Court. Terms run for four years. The Nerve earlier this month submitted a written request to Tonnya Kohn, the state court administrator, for a current list of CJC members, though no reply was provided by publication of this story. As of 2021, the CJC included now-retired Circuit Court Judge Casey Manning of Richland County, according to a commission list provided then to The Nerve by the Judicial Department. In September this year, the Supreme Court voided a secret, Dec. 30, 2022, order by Manning allowing Jeroid J. Price to be released in March this year from prison after serving 19 years of a 35-year murder sentence in the 2002 shooting death of Carl Smalls Jr., 22. Manning issued the order the day before his last official day as a full-time judge because of the mandatory retirement age of 72 – which also was the same day his CJC term expired, records show. Price was arrested in New York City in July this year and returned to South Carolina to serve the remainder of his murder sentence. His attorney when Manning issued his order was state Rep. Todd Rutherford, D-Richland, the House minority leader and a member of the Judicial Merit Selection Commission, which held screening hearings this week for the latest round of judicial candidates. The majority of justices, including Kittredge, in their September 3-2 ruling said Manning’s order was “both outside the circuit court’s authority and contrary to law.” The parents of Smalls Jr. in July filed an ethics complaint with the ODC against Manning, Rutherford and 5th Circuit Solicitor Byron Gipson, according to media reports, but given court rules, it’s unknown for now whether the ODC conducted an investigation. The Nerve asked the ODC about whether any formal ethics charges have been issued in connection to the complaint but was referred to a Judicial Department spokeswoman, who didn’t respond by publication of this story. Meanwhile, the JMSC on Tuesday voted 10-0 to qualify and nominate Kittredge as the next chief justice, according to Erin Crawford, the commission’s chief lawyer. The Legislature is expected to elect Kittredge, who is the sole nominee for that seat, in an election tentatively set for Feb. 7. Nerve intern Jasmine Creech contributed to this story. Brundrett is the news editor of The Nerve (www.thenerve.org). Contact him at 803-394-8273 or [email protected]. Follow The Nerve on Facebook and X (formerlyTwitter) @thenervesc. Nerve stories are free to reprint and repost with permission by and credit to The Nerve.

By RICK BRUNDRETT When Proterra announced in February 2010 that it was locating a hybrid- and electric-bus assembly plant in Greenville, the then-CEO said the company selected South Carolina over some 30 states because of the “numerous benefits in terms of workforce capabilities and research and development support.” Former CEO Jeff Granato didn’t mention any taxpayer-backed incentives offered to the company, based then in Colorado. The S.C. Department of Commerce in a press release at the time said two state grants totaling $3 million were awarded to the company – dubbed “Project Magic Carpet” – but didn’t provide specifics on any other offered incentives.Two months later, The Nerve revealed that Proterra could receive up to $40 million in grants, corporate income tax and job development credits, low-interest bonds and forgivable loans within 10 years. Proterra at the time publicly committed to investing $68 million and creating at least 1,300 jobs over seven years. But under a state incentives agreement obtained then by The Nerve, the company would have to create 800 jobs – not 1,300 as announced – and invest $30 million– less than half of the announced $68 million – over five years to receive the collective $3 million in state grants publicized by Commerce. And a new investigation by The Nerve, which was based on records obtained under the S.C. Freedom of Information Act, found that state and local officials continued to ratchet down Proterra’s job creation and investment requirements at its Greenville County facility, currently located on Whitlee Court near Clemson University’s International Center for Automotive Research. As of 2020 – the last time state officials said they tracked employment numbers at the plant – the company had about 300 workers, a Commerce spokeswoman recently told The Nerve, though the last-known amended incentives agreement required a minimum of 400 employees. Proterra, currently headquartered in Burlingame, Calif., filed for bankruptcy in August and since last Friday agreed to collective auction purchases of more than $200 million for various company assets, including its electric-vehicle battery plant in neighboring Spartanburg County, bankruptcy records reviewed by The Nerve show. The total actual cost of taxpayer-backed incentives awarded to the company is unknown – partly because of a general lack of transparency by state and local government agencies awarding incentives, and state privacy laws that prohibit the release of the taxpayer cost of certain types of benefits. A Proterra spokesman didn’t respond to The Nerve’s recent written requests for comment about whether the company’s bankruptcy would result in any repayment of state or local incentives. A nearly $200,000 incentives repayment to the state involving the Greenville County plant was waived in 2020, according to Commerce. Proterra wasn’t the only company in South Carolina in recent years to have reduced investment and job creation requirements after initially being awarded incentives. The Nerve in 2018 revealed, for example, that Element TV in Fairfield County had to create far fewer jobs than originally promised under a $1.3 million state grant for its assembly plant. The Nerve in 2018 also revealed that since 2015, 14 other companies that had committed to locating or expanding in South Carolina had repaid a total of nearly $7 million in state grants after failing to meet  job creation or investment requirements. The South Carolina Policy Council – the parent organization of The Nerve – has called for greater transparency in the incentives process. Lowered expectations Under the last-known amended state “performance agreement,” which was dated March 7, 2012, Proterra was required to invest a minimum of $16 million for its land, building, machinery and equipment – down from the previous $30 million threshold - and create at least 400 full-time jobs – compared to the previous 800-employee target, according to records obtained under the state open-records law. Proterra was given an extra two years under the 2012 agreement to meet the reduced requirements. No explanation was given in the revised agreement with Greenville County and the S.C. Coordinating Council for Economic Development (CCED) for the lowered thresholds, which were required to be met by June 29, 2017. The awarded $3 million total in state grants was cut in half, records show. The CCED is made up of the directors or board chairpersons of 11 state agencies, including Commerce, involved with economic development and by law is headed by the Commerce secretary, who is appointed by the governor. CCED meeting minutes from Dec. 3, 2009, show that the council initially approved job development credits (JDCs), which are rebates of a portion of employee wage withholdings, for Proterra, provided that only jobs paying at least $14 an hour would be eligible for the credit. Proterra was identified in the minutes only as project “EZ09232475-Greenville” and was among five unidentified companies approved for JDCs under the heading, “Regarding confidential projects, the following actions were taken.” In a recent written response to The Nerve, Commerce spokeswoman Kelly Coakley said Proterra in 2012 requested a “reduction of its minimum investment and job requirements,” and that no grant funds had been dispersed then, adding, “Because the investment and job numbers were reduced by 50%, the grant award was reduced by 50%.” No answer was given to The Nerve’s question about why the state agreed at the time to the lowered job and investment targets. Proterra never hit its reduced 400-job threshold by the required deadline, according to Coakley, who noted that when the state grant closed in 2020, the company had 302 employees. Still, the CCED in March 2020 waived a $195,000 incentives repayment because although Proterra had fallen short of a 300-job target by Dec. 31, 2018, it had invested “nearly double its requirement” at its Greenville facility, she said. The Nerve previously has pointed out that the CCED, which is administered by Commerce, routinely has met in secret in Commerce’s headquarters on the 16th floor of an office high-rise across the street from the State House to discuss what incentives – often totaling in the millions – to dole out to companies seeking to locate or expand in South Carolina. The CCED was a party in the recent state incentives agreement involving Scout Motors, an electric vehicle company created last year by German-based Volkswagen and which earlier this year received a nearly $1.3 billion appropriation – which works out to be about $240 for every man, woman and child in South Carolina – from the S.C. Legislature to locate an assembly plant in Richland County. The Nerve in June revealed details of that agreement and followed up with another investigation last month showing how state and local government officials – including Republican Gov. Henry McMaster, who last year issued an executive order committing the state to promote the electric vehicle industry – kept the deal secret from the public for months. Unknown job numbers In a press release issued last Saturday, the U.S. Volvo Group, which manufactures commercial vehicles, announced that it had submitted a winning $210 million bid at a bankruptcy auction for Proterra’s electric-vehicle battery plant in Greer in Spartanburg County and a related battery development facility in California. A separate Volvo company operates a car assembly plant in Berkeley County. Bankruptcy records reviewed by The Nerve show that the agreement involving Proterra Inc., Proterra Operating Company Inc.,  Volvo Battery Solutions LLC and Mack Trucks Inc. included a reference to “transferred incentives” – specifically a 2021 “fee-in-lieu-of-tax” (FILOT) agreement with Spartanburg County and two 2021 “revitalization” agreements with the CCED. Mack Trucks, which is part of the Volvo Group, operated a truck assembly plant in Winnsboro in Fairfield County from 1987 to 2002 and received taxpayer-backed incentives before Volvo closed the plant and relocated operations to Virginia, as The Nerve revealed in a 2010 story about failed companies in South Carolina that were awarded incentives. In announcing the Spartanburg County project in December 2021, Commerce described the project as a $76 million investment that would create more than 200 new jobs. The CCED approved job development credits for Proterra and awarded Spartanburg County a $750,000 grant to “assist with costs related to this project,” according to a Commerce release. “Today’s announcement by Proterra is further proof that South Carolina is leading the charge in the electric vehicle revolution,” Gov. McMaster said in the release. The announcement came about eight months after President Joe Biden took a virtual tour of Proterra’s Greenville County facility. Asked for current job and investment numbers at Proterra’s Greenville and Spartanburg County locations, Commerce spokeswoman Coakley in her recent email response said because the state grant for the Greenville County plant is “now closed,” and the company did not claim job development credits for that facility, it no longer has to report updated job and investment figures there. As for the Spartanburg County plant, Coakley said no current employment or investment figures are available because required job and investment thresholds don’t have to be met until Dec. 2, 2026. A Spartanburg County spokeswoman didn’t respond to The Nerve’s recent written requests for any related county incentives agreements. County concessions The Nerve’s review found that the state incentives package for Proterra wasn’t the only amended agreement with reduced requirements for the company. Under “inducement” and millage rate agreements with Greenville County, which were signed in December 2009 and January 2010, Proterra committed to making a $42 million investment over five years – $68 million over seven years  - and creating “approximately” 1,300 jobs over five years, according to records provided recently to The Nerve by the county under the state open-records law. In exchange, Proterra would be allowed to make FILOT payments over 20 years based on the 2009 county millage rate and a reduced property assessment percentage of 6% – potentially saving the company millions in property taxes over the life of the agreement. In addition, given that the plant would be located in a “multi-county” industrial park as defined by state law, Proterra would be eligible for county “infrastructure” credits equal to 100% of its FILOT payments on its land and building investment for the first four years, and 50% of FILOT payments on other property, such as machinery and equipment, for the first 10 years, under the agreements. Besides FILOT incentives, the county also authorized the issuance of up to nearly $7.5 million in federal “recovery zone facility” bonds for the project. The January 2010 agreement and a related county resolution authorized another maximum $7.5 million in federal “qualified energy conservation” bonds (QECB), which, as with the other bonds, were supposed to be repaid by the company. The total maximum authorized QECB amount was later reduced to $4.5 million under another resolution. But despite the initial investment requirements approved by the county, under an ordinance approved in November 2010 and a FILOT agreement in December 2010, Proterra would have to invest a minimum $33 million – not $42 million as required in the initial agreements – over a period of seven years – as opposed to five years under the first contracts – to receive the same FILOT benefits. No job-creation figures were listed in the revised agreements. A county resolution in August 2017 extended the seven-year project completion period by another three years to the end of December 2020, given that Proterra was “considering making additional investment in the Project,” though no specifics were provided. The Nerve recently sent a list of written questions to Joseph Kernell, the county’s longtime administrator, about the lowered incentives requirements in the amended agreements. He told The Nerve in 2010 that offering incentives was necessary to persuade Proterra to locate in South Carolina, describing the county deal then as a “strong package.” “If you don’t do the investment, you wouldn’t get the return,” he said at the time. “The  competition is from other states; we’ve got to be competitive.” Responding on behalf of Kernell, county spokesman Bob Mihalic in a recent email to The Nerve said the county’s 20-year FILOT agreement with Proterra is still in effect, and that the company has made required annual FILOT payments. Asked why Proterra was allowed to receive the same FILOT benefits while being required to do less under the amended agreements, Mihalic replied, “Automotive/Mobility was/is a sector that the GADC targeted and tries to grow.” “GADC” refers to the Greenville Area Development Corporation, the governing board of which is appointed by the Greenville County Council. In its most-recent federal income tax return filed in April this year, the nonprofit organization, which aims at “promoting and enhancing the economic growth and development” of the county, reported a $2.1 million deficit for the 2021-22 tax year, with total revenues and expenditures at nearly $2 million and more than $4.1 million, respectively. Mihalic said Proterra was not required to repay any awarded county incentives because it had met the reduced $33-million minimum investment requirement. “Clawback” provisions in incentives agreements typically require companies to repay part or all of certain awarded benefits, based on a formula, if job creation or investment thresholds aren’t met. As for the federal bond repayments, Mihalic said that “would be all between” Proterra and the federal government. Mihalic instructed The Nerve to contact the S.C. Department of Commerce about Proterra’s current number of workers at its county plant and referred questions to county Auditor Scott Case about Proterra’s total FILOT payments and awarded “infrastructure" credits. Case didn’t respond to The Nerve's written requests for that information. Elsewhere in the state, Proterra announced in March that the S.C. Department of Education would “deploy” 160 electric school buses statewide in a partnership with the company and Thomas Built Buses. Proterra in its press release described the purchase as the single-largest order then of electric school buses under the federal Environmental Protection Agency’s "Clean School Bus Program." In a recent written response to The Nerve, Department of Education spokesman Derek Phillips said Proterra’s bankruptcy announcement in August would not affect "the production or delivery of the buses.” Phillips said the 160 buses cost a total of $59.5 million, which was covered by a federal grant through the Clean School Bus Program. He provided The Nerve with a list of 17 school districts statewide in which he said Proterra buses are operating, ranging from small districts such as Barnwell 45 to the larger Richland 1 district. Big creditors, big losses Proterra on Aug.7 filed for Chapter 11 bankruptcy in U.S. Bankruptcy Court in the District of Delaware. The company listed the location of “principal assets” at its Greer electric battery plant. Proterra in its bankruptcy petition estimated the number of creditors at 5,001-10,000. Total assets and debts as of June 30 were $818.7 million and $609.4 million, respectively, according to the petition. In its latest quarterly filing with the U.S. Securities and Exchange Commission, Proterra, which became a publicly traded company in 2021, reported a total operating loss of $183.6 million for the nine months ending Sept. 30. Proterra’s shareholders that had at least 5% voting power within the company as of August, according to the bankruptcy petition, included New York-based BlackRock Inc., which has been ranked as the world’s largest asset manager, and whose co-founder and CEO, Larry Fink, has publicly encouraged businesses to adopt liberal “environmental, social and governance” (ESG) policies. The Nerve in April revealed that BlackRock, which as of fiscal 2022 managed more than $10 billion in the state pension system in South Carolina, was among the top-five collective shareholders as of the end of 2022 among the 19 biggest companies by publicly traded stock in one or more of the four largest, public-stock MSCI indexes in the state pension plan. As for why Proterra filed for bankruptcy, industry analysts in technology publications cited various factors, including inflation, tightening capital markets, supply chain issues and pressures fulfilling contracts with public transit systems that required customized buses. Bankruptcy records show that California-based Phoenix Motor Inc., another electric vehicle company, on Monday purchased Proterra’s transit business line. Proterra’s top-25 unsecured creditors as of August listed claims ranging from $661,463 to $27.5 million and included 10 municipal or regional transit systems in the U.S. and Canada, with Miami-Dade County claiming the largest amount of “deferred revenue” – nearly $10 million – among that group, according to the bankruptcy petition. Deferred revenue refers to advance payments that a company receives for products or services that are to be delivered or performed in the future, according to the online Investopedia. In court papers, Miami-Dade County said it awarded Proterra in 2019 two contracts totaling more than $72 million to purchase 69 electric transit buses and charging systems, along with new replacement parts and services for those buses. In a June 2021 press release, the county said it had agreed in 2019 to buy 33 electric buses and depot chargers, following up in 2021 with a “commitment” to purchase 42 additional buses, though no cost figures were provided. A “pilot” Proterra bus model was scheduled to be delivered in mid-July 2021 for testing, with the other electric buses slated for delivery last year, the release said. “With these new electric buses, Miami-Dade will lead the way with the largest sustainable transportation fleet in Florida and one of the largest in the nation,” county Mayor Daniella Levine Cava said in the release. The Nerve recently sent written questions to Miami-Dade County about the number of Proterra buses currently operating in the county, and its bankruptcy claim against the company. No response was provided by publication of this story. A Proterra spokesman didn’t respond to The Nerve’s questions about how the company’s bankruptcy would affect contracts with transit systems nationwide. Besides the transit systems’ claims, the U.S. Customs and Border Protection – another unsecured creditor as of the August bankruptcy filing – claimed nearly $713,000 in owed taxes from Proterra. Nerve intern Jasmine Creech contributed to this story. Brundrett is the news editor of The Nerve (www.thenerve.org). Contact him at 803-394-8273 or [email protected]. Follow The Nerve on Facebook and X (formerlyTwitter) @thenervesc. Nerve stories are free to reprint and repost with permission by and credit to The Nerve.    

By RICK BRUNDRETT Update: 11/7/23 - Eight days after this story was published, voters in the town of Blythewood ousted incumbent Mayor Bryan Franklin, electing Town Council member Sloan Griffin as the new mayor by nearly 70% of the vote, according to state election results. Voters also rejected a re-election bid by council member Eddie Baughman, the mayor pro-tempore.  On the night of Sunday, Feb. 26 this year, state and local government officials gathered in the 600 Executive Club at the Williams-Brice football stadium in Columbia for an event billed as a “Confidential Economic Development Dinner with Project Connect: Scout Motors.” The meeting was so secret that dinner guests were required to sign nondisclosure agreements to attend, according to records obtained recently by The Nerve under the S.C. Freedom of Information Act.The stated purpose of the event, led by Gov. Henry McMaster, was for “South Carolina leadership to host a dinner for Project Connect’s leaders,” which included Scott Keogh, Scout Motors' president and chief executive officer, as well as executives and a board member of the Volkswagen Group, records show. The German-based Volkswagen Group last year created Scout Motors as an independent company. The confidential briefing materials, which included a dinner seating chart as part of nearly 1,000 emails provided to The Nerve by the town of Blythewood, noted that Volkswagen’s board of directors planned to make a final decision on March 3 about whether to locate Scout Motors’ first electric pickup truck and sport utility vehicle assembly plant in South Carolina or the other finalist state, believed then to be Mississippi. Also included in the emails, which were released under the state's open-records law, was an incentives wish list that was provided in December by Scout Motors – identified in the document only as Project Connect – through a global real-estate services firm to local officials. The Nerve’s review of the written “request for proposal” found that it served as the framework for the more than $1 billion in approved state and local incentives for Scout Motors. State and local officials told The Nerve that it’s common for large companies seeking to locate or expand in South Carolina to present written requests to government agencies for taxpayer-backed incentives. On the morning of March 3, Keogh informed McMaster in a phone call at the State House that an approximately 1,600-acre site off Interstate 77 at the town of Blythewood in Richland County had been selected for the Scout Motors plant, which would cover 1,100 acres, according to documents provided to The Nerve by the Governor’s Office under the state's open-records law. “We’re inspired by South Carolina, its people, and your commitment to becoming the epicenter of electric vehicle innovation,” Keogh said in a follow-up confirmation letter that morning to McMaster, which was emailed to the governor’s chief of staff. By noon that day, South Carolinians learned for the first time about the announced 4,000-job, $2 billion project. Production at the Blythewood plant is scheduled to begin at the end of 2026. Records provided to The Nerve show that the project – which likely will cost taxpayers in South Carolina far more than the $1 billion dispersed in March to the state Department of Commerce – had been kept secret since at least October 2022. The Nerve this month sent written questions to state and local officials about the incentives offered to Virginia-based Scout Motors, which Volkswagen launched in May 2022. Among other things, The Nerve wanted to know why local public hearings weren’t held before incentives were formally offered to allow citizens to express their views on the massive taxpayer-backed project. More broadly, The Nerve sought answers as to why there was no statewide public discussion beforehand about the Republican McMaster's executive order in October 2022  – issued about two weeks before the first recorded meeting between state officials and Scout Motors representatives – committing the state to promote the electric vehicle industry. McMaster; his chief of staff, Trey Walker; or governor spokesman Brandon Charochak didn’t respond to The Nerve's inquiry about the governor's Oct. 12, 2022, executive order. In a March email that was included in records provided by the Governor’s Office, Walker told S.C. Commerce Secretary Harry Lightsey, who was appointed by McMaster, that the state was “not going to ‘crowd source’ decision making, like the drafting of legal documents or contracts,” related to the Scout Motors project. “If the voters don’t like it,” Walker wrote, “there is a process for expressing their displeasure. Elections.” Other records from the Governor’s Office show that the “Commerce team” held a private conference call about the project in January with S.C. House Speaker Murrell Smith, R-Sumter; and Sen. Harvey Peeler, R-Cherokee, the former Senate president and current Senate Finance Committee chairman. Two private meetings were held in February in the Governor’s Office involving the “Commerce team,” Smith and Peeler, according to a timeline. Smith and Peeler didn’t respond to The Nerve’s recent written requests for comment. The Legislature with uncharacteristic blazing speed passed an amended resolution – an original co-sponsor of which was Smith – in one week in March after the official March 3 announcement by Scout Motors, authorizing approximately $1.3 billion in state surplus funds for the project. As The Nerve revealed in June, the $1.3 billion works out to be about $240 for every man, woman and child in South Carolina. Asked whether Commerce officials had any contact with Smith or Peeler about Scout Motors before the January conference call, agency spokeswoman Kelly Coakley in an email response this month didn't directly answer the question but said, “S.C. Commerce has had regular communications with legislative leaders over the last 18-24 months regarding significant economic development projects in the S.C. Commerce pipeline.” Local officials defended the behind-closed-doors negotiations on the Scout Motors project. Blythewood Town Administrator Carroll Williamson said in an email response this month to The Nerve that no public town hearings were held before the March 3 official announcement because “no official action by the Town was required before the public announcement.” In a letter this month to The Nerve, Patrick Wright, Richland County’s chief attorney, said it would be “virtually impossible to get organizations to come to South Carolina if every item discussed or negotiated had to be released immediately.” “In its foresight, the General Assembly allowed for discussions and negotiations to be private, so jobs and growth would not be stunted in our great state,” Wright said. The S.C. Freedom of Information Act allows public bodies – though it isn’t required – to meet behind closed doors to discuss the proposed “location or expansion of industries or other businesses in the area served by the public body.” Government agencies under the FOIA can – though they aren’t required to do so – withhold incentives agreements until a public announcement is made about the project, or the agreement is “finalized,” whichever occurs later. The Nerve recently asked Scout Motors CEO Keogh for specifics about how South Carolina’s incentives package was better than what might have been offered by Mississippi, believed by S.C. officials in February to be the other finalist state. Keogh didn’t reply to the email inquiry. Mississippi officials also didn’t respond to a request for comment. The Volkswagen Group last week reported third-quarter operating profits of about $5.3 billion in U.S. dollars. The company, headquartered in Wolfsburg, Germany, has 115 production plants worldwide with about 676,000 employees, according to the company’s website. The South Carolina Policy Council – the parent organization of The Nerve – has called for greater transparency in the state incentives process. Confidential wish list Timelines provided to The Nerve by the Governor’s Office and town of Blythewood under the state’s open-records law show that Commerce received a “request for proposal” in July last year from JLL (Jones Lang LaSalle) Inc., a global real-estate services company headquartered in Chicago. The timelines noted, though, that the “lead went quiet.” Following a meeting in Washington, D.C., on Oct.25, 2022, which involved a Scout Motors official and representatives from the Governor’s Office and Commerce, Commerce learned that the company was “interested in looking at South Carolina for a manufacturing EV assembly plant,” according to the timelines. JLL representatives on Dec. 19 “reached out to S.C. Commerce and made a visit to South Carolina to tour the Blythewood site,” the timelines said. The “request for proposal” (RFP) from JLL on behalf of Scout Motors was sent Dec. 30 by the Central SC Alliance to Jeff Ruble, Richland County’s economic development director, who forwarded it that day to Williamson, Blythewood’s town administrator, according to emails provided by the town to The Nerve. The Legislature collectively provides millions in annual funding to the Central SC Alliance and other regional economic development organizations, as The Nerve previously has reported. For the fiscal year that started July 1, the Central SC Alliance was appropriated $750,000, state budget records show. Although it didn’t identify Scout Motors – only the code name “Project Connect” – the RFP from JLL laid out Scout Motors’ wish list, including: A cash grant Income, property and sales tax breaks, along with rebates of payroll taxes Highway interchanges at “no cost to the company” Multiple rail spurs at state expense A truck staging area for about 300 trucks A free, 40,000-square-foot employee training center State-funded employee recruitment and training A state-constructed, daycare facility to accommodate 400 children State funding for a 40,000-square-foot temporary office building A state commitment to “establish an electric vehicle charging station network of sites” A state commitment to “not support the establishment of an automotive Original Equipment Manufacturer (OEM)” within 45 “road surface miles of the Mega Site,” and A partnership with state and local government agencies to ensure compliance with the “German Supply Chain Due Diligence Act,” which, among other things, requires that the site was never the “subject of unlawful eviction or unlawful taking of land, forest and waters … the use of which secures the livelihood of a person.” “It is the expectation that the Government receiving this request will assemble content experts and provide a detailed and thorough response to the questions included with this document,” according to the cover sheet from JLL, which listed a response due date of Jan. 6 this year. The RFP estimated 4,800 jobs with “Phase 1” of the project, though it didn't give specifics. In comparison, the state incentives agreement with Scout Motors requires that a minimum of 4,000 “qualified” jobs be created over no longer than an initial eight-year “achievement period.” And, as The Nerve revealed in June, Scout Motors itself would have to create at least 400 jobs – not 4,000 – allowing the difference to be made up by company “affiliates” and “counted suppliers.” In addition, as many as 400 employees could be “badge” workers, defined in the incentives agreement as “cafeteria, security, and janitorial maintenance personnel” employed by third parties. In mandating an immediate appropriation of nearly $1.1 billion in state surplus funds for the project, the Legislature in March designated that the money be used for such things as land acquisition, a bridge to support the construction of a rail spur, road access and related improvements, soil stabilization, water and wastewater infrastructure, and an employee training center – items covered specifically or more broadly in the RFP. The state incentives agreement also covered various RFP provisions, The Nerve’s latest review found, including, for example: A new interchange A minimum 40,000-square-foot, “state-of-the-art” training center, with the first $25 million of construction costs to be funded by Commerce State-funded employee training and recruitment  State job development credits and sales tax exemptions County reimbursements for lease payments on a 40,000-square-foot temporary office building County-dedicated land for future “childcare, health and wellness, and/or recreational uses, to support the workforce and local community,” and A ban on state incentives being offered to “competitive vehicle production facilities” within 75 “road surface miles” of the Blythewood site. The incentives agreement also mandates compliance with the German law dealing with environmental, human rights and property rights issues, which legal observers have said reflects the “environmental, social and governance” (ESG) movement. The Nerve has reported extensively about the ESG movement in South Carolina since last year. Regarding environmental issues, the Scout Motors RFP sought state and local government approval to allow site preparation work to begin “in advance of receiving formal construction permits and the environmental impact assessment.” The company paused site work last month following concerns from environmental groups and state and federal agencies, The State newspaper reported. In her Oct. 16 email response to The Nerve, Commerce spokeswoman Coakley declined to give specifics about the role of Commerce or any other government agencies played in responding to the RFP, citing confidentiality protections in the state’s open-records law regarding economic development projects. But Coakley acknowledged that is “very common” for companies or their representatives to present RFPs to Commerce seeking incentives. She also said JLL “regularly represents clients that evaluate whether to locate in South Carolina,” estimating that it “likely initiated” contact with Commerce on behalf of “more than 50 companies during the last five years.” Asked how common it is for large companies seeking to locate or expand in Richland County to provide a written incentives wish list, such as the one submitted by JLL on behalf of Scout Motors, county attorney Wright replied in his Oct. 24 letter to The Nerve, “This sort of request occurs on almost every project.” McMaster or staffers in his office did not respond to The Nerve’s written questions related to Scout Motors’ RFP. Private, pricey meetings On Jan. 9 this year, JLL representatives and Scout Motors’ technical staff visited the Blythewood site, according to timelines provided by the town of Blythewood and the Governor’s Office. A “Project Connect” itinerary produced by Richland County’s economic development office and included with town emails provided to The Nerve, show that at least 10 federal, state and local officials met privately with Scout’s technical staff that day at the University of South Carolina’s Alumni Center. A dinner that night was attended by Commerce Secretary Lightsey, Richland County Council Chairman Overture Walker and council member Paul Livingston, according to the itinerary. More private meetings were held the following day. On Jan. 31, S.C. House Speaker Smith and Senate Finance Committee Chairman Peeler held a conference call on the project with the “Commerce team,” the identities of whom weren’t identified, according to the Governor’s Office timeline. On Feb. 14 and Feb. 16, Smith and Peeler met privately at the Governor’s Office with the “Commerce team,” the timeline noted. Neither Smith nor Peeler responded to written requests from The Nerve for comment. Commerce spokeswoman Coakley in her written response said while her agency has “no independent verification” of the Jan. 31 conference call with Smith and Peeler, “any call during this period was likely to brief legislative leaders about the status of the negotiations.” The Scout Motors technical team made a second site visit from Feb. 1-4. On Feb. 2, McMaster hosted a dinner at the Governor’s Mansion with various guests, including Scout Motors CEO Keogh and other company leaders, Republican U.S. Sen. Lindsey Graham, Lightsey, Walker and Jeff Ruble, the county’s economic development director, according to the timeline from the Governor’s Office. In an email response this month to The Nerve, McMaster spokesman Charochak said the total cost of the Feb. 2 dinner was $3,692, which was “paid for by the Governor’s Mansion.” Scout Motors’ technical team made a third visit to the Blythewood site on Feb. 23 and 24, according to the timeline from the town of Blythewood. For the “Confidential Economic Development Dinner” at Williams-Brice Stadium on Feb. 26, the S.C. Highway Patrol escorted Scout Motors and Volkswagen officials from the Charlotte, N.C., airport to the event, which included a cocktail reception, a stadium “light show,” an “SC Pitch” video, and remarks by McMaster and Lightsey, records show. The text of Lightsey’s remarks was included with the emails provided to The Nerve by the town of Blythewood. “We will be your partner – it will not be just VW that is making an investment in SC; we will be invested in your success,” Lightsey said. “That partnership endures over the course of decades for as long as you choose to be here. You will be on a first name basis with and have access to our top leadership – no matter who they might be. Look around you, the folks in this room represent our leadership.” A seating chart attached to one of the emails listed 50 guests. The event program identified 31 attendees, divided among the following groups: “Project Connect Guest of Honor,” which included nine Scout or Volkswagen executives, and a Volkswagen board member; state legislators; university presidents; state agency heads; and county leaders. Asked about the costs of the Feb. 26 dinner and earlier visits by Scout Motors’ staff, Coakley in her email response said Commerce spent a total of $117,605.22 toward costs associated with the dinner, a follow-up site visit and barbecue in Blythewood the next day, and the Jan. 9-10 technical meetings. The costs included van rentals for “local and airport transportation for Scout Motors executives and consultants,” and for local transportation to the Blythewood site for “JLL personnel,” though she noted that Commerce did not pay for other travel costs for Scout executives or consultants. Commerce spent a total of $44,946.22 on the Feb. 26 dinner event, Coakley said. During the event, McMaster presented Keogh and Chris Condon, Scout Motors’ chief financial officer, with the governor’s “Honorary Sandlapper” award, according to the program. McMaster created the award last year for out-of-state residents to “express gratitude, to recognize an extraordinary accomplishment, to generate good will, or to demonstrate the State’s commitment or interest to an endeavor or project,” according to the Governor’s Office website. Records show that the guest list included – besides McMaster, his wife and several staffers in his office, and Lightsey and other Commerce staff – state Department of Transportation Secretary Christy Hall, then-S.C. Department of Employment and Workforce Director Dan Ellzey, County Council Chairman Walker, Blythewood Mayor Bryan Franklin and Columbia Mayor Daniel Rickenmann. The following university and college presidents also were on the attendees list: Michael Amiridis, University of South Carolina; James Clements, Clemson University; Roslyn Clark Artis, Benedict College; and Tim Hardee, S.C. Technical College System. In addition, the listed guests included the following state lawmakers: House Speaker Smith Senate Finance Committee Chairman Peeler Senate President Thomas Alexander, R-Oconee Sen. Brad Hutto, D-Orangeburg, who is the Senate minority leader Sen. Nikki Setzler, D-Lexington, who is the former Senate minority leader Rep. Bruce Bannister, R-Greenville, who is the House Ways and Means Committee chairman Rep. Tommy Pope, R-York, who is the House speaker pro tempore Rep Todd Rutherford, D-Richland, who is the House minority leader, and Rep. Leon Stavrinakis, D-Charleston. As with Smith and Peeler, Alexander didn’t respond to The Nerve’s written requests for comment. The dinner invitation letter to Mayor Franklin, which was included in a Feb. 21 email from Ruble, said McMaster and Commerce would “host Project Connect’s executive board members who are traveling to South Carolina for final conversations and to, again, tour the project site.” The letter noted that dinner guests “must complete and return the attached non-disclosure agreement (NDA) at the same time.” “We look forward to you being part of this historic South Carolina evening,” the letter concluded. County secrecy agreement In his letter this month to The Nerve, Richland County attorney Wright said the county entered into an NDA with Commerce on Jan. 5 this year, which “broadly bound the county to nondisclosure on all matters related to the project,” adding that the identity of Scout Motors was not disclosed at that time. Wright responded to a list of questions initially sent by The Nerve to County Council Chairman Walker, council member Livingston and Ruble, the county's economic development director. Wright said county officials first became aware in a "virtual meeting" last Dec. 5 with JLL real estate brokers, which he noted was arranged by Commerce, of Scout Motors’ interest in locating its plant in Richland County, though county officials didn’t know the company's identity then. In an email this month to The Nerve, Blythewood Town Administrator Williamson said the town first learned of the company’s identity on Feb. 14 from the county’s economic development office, adding that town officials “generally understood that the project was to remain confidential until it was announced publicly.” Williamson said the Blythewood Town Council held no public hearings or closed-door executive sessions on the project before the March 3 official announcement. As with Richland County, the Town Council subsequently approved the main project development agreement with Scout Motors, which also included the city of Columbia, Commerce and the state Coordinating Council for Economic Development, made up of the heads or board chairpersons of 11 state agencies involved with economic development. County Council meeting minutes reviewed by The Nerve show that the project, identified initially only as Project Connect, was discussed in executive session, and that a proposed county fee-in-lieu-of-taxes (FILOT) and incentives agreement was given first-reading approval – by title only – at its Feb.7 regular meeting. The agreement was given second-reading approval at a Feb. 14 special-called meeting, though the minutes didn’t provide any details of the project. Asked if the county publicly released any project details in February – even without revealing the identity of Scout Motors – Wright in his letter said the county was “bound” by the NDA until the March 3 official announcement. As for why no public hearings were held before March 3 given the large scale of the project, Wright said the company didn't make a final site selection until that day.  “Until that time, (the) NDA was in effect,” Wright said. County council meeting minutes show that the third reading of the county FILOT and incentives agreement, which identified Scout Motors, was approved at the regular March 21 meeting. Besides receiving state benefits, Scout Motors will save millions in county property taxes over 40 years under the FILOT agreement, which will allow the industrial project site to be assessed at the lowest rate applied to owner-occupied homes, as The Nerve revealed in June, and sets a fixed millage rate. Minus allowed credits, FILOT payments over the life of the county agreement are expected to total more than $1.2 billion, Wright said. The collective cost of all other county incentives offered to Scout Motors, including land for a childcare and/or a wellness center, office lease-payment reimbursements, and renaming all roads within the industrial park site is projected at about $86 million, Wright said, noting those costs would be “sourced from the property tax payments Scout Motors makes to the County.” While contending that the incentives negotiations had to be confidential, Wright said the taxpayer-backed benefits offered to Scout Motors will be worth it for the county and state. He pointed out that the company chose Richland County out of “75 potential sites across the country.” “This will be a multibillion-dollar investment that will provide thousands of jobs for our citizens and be a catalyst for generational change in the area,” Wright said. “All of the hard work and dedication of the people to make this benefit to our wonderful state happen in such a short period of time is something to be applauded.” Brundrett is the news editor of The Nerve (www.thenerve.org). Contact him at 803-394-8273 or [email protected]. Follow him on Twitter @RickBrundrett. Follow The Nerve on Facebook and X (formerly Twitter) @thenervesc. Nerve stories are free to reprint and repost with permission by and credit to The Nerve.  

By RICK BRUNDRETT Update: 10/16/23- Less than three weeks after this story and a companion investigative piece were published, Gov. Henry McMaster in a letter to the S.C. Senate called for reforms in the magistrate selection process, pointing out that his "relatively recent predecessors adopted or acceded to a custom of senatorial deference, whereby a local senator or county senatorial delegation is relied upon as the sole source for nominations." McMaster in his letter contended that candidates have not been "sufficiently vetted in recent years" and noted that dozens of magistrates have been "acting in a holdover capacity" after their four-year terms have expired. He announced that future candidates who are considered by him for appointment will be required to complete "more detailed applications" and "waive confidentiality protections" for "any attorney or judicial disciplinary proceedings." For more than a year, longtime senator-lawyer Brad Hutto has represented dozens of mainly criminal clients in Orangeburg County magistrate courts before judges whom he played a prominent role in nominating, an investigation by The Nerve found. Hutto, the Senate’s Democratic minority leader who has been in office since 1996, also has appeared at times before magistrates in Bamberg and Barnwell counties, where he has sole nomination authority.In addition, Hutto’s son, Skyler Hutto, who works in the same Orangeburg-based law firm as his father, represented dozens of clients over the past 18 months before magistrates whom his father helped nominate, The Nerve’s review found. Sen. Hutto isn’t the only senator-lawyer who has handled cases before magistrates nominated by that senator, records show, though Hutto is the focus of this story because of the relatively large number of magistrate cases handled by him and his son. Neither Hutto nor his son is accused of doing anything wrong under state law. State Sen. Tom Corbin earlier this year introduced a bill that would prohibit current senators-lawyers from appearing before magistrates in counties they represent. The seat of a senator-lawyer who continued to do so would be declared vacant under the bill, which has remained stuck in committee. “To me, it’s bad enough that the General Assembly appoints all the judges,” Corbin, R-Greenville, who is a businessman, told The Nerve recently. “But if you think about it, if the senators for each county appoint the magistrates for that county, that is even more egregious that a senator could appoint a magistrate judge and practice law in his courtroom.” “That’s almost like this-judge-works-for-me sort of thing,” he added. In a recent interview with The Nerve, Hutto acknowledged that he and his son have handled many cases before Orangeburg County magistrates whom he helped nominate. But he stressed that those judges haven’t shown him, his son or other attorneys in the law firm where they work any special treatment. “I don’t tell them how to do their jobs,” Hutto said. “My citizens elected me to do all the functions of a senator, including nominating magistrates. I’ve been nominating magistrates for nearly 30 years, and I’ve been practicing law for nearly 40 years. Everybody knows that, and it’s never been an issue.” Under state law, South Carolina’s current 306 magistrates, as listed on the S.C. Judicial Department’s website, are appointed by the governor with “advice and consent” of the Senate. Their terms by law run for four years, though senators can keep them on the bench for years after their terms expire, as The Nerve revealed in another investigative story published with this piece. When it comes to nominating magistrates, the reality is that the senators representing a county – not the entire Senate – recommend local magistrates to the governor, whose office typically rubber-stamps them for appointment after routine background checks. In 12 counties, one senator has the sole nomination authority, including Bamberg and Barnwell counties where Hutto has that power, according to a Senate list provided earlier this year to The Nerve under the state’s open-records law. The sole-nominator club, which The Nerve first revealed in 2019, currently includes senator-lawyers Shane Massey, R-Edgefield, who is the Senate majority leader; and Ronnie Sabb, D-Williamsburg; and non-lawyers Thomas Alexander, R-Oconee, who is the Senate president; and former Senate president Harvey Peeler, R-Cherokee, who chairs that chamber’s Finance Committee. In another 17 counties, including Hutto’s home county of Orangeburg, just two senators control the magistrate nomination process, according to the Senate list. Of the 17 counties, 15 have at least one senator-lawyer; in six counties, including Allendale and Hampton counties, parts of which are represented by Hutto, both senators are attorneys. In total, there currently are 19 senator-lawyers, which represents 41% of the 46-member chamber. Magistrates are considered lower-level judges, generally handling traffic offenses and other minor criminal cases that carry a maximum penalty of 30 days in jail and a $500 fine, and civil cases involving claims of up to $7,500. If South Carolinians have any experience with the state court system, it likely will be at the magistrate or municipal court level, collectively known as summary courts. Under state law, a magistrate appointed after July 1, 2005, has to be a U.S. citizen who is at least 21 years old, a resident of the state for at least five years, and have a bachelor’s degree. Magistrates must pass a judicial certification test in their first year in office and a recertification test every eight years generally. They also are subject to the state judicial ethics code, which is enforced by the S.C. Supreme Court, the state’s top court. Among other things, the code requires judges to avoid even the appearance of impropriety. A national judicial ethics expert told The Nerve that at the very least, magistrates have an ethical duty to automatically disclose to opposing parties if senator-lawyers appearing before them played a role in getting their job. “I think that’s what the best practice should be,” said David Sachar, director of the Center for Judicial Ethics with the Virginia-based National Center for State Courts. As elected officials, S.C. senators, who serve four-year terms, also have ethical responsibilities, says Stephen Spaulding, vice president of policy and external affairs with the national government-watchdog organization, Common Cause, based in Washington, D.C. “Constituents and voters need to know that those magistrates are acting independently consistent with the highest ethical standards,” Spaulding said in an interview with The Nerve. “South Carolinians, in my view, should have full confidence that their rulings are unbiased and impartial.” Corbin’s bill, which has 11 co-sponsors, never made it this year out of the Senate Judiciary Committee, chaired by senator-lawyer Luke Rankin, R-Horry, who didn’t respond to The Nerve’s recent request for comment. The bill would have to be reintroduced in 2025 if it doesn’t pass the Legislature next year, given the two-year legislative cycle. Hutto told The Nerve that he previously has introduced bills that would have transferred the authority to nominate magistrates to higher-level circuit court judges, contending that would be a “better way of doing it.” Circuit court judges are elected by the full 170-member Legislature. The Nerve has pointed out over the years that South Carolina and Virginia are the only states where their legislatures play primary roles in electing judges. Among other judicial reform proposals, the South Carolina Policy Council – The Nerve’s parent organization – has endorsed changing state law to address the power of small groups of senators over the selection of magistrates. Judicial reform is expected to be a hot topic when lawmakers return to Columbia in January for the next regular legislative session. Dozens of cases The Nerve earlier this year sent a formal request under a state court rule to the S.C Court Administration office asking for more than two years of magistrate docket records, if applicable, for 20 senator-lawyers (Senator-lawyer Marlon Kimpson later resigned his seat to take a position in the Biden administration). In a May 31 letter, J. Daniel Jones, deputy court administrator, denied the request, noting the court rule permitting the release of the information is allowed only “when the identity of specific individuals is ancillary to the request,” and that even if the request didn’t involve identifying specific persons, his office would not have the “resources available to fulfill such a request.” The Nerve’s review of Sen. Hutto’s magistrate cases was based on nomination records from the Governor’s Office going back to 2018 and Orangeburg County magistrate docket lists since the start of last year through this summer. Those records were obtained through multiple S.C. Freedom of Information Act requests. The Nerve over the past year also randomly sampled online magistrate dockets from Bamberg, Barnwell and Orangeburg counties, as well as reviewed years of magistrate appointment records in official Senate journals. The Nerve’s review found that docket information changed over time, with a criminal defendant, for example, appearing before multiple magistrates depending on the stage of the proceeding. In addition, no online records existed as of Sept. 20 for dozens of mainly criminal cases that initially were identified in earlier docket samplings. Records show as of Sept. 20, Sen. Hutto had active or concluded criminal cases involving 54 traffic or other criminal defendants facing a collective 112 charges in Orangeburg County magistrate courts, plus was a plaintiff’s attorney for two clients in three civil cases, before eight current or former judges whom he and the county’s only other senator at the time had nominated. Hutto has been recognized nationally over the last decade for his defense work in drunken driving cases, according to his profile on the website of the Williams & Williams law firm, where he works with his son, Skyler. As of Sept. 20, Skyler Hutto represented 81 traffic and other criminal defendants facing 162 total charges in Orangeburg County, plus was the plaintiff’s attorney for four clients in more than a total of 30 civil cases, before magistrates whom his father helped nominate, records show. His totals were based on a sampling of court dockets over the past year. Skyler Hutto’s position as a part-time public defender in Orangeburg County has allowed him to handle "dozens" of jury trials in Orangeburg, according to his Williams & Williams online profile. In addition, at least three other lawyers at Williams & Williams, which has offices in Orangeburg and Columbia, each handled at least two Orangeburg County cases as of Sept. 20 before magistrates whom Sen. Hutto helped nominate, records show. Original file dates, when listed, in cases in The Nerve’s review ranged from April 2018 to August of this year. Current or former Orangeburg County magistrates before whom Sen. Hutto or his son appeared since Jan. 1, 2022, included chief magistrate Derrick Dash and associate chief magistrate Meree Wiliamson, as well as Robert Clariday, Dennis Gary Doremus, Peggy Doremus, Robert Lake, Valerie Lawrence and Stephanie McKune-Grant, The Nerve’s review found. Those judges were nominated by either Sen. Hutto and former Democratic Sen. John Matthews, or Hutto and current Democratic Sen. Vernon Stephens, records show. Sen. Hutto also handled as of  Sept. 20 at least one criminal case before Bamberg County chief magistrate Richard Threatt and represented another criminal defendant before Barnwell County magistrate Robert Cooper. Hutto was the sole nominator of both judges, according to Governor’s Office records. As of Sept. 20, more than half of the total listed cases involving Sen. Hutto and his son were still pending, according to online court records. In Orangeburg County, chief magistrate Dash was listed as the assigned judge for the vast majority of cases, followed by McKune-Grant, Lawrence, Dennis Gary Doremus and Clariday. In his interview with The Nerve, Sen. Hutto estimated his win-loss record on magistrate cases over the years was “probably 50/50,” contending that rate was similar to the success percentages of other criminal defense lawyers representing cases before the same judges. He said as an Orangeburg County public defender, his son Skyler handles more criminal cases before magistrates than he does, noting his son “gets maybe dozens of cases every month, every week.” Asked if Skyler appears before the same magistrates whom he helped nominate, Sen. Hutto replied, “That’s all true,” though he added there was nothing unethical about that. “They’re (the magistrates) doing their job; I’m doing my job; Skyler is doing his job,” he said. “We have rules to play by, and we’re all playing by those rules.” Skyler Hutto did not respond to a written request by The Nerve for comment. ‘Known him for many years’ Contacted recently, former longtime Sen. Matthews, a non-lawyer who retired from office in 2020, told The Nerve that procedurally over the years, if a magistrate lived in Sen. Hutto’s district, Hutto would recommend that person for nomination, and he would sign off on the official nomination letter to the governor. If the magistrate lived in Matthews’ district, the nomination practice would be reversed with Hutto, Matthews said. At least five Orangeburg County magistrates in The Nerve’s review lived at one time or another in Hutto’s district, which primarily covers the northern portion of the county, according to Senate Journal records and mapping information from the S.C. Office of Revenue and Fiscal Affairs. Other parts of Orangeburg County currently are represented by Sen. Stephens, a non-lawyer who didn’t respond to a recent written request from The Nerve for comment. Following a 1999 federal court ruling, votes by S.C. legislative delegations have been required to be weighted, based on the percentage of population that delegation members represent. In Orangeburg County, for example, Stephens and Hutto have 52.97% and 47.03% of the weighted vote, respectively, according to information provided by the Senate to The Nerve under the state’s open-records law. Records from the Governor's Office included mostly standard nomination letters signed by Hutto. But in two cases, those records showed a greater level of  involvement by Hutto. For example, in a June 3, 2020, letter to the Governor’s Office regarding the initial appointment of Dennis Gary Doremus, Hutto thanked a staffer with “discussing with me some of the concerns” related to a credit report for Doremus. Hutto in the letter explained that it was his understanding that Palmetto State (Bank) “charged off part of a bank note, and no money is currently due.” He also wrote that Doremus’ daughter was in a “very serious boating accident, and numerous medical bills were incurred,” adding that Doremus had a “medical condition from which he has recovered” and noting, “Both of these medical situations contributed to financial stress.” “I am not aware of anything that would keep Gary Doremus from serving with distinction as a Magistrate,” Hutto continued. “He has a law degree and other capabilities that will allow him to handle the job without significant training.” Less than three weeks later, Gov. Henry McMaster submitted a formal letter notifying the S.C. Senate of Doremus’ appointment, which was confirmed by the chamber by a simple voice vote, Senate journal records show – as is typically done with magistrate appointments. Hutto told The Nerve that Doremus took over the position from his mother, Peggy Doremus, who had retired. “Gary was interested in it,” he said, explaining that it is often difficult to attract lawyers to become magistrates in smaller counties partly because the pay typically is lower compared to larger counties. “His mother had done it and did an exemplary job, and he’s done a great job.” According to the fiscal year 2022 wage-and-salary survey by the South Carolina Association of Counties, the salary for Orangeburg County’s chief magistrate ranged from $88,000 to $98,000, with other magistrate salaries ranging from $80,000 to $90,000. In comparison, the county of approximately 83,000 residents had a per-capita income in 2021 dollars of $22,282, according to the U.S. Census Bureau. The Nerve recently submitted an open-records request to Orangeburg County for current magistrate salaries but declined to pay a requested fee for the short salary list. In another magistrate case, the Governor’s Office notified Hutto in a Feb. 20, 2019, letter of a “potential” unspecified issue involving the appointments of Robert Cooper of Barnwell County and Willard Branch of Allendale County, who currently is that county’s chief magistrate. Hutto and another senator-lawyer, Margie Bright Matthews, a Democrat, control magistrate nominations in Allendale County, with Bright Matthews having 61.05% of the weighted vote, Senate records show. The day before the 2019 letter from the Governor’s Office, Hutto said in a letter to McMaster that after “reviewing the information and speaking with your office, it is the desire of the Senatorial Delegation to reappoint Judge Cooper.” “I have known him for many years, he has served in a fair, honorable manner, and I believe he will continue to do so,” Hutto wrote. On March 4, 2019, McMaster formally notified the Senate in a letter that he was reappointing Cooper. Hutto told The Nerve that Cooper is retiring because he has reached the mandatory judicial retirement age of 72. Legal loopholes Under state law, Senate delegations can appoint screening committees to help them in nominating magistrate candidates to the governor. But that section of law doesn’t require that committee meetings – or anything else connected to the nomination process – be open to the public before delegations make their choices, though the S.C. Supreme Court in 1996 ruled that county legislative delegations are considered public bodies under the state Freedom of Information Act. Official magistrate nominations letters by Senate delegations, for example, aren’t published on the Legislature’s website. For this story, The Nerve obtained those records through several Freedom of Information Act requests to the Governor’s Office. “There needs to be transparency behind how magistrates are selected, how they’re nominated; and it shouldn’t be done behind closed doors,” said Stephen Spaulding of Common Cause, who formerly served as a U.S. House attorney and the U.S. Senate Rules Committee’s policy director. “The vetting should be done publicly.” Generally, South Carolina's ethics law bans public officials, including state lawmakers, from using their positions to obtain “an economic interest for himself, a family member, an individual with whom he is associated, or a business with which he is associated.” An economic interest is defined as an “economic benefit” of at least $50. That section of law, however, doesn’t apply to “any court in the unified court system.” The state’s unified court system includes magistrate courts. Another ethics law specifically bans lawmakers from representing clients for fees before agencies, boards, commissions, departments or  “other entity” if they voted for the nomination, appointment or election of the governing body of those bodies within the preceding 12 months. But the “unified judicial system” is exempted from that section. Outside of ethics laws, magistrates and municipal court judges are “explicitly subject” to a court rule dealing with judicial ethics, according to the S.C. Judicial Department’s “Summary Court Bench Book.” The five ethical “canons” are summarized as follows: A judge shall uphold the integrity and independence of the judiciary. A judge shall avoid impropriety and the appearance of impropriety in all his activities. A judge shall perform the duties of his office impartially and diligently. A judge shall conduct his extra-judicial activities as to minimize the risk of conflict with his judicial obligations. A judge or judicial candidate shall refrain from inappropriate political activity. Nothing in the judicial ethics code, however, requires magistrates to recuse themselves from cases handled by senator-lawyers who played a prominent role in their nominations. ‘Threatens public confidence’ Stephen Gillers, a New York University professor emeritus specializing in legal ethics, told The Nerve in a recent written response that assuming the high level of control exercised by senator-lawyers over magistrate nominations, those judges under ethics rules adopted in South Carolina and nationwide would have to recuse themselves from cases handled by those senators if opposing parties requested it. “It does not mean the magistrate could not be impartial, only that the public would have reason to question his impartiality,” Gillers said. “The rule operates from the premise that the appearance of justice is as important as justice.” “In this situation, the magistrate would presumably be interested in keeping his job,” Gillers continued. “The (senator-) lawyer can make that happen or not happen. That reality threatens public confidence.” Asked if magistrates should automatically recuse themselves in those cases, Gillers said there are “two schools of thought,” with some contending that a recusal request from an opposing party isn’t needed, with others taking the “dominant” view that a recusal request would be required. “It seems to me there are some pretty obvious or potential conflicts of interest,” said Spaulding of Common Cause. “Even if there are not actual (conflicts of interest), there is an appearance issue. That appearance issue undermines those principles of fair and impartial courts.” David Sachar of the National Center for State Courts said while judges in those cases might not be required to recuse themselves, they should at least disclose in advance the role that the senator-lawyer played in their nomination. “That is something that should be disclosed at a minimum to the parties involved,” said Sachar, who formerly worked as a special circuit court judge and prosecutor. “It would be better for the judge as well as the parties.” But when asked if magistrates whom he helped nominate should always disclose his nomination role in advance to opposing parties, Sen. Hutto replied: “You don’t think that every highway patrolman, that every deputy sheriff, that the sheriff himself, the solicitor – everybody knows that. Nobody has hidden that from them, and they never made a motion to recuse the judges because they know these judges are fair.” In magistrate courts, it’s not uncommon for police officers to act as prosecutors. Hutto said in simple traffic cases handled by police officers, if his client wasn’t “obnoxious” with the officer who stopped him, he usually can reach an agreement the officer to reduce the number of points to be assessed against his client’s driver’s license, and the judge “just signs off on it.” The Nerve recently sent written questions to current Orangeburg County magistrates Clariday, Dash, Doremus, Lawrence, McKune-Grant and Williamson, as well as chief magistrate Threatt of Bamberg County and Barnwell County magistrate Cooper, asking them if they ever had recused themselves automatically or did so when asked by an opposing party, or if they disclose in advance Sen. Hutto’s role in their nominations. None of the magistrates responded. ‘Obligation’ to nominate judges Regarding ethical requirements for Sen. Hutto and other senator-lawyers who appear before magistrates whom they helped nominate, Gillers, of the NYU Law School, in his written response said they would be “practicing his or her profession and not violating any lawyer ethics rules.” Asked in a follow-up question if senators, as elected officials, should avoid handling cases before those magistrates to foster public trust in the judicial system, Gillers replied: “I suspect that few politicians would restrict their practices that way. It becomes a decision for voters to take into consideration.” In South Carolina, lawmakers police themselves for ethics violations through their respective chambers’ ethics committees. In a written response to The Nerve, Senate Ethics Committee lawyer J.J. Gentry said he wasn’t able to find any committee opinions specifically addressing senator-lawyers who practice before magistrates. Hutto is a member of the Senate Ethics Committee. So is senator-lawyer Luke Rankin, who also chairs the Judiciary Committee, which didn’t take up Sen. Corbin’s bill this year to ban senator-lawyers from appearing before magistrates in counties that they represent. Corbin, a former S.C. House member who was first elected to the Senate in 2012, said he filed the same bill twice previously in recent years – with the same results. He said he’s been pushing judicial reform legislation for 12 years. “It’s going to take a groundswell of the people to get this done because the good-ol’-boy network is not going to break loose of it if the people don’t demand it,” Corbin said. Asked whether he agrees with Corbin’s bill, Spaulding of Common Cause replied, “Yes, I do think that’s one way to cut to the heart of the issue,” adding, “There needs to be a close look at the rules that govern outside employment by part-time legislators.” Hutto told The Nerve that he has introduced bills over the years – which he acknowledged went nowhere – to transfer senators’ nomination authority to local circuit court judges. Asked why he preferred that change, he replied: “The circuit court judges are the judges who basically grade the papers of the magistrate courts. So if there are appeals, bonds that have to be reviewed, circuit court judges are looking at everything magistrates do as it moves up.” Hutto said his plan was modeled after the federal system in which U.S. District Court judges appoint lower-level federal magistrates. But absent a change in state law, Hutto said he will continue nominating magistrates – even those judges before whom he appears as an attorney. “My obligation is to nominate judges,” he said. Nerve interns Jasmine Creech and Max White, as well as former interns Tyler Fedor and Charlotte Morrison, contributed to this story. Brundrett is the news editor of The Nerve (www.thenerve.org). Contact him at 803-394-8273 or [email protected]. Follow The Nerve on Facebook and Twitter @thenervesc. Nerve stories are free to reprint and repost with permission by and credit to The Nerve.

By RICK BRUNDRETT Update: 10/16/23- Less than three weeks after this story and a companion investigative piece were published, Gov. Henry McMaster in a letter to the S.C. Senate called for reforms in the magistrate selection process, pointing out that his "relatively recent predecessors adopted or acceded to a custom of senatorial deference, whereby a local senator or county senatorial delegation is relied upon as the sole source for nominations." McMaster in his letter contended that candidates have not been "sufficiently vetted in recent years" and noted that dozens of magistrates have been "acting in a holdover capacity" after their four-year terms have expired. He announced that future candidates who are considered by him for appointment will be required to complete "more detailed applications" and "waive confidentiality protections" for "any attorney or judicial disciplinary proceedings." State law allows senators to keep local magistrates on the bench long after the judges’ terms expire – giving lawmakers tighter control over their jobs. As of mid-July, 78, or a quarter, of the state’s 306 magistrates identified on the S.C. Judicial Department’s website were in what’s known as “holdover status,” according to lists released by the Governor’s Office and Judicial Department after The Nerve submitted state Freedom of Information Act requests.At least one magistrate in 22 of the state’s 46 counties was listed in that status, with Spartanburg County topping the group with 20 judges. Nine magistrates have been in holdover status for at least five years, with two judges – both in Oconee County – serving more than 17 years beyond when their terms expired, The Nerve’s review found. The terms of 54 of the 78 judges, including 19 from Spartanburg County, expired on April 30 of this year, records show. The total number of magistrates in holdover status nearly doubled since The Nerve last reported about the issue in 2021. Magistrates handle traffic tickets and other relatively minor criminal and civil cases. They don’t have to be lawyers, though those appointed in recent years must have a bachelor’s degree. Magistrates are appointed by the governor with “advice and consent” of the 46-member Senate. But as The Nerve revealed in another investigative story published with this piece, one or two senators often control nominations in their respective counties. Under state law, magistrates serve four-year terms “and until their successors are appointed and qualified,” which means they can continue working after their terms expire if allowed by their local senators. It also means senators with nomination control can fire those judges in holdover status at any time. Senators have no firing authority by themselves while magistrates are serving their regular terms, though the S.C. Supreme Court can remove them for ethical violations. Senator-lawyer Tom Young, R-Aiken, introduced a bill earlier this year that would cap the holdover period at 14 days and allow the governor to make a temporary appointment if needed until the Senate confirmed a permanent candidate. Aiken County has no magistrates in holdover status, according to the Governor’s Office and Judicial Department lists. The bill didn’t get out of the Senate Judiciary Committee, chaired by senator-lawyer Luke Rankin, R-Horry, who didn’t respond to The Nerve’s recent request for comment. If the bill doesn’t pass the Legislature next year, it would have to be reintroduced in 2025, given the two-year legislative cycle. Young said he believes current state law gives senators too much control over magistrates in holdover status. The intent of his bill, he said, is to “empower the governor to deal with the holdover magistrate issue” while allowing local senators to “retain the ability to nominate or renominate (candidates) to the Governor’s Office.” “We’re codifying the balance,” Young said. “Otherwise, we just have an indefinite amount of period for the holdover.” ‘More accountable’ But Sen. Rex Rice, R-Pickens, says he supports keeping magistrates in holdover status if necessary. Three Pickens County magistrates have been serving past their terms for more than five years, records show. “By having them in holdover status, my belief is they are more accountable because I could change them tomorrow,” said Rice, who controls most of the weighted senatorial delegation vote in his county – 79.39%, according to Senate records provided to The Nerve under the Freedom of Information Act. Asked if keeping magistrates in that status gives him too much control over them, Rice replied, “I don’t think it does because I have the power to appoint them anyway.” He pointed out that as a contractor, he doesn’t appear before magistrates in his county or represents clients before them, adding, “So I have no conflict of interest before them.” All three magistrates in holdover status are doing a good job for now, Rice said. Given that, asked why he doesn’t reappoint them to new four-year terms, he replied, "If someone came to me tomorrow and said, ‘Sign right here and reappoint them,’ I’d reappoint them,” though he repeated his contention that  keeping them in holdover “just makes them a little more accountable.” Rice said he believes a bigger issue currently than holdover status occurs when a senator “comes in and cleans house, getting rid of every magistrate there and putting their buddies in there.” Years in holdover The Nerve left recent written or phone messages for eight senators whose districts include magistrates in holdover status for at least five years. Rice was the only lawmaker in that group to respond. Legislators who didn’t respond included Republican Senate president Thomas Alexander of Oconee County, where two magistrates – chief judge Blake Norton and William Derrick – have been serving more than 17 years past their terms, records from the Governor's Office and Judicial Department show. Alexander is the sole nominator of magistrates in his home county and has 20.61% of the weighted senatorial delegation vote in Pickens County, according to Senate records. For most Oconee County magistrates, their annual pay ranged from $54,489 to $89,357, according to the fiscal year 2022 wage-and-salary survey by the South Carolina Association of Counties. Magistrates’ salaries vary widely statewide. Alexander isn’t the only lawmaker whose Senate district includes multiple magistrates in holdover status. That group includes, for example, Senate minority leader Brad Hutto, D-Orangeburg, whose district includes parts of Allendale, Colleton, Hampton and Orangeburg counties, as well as all of Bamberg and Barnwell counties, where he has sole nomination authority over magistrates there. Records show that Barnwell County magistrate Robert Cooper has served past his term by more than four years, while three Orangeburg County magistrates are among the 54 judges who have been in holdover status since April 30. Hutto recently told The Nerve that he hasn’t reappointed Cooper because he is facing the mandatory judicial retirement age of 72. Following is a list of magistrates who have been in holdover status for at least four years, according to the Governor’s Office and Judicial Department lists:   Magistrate County Holdover period-years William Francis Derrick Oconee 17.36 Blake Andrew Norton Oconee 17.36 Shirley Cockman Davidson Lee 9.36 Tina Gibson McMillan Spartanburg 8.36 Harold Whitney Smith Union 7.36 Vivian Le-Nette Patrick Chesterfield 5.36 Michael Andrew Baker Pickens 5.36 Benjamin Alexander Dow Pickens 5.36 Stanley Michael Gillespie Pickens 5.36 Robert Oscar Cooper* Barnwell 4.36 Cheveron Terrell Scott Darlington 4.36 Johnathan Dwayne Guiles Georgetown 4.36 Gwendolyn Roberts McNeil Georgetown 4.36 Isaac Lester Pyatt Georgetown 4.36 Grover McQueen Marlboro 4.36 Toney Lein Farr Union 4.36 *Wasn’t reappointed because he is facing the mandatory judicial retirement age of 72, according to Sen Hutto. Brundrett is the news editor of The Nerve (www.thenerve.org). Contact him at 803-394-8273 or [email protected]. Follow him on Twitter @RickBrundrett. Follow The Nerve on Facebook and Twitter @thenervesc. Nerve stories are free to reprint and repost with permission by and credit to The Nerve.

By RICK BRUNDRETT When fiscal 2022-23 ended on June 30, the state’s general fund had a balance of less than $58 million – a relatively paltry amount compared to the $1.2 billion surplus reported a year earlier. But that doesn’t mean state government in South Carolina is poor. Far from it, in fact.State agencies collectively carried over $4 billion in general funds into this fiscal year, which began July 1, ranging from $248 carried forward by the S.C. Secretary of State’s Office to more than $1.5 billion transferred by the S.C. Department of Commerce, according to the state comptroller general’s annual financial summary of the general fund – one of three main pots of money in the current $41 billion total state budget. The $4 billion equates to about $750 for every man, woman and child in South Carolina. Many eligible S.C. taxpayers by the end of 2022 received rebates of up to $800 after lawmakers earlier in the year designated $1 billion in state surplus funds for the payouts. But the 170-member Legislature in just one week in March this year overwhelmingly passed an amended resolution designating nearly $1.3 billion in surplus funds to Commerce to bring a Scout Motors electric-vehicle plant to South Carolina – initially identified only as “Project Connect.” The Nerve in June revealed details of the massive taxpayer-funded gift to the recently created company of German-based Volkswagen, pointing out that the $1.29 billion appropriation out of actual and projected state surplus funds worked out to be about $240 for every S.C. resident. A total of $74.6 million has been spent so far toward the Richland County project, according to a written agency response last week to The Nerve. “Our state has experienced record economic development in what is a very transformative time for industry,” Commerce spokeswoman Kelly Coakley said, noting that nearly all of the $1.5 billion carried forward into this fiscal year is committed to specific projects, which, except for Scout Motors, were not identified. “Economic development activities usually take time to execute,” Coakley said. The latest annual general-fund report – the first one issued by Brian Gaines, who recently was appointed by Gov. Henry McMaster as the interim comptroller general following the resignation of Richard Eckstrom over a $3.5 billion accounting error – showed a $23.7 million year-end balance in the state’s “contingency” reserve fund, which is separate from the general fund, after subtracting out the $1 billion for taxpayer rebates and a $1.2 billion transfer to Commerce for the Scout Motors project. The state last fiscal year collected $1.8 billion more in general fund revenues over estimated revenue, though even with a net additional $342 million in  surplus funds, the general fund balance as of June 30 was $57.8 million after more than $2 billion in “supplemental” appropriations for this fiscal year, along with $86.2 million to be transferred to Commerce for the Scout Motors project, was subtracted, according to the comptroller general’s report. Among other things, the general-fund revenue windfall at the end of last fiscal year was used by lawmakers to finance state budget earmarks totaling more than $700 million for this fiscal year – special funding requests by legislators for specific projects or programs that didn’t originate with written agency budget requests – though the Republican McMaster vetoed just a fraction of 1% of the overall amount, as The Nerve reported in June. Expecting future healthy revenue growth, lawmakers last year approved lowering the top individual income-tax rate to 6.5% from 7% and gradually reducing the rate to 6% over five years, depending on available revenue. The South Carolina Policy Council – The Nerve’s parent organization – in April this year called on lawmakers to accelerate tax relief with surplus funds. Last year, the Policy Council proposed a “sustainable” budget model that would annually cap general fund appropriations to inflation plus population growth, pointing out in its analysis that appropriations during the previous decade were collectively $7 billion more than what would have been allowed under the model. This fiscal year’s total $41 billion state budget is made up of $13.8 billion in general funds, which are generated primarily by individual and corporate income taxes, and state sales taxes; $13.2 billion in federal funds; and nearly $14 billion in “other” funds, which include fees and fines, lottery proceeds, college tuition, state gasoline taxes, and a portion of the state sales tax earmarked for K-12 education. The Nerve previously has reported about the overall billions in unspent “other” funds that state agencies carry over into the new fiscal year. Under an annually renewed budget proviso, state agencies can transfer up to 10% of their unspent general funds from a given fiscal year into the next fiscal year. Other provisos allow certain agencies to carry over entire unspent amounts of specific funds. Commerce, for example, is allowed to carry over any unspent money from its “closing” fund, which has been used in recent years to help large companies locate in South Carolina. In its written response last week to The Nerve, Commerce noted that the closing fund was included as part of $355.7 million in general funds carried forward into this fiscal year under a set of agency budget provisos dealing with specific funds. And the 124-member House and 46-member Senate annually carry over millions in unspent general funds for the operation of their respective chambers – courtesy of a renewed budget proviso that allows them to do so. The House, for example, carried forward $17.1 million into this fiscal year, according to the comptroller general’s latest report, which represents 63% of that chamber’s $27.1 million total budget for this fiscal year. What the little-known provisos allow state agencies to do is to spend more money during a fiscal year than what is represented to the public initially in approved budget documents. The comptroller general’s latest report, for example, shows that lawmakers appropriated a total of $10.1 billion in general funds for state agencies in fiscal 2022-23, but overall “adjusted” appropriations, which included carryover funds and other budget "adjustments,” during the fiscal year were $15.8 billion, which allowed for actual expenditures of $11.7 billion. The following state agencies had the 10 largest general-fund surpluses to start this fiscal year, according to the comptroller general’s report: Commerce: $1.5 billion Ports Authority: $499.4 million Higher Education*: $406.2 million Education**: $231.9 million Transportation: $187.2 million Department of Administration: $167.1 million Health and Human Services: $159.3 million Natural Resources: $74.8 million Aeronautics: $65.5 million Parks, Recreation and Tourism: $64.5 million *Includes The Citadel, Coastal Carolina University, College of Charleston, Francis Marion University, Lander University, S.C. State University, Winthrop University, S.C. Technical College System, Commission on Higher Education and Higher Education Tuition Grants Commission. **Includes the S.C. Department of Education, S.C. Governor’s School for the Arts and Humanities, and S.C. Governor’s School for Science and Mathematics. Brundrett is the news editor of The Nerve (www.thenerve.org). Contact him at 803-394-8273 or [email protected]. Follow him on Twitter @RickBrundrett. Follow The Nerve on Facebook and Twitter @thenervesc. Nerve stories are free to reprint and repost with permission by and credit to The Nerve.

By RICK BRUNDRETT Update: 10/26/23 - The South Carolina Education Association announced that the association, the South Carolina State Conference of the NAACP and six public school parents filed a lawsuit asking the S.C. Supreme Court to nullify a state law passed earlier this year creating a school-choice program that would use state funds for scholarships to allow eligible students to attend private schools. A federal appeals court has dismissed a lawsuit claiming that a state constitutional provision banning direct public funding of religious or other private schools in South Carolina was rooted in religious and racial bigotry. But it’s unclear whether the ruling last month by a panel of the Virginia-based U.S. 4th Court of Appeals will affect legislative efforts to remove the constitutional provision through a statewide ballot measure, or a predicted legal challenge to historic school-choice legislation passed this year.In a federal lawsuit filed in April 2021, which dealt with access to federal COVID-relief funds, the Bishop of Charleston, on behalf of the Roman Catholic Diocese of Charleston, South Carolina, and the South Carolina Independent Colleges and Universities (SCICU) Inc. said Article 11, Section 4 of the S.C. Constitution – commonly referred to as the “Blaine Amendment” – violates the equal protection and free exercise clauses of the U.S. Constitution. The suit contended that the state provision was “based on longstanding and pervasive religious and racial bigotry.” The section in question, as amended by S.C. voters in 1972, reads, “No money shall be paid from public funds nor shall the credit of the State or any of its political subdivisions be used for the direct benefit or any religious or other private educational institution." The diocese and SCICU in court papers said the Blaine Amendment, which first appeared in the state constitution of 1895, was pushed by Benjamin Tillman, a white supremacist governor and later U.S. senator who, after Reconstruction ended and Union troops withdrew from the state, “set out to craft a new constitution that permanently protected white power with literacy requirements for voting and other racist policies.” Unlike the current provision banning only direct public funding of religious or other private schools, the 1895 constitution prohibited direct or indirect public funding of “any college, school, hospital, orphan house, or other institution, society or organization, of whatever kind, which is wholly or in part under the direction or control of any church or of any religious or sectarian denomination, society or organization.” “This provision reflected the ugly marriage of two prejudices: religious bigotry against immigrant Catholics coming to America’s shores and racial prejudice against newly freed slaves whose lives, living conditions, and educational opportunities were being improved by religious missionary organizations,” according to the plaintiffs’ complaint. The plaintiffs contended that the 1895 provision “served an important Tillman goal: if the freed slaves and their descendants were cut off from private schools that might actually teach them to read, then they could never reach a critical mass of voters who could hurdle the literacy test blocking their access to the ballot box.” South Carolina was among more than 35 states at the time that adopted similar amendments after an effort by U.S. Rep. James Blaine of Maine – the amendment’s namesake – to change the U.S. Constitution failed in 1875, according to court papers. The suit by the diocese and SCICU was filed six months after the S.C. Supreme Court unanimously ruled in favor of the Orangeburg County School District, the South Carolina Education Association and several other petitioners in a separate, related legal case. The October 2020 ruling by the state’s top court held that a plan by Republican Gov. Henry McMaster to use $32 million in federal COVID-relief funds to provide grants of up to $6,500 to eligible private-school students violated the direct-funding ban under the state constitution. Named as main defendants in the subsequent federal suit were McMaster; S.C. Department of Administration Director Marcia Adams; and Brian Gaines, the department’s former state budget director who recently was appointed by McMaster as the state comptroller general. Ironically, although a vocal school-choice proponent, McMaster contended in his official answer in the federal suit that the plaintiffs’ claim about religious and racial bigotry behind the 1895 provision “consists of legal conclusions, arguments, inferences, editorial comments, and generalizations about complex, nonjusticiable issues, rather than allegations of fact,” adding, “To the extent a response is required, the allegations are denied.” In February 2022, U.S. District Court Judge Bruce Howe Hendricks, who is based in Charleston, sided with McMaster and the other defendants, ruling that although “both racial and religious prejudice existed in virulent form in the late 1800s,” the plaintiffs “fail to satisfy their burden of proving discriminatory intent, either racial or religious,” behind the current state constitutional provision, adding that their “failure of proof about discriminatory impact dooms their claims.” Hendricks pointed out that the current constitutional provision was one of the recommendations in 1969 by the legislatively created West Committee, headed by future governor John West; and was approved by voters in 1972. She noted that the current provision “no longer distinguishes between religious and non-religious schools, and it no longer bars all funding to these schools.” “The original 1895 provision no longer governs,” she wrote. The plaintiffs appealed to the U.S. 4th Circuit of Appeals, based in Richmond, Virginia, but a three-member panel on July 6 dismissed the case, ruling that the plaintiffs’ claims were “moot” because all of the federal COVID-relief funds that could have been used for private school grants under McMaster’s plan, which wasn't implemented, had been dispersed by the state for other purposes. The Nerve this week and last asked representatives of the diocese, SCICU and the Chicago-based Liberty Justice Center, which provided the main legal representation for the plaintiffs, for comment if they planned to appeal the latest ruling. In a written response Thursday, Jeff Perez, the SCICU’s president and CEO, said that given the 4th Circuit’s ruling, “we concluded with our counsel that the U.S. Supreme Court would not take the case on appeal.” ‘In jeopardy’ Spurred by the state Supreme Court’s 2020 ruling against McMaster, S.C. House Speaker Murrell Smith, R-Sumter, introduced a joint resolution in January, which was co-sponsored by 21 other Republicans, to ask state voters whether they want to repeal the direct-funding ban in the S.C. Constitution. “That (Supreme Court) ruling is what really concerned me,” Smith, an attorney, told the House Judiciary Constitutional Laws Subcommittee in February. “We have a question as to whether indirect (public funding) to religious and private institutions is constitutional, and reading that opinion … there obviously may be some concerns that the (Supreme) Court could find likewise in that situation.” Smith said at the hearing that although he believes the state constitution allows indirect funding to private schools, citing as examples the college tuition grants and other higher-education scholarship programs, as well as kindergarten and First Steps programs, he’s concerned that given the Supreme Court ruling, “all this could be in jeopardy.” Changing the state constitution requires a two-thirds vote of the 170-member Legislature and a simple majority vote of state electors. Smith’s joint resolution passed the House in February by the two-thirds margin but never got out of the Senate Judiciary Committee, chaired by Sen. Luke Rankin, R-Horry. The Nerve this week and last reached out to Smith through his spokeswoman, Nicolette Walters, for comment about the joint resolution. Walters referred The Nerve to his statements at the Feb. 9 subcommittee hearing, though he didn’t provide any new response by publication of this story. Perez said in the wake of the 4th Circuit’s ruling last month, the SCICU, which represents 21 private nonprofit colleges and universities headquartered in South Carolina, has decided to focus on helping to get the joint resolution passed in the Legislature next year so the issue can go before voters. “This is clearly an important public policy decision,” he said in his written response. “So why not let the public decide?” Perez highlighted several points on behalf of his organization, including: SCICU “strongly believes there’s no place in our state constitution for the racism and anti-religious sentiment that inspired the Blaine Amendment, and that state and local governments should have the freedom to engage who they believe will best serve the public benefit.” The Blaine Amendment “amounts to a mandate imposed on private businesses, i.e., the state’s private colleges and universities, that thwarts public-private cooperation.” The Blaine Amendment prevents the distribution of federal funding to private schools and colleges, though Congress “intended access.” In a written response earlier this year to The Nerve, University of South Carolina constitutional law professor Derek Black said no states in recent years have repealed constitutional bans like South Carolina’s dealing with the direct public funding of private schools. “No measure, whether by amendment or referendum, put to the full electorate on vouchers has ever succeeded,” Black said in his January response. “The vast majority of the public has, across all states, supported the principle of keeping public dollars in public schools.” Michael Acquilano, chief operating officer of the Roman Catholic Diocese of Charleston, said in a written response to The Nerve in February that the diocese supports the “repeal of this (Blaine) amendment and all other racist and bigoted traces of it in our laws and regulations.” “Parents are the primary educators of their children and further attempts to block them from accessing other educational options is a travesty,” he said. “South Carolina must prioritize children first, and not institutions.” Acquilano said then the diocese, which serves the entire state, had a total of approximately 7,500 students in 33 schools, with the number of parishioners totaling about 350,000 in 114 parishes and missions. No legal challenge yet In a historic move, the Legislature this year passed a bill, which McMaster signed into law, establishing a school-choice program using state funds that would provide, starting in the 2024-25 school year, $6,000 scholarships to 5,000 eligible students to attend approved private schools, with the number of eligible scholarship students increasing to 15,000 in the third and subsequent years. The program in the first year would be limited to eligible lower-income students but would include middle-income students by the third and succeeding years, as The Nerve revealed in February. In a statewide poll released in January by the South Carolina Policy Council – The Nerve’s parent organization – 60% of 637 likely S.C. voters said they strongly or somewhat approved of a scholarship program for low-income, K-12 students to attend private schools.  State Sen. Greg Hembree, R-Horry, the former top prosecutor for Horry and Georgetown counties who currently is chairman of the Senate Education Committee, told The Nerve in January that he expected a legal challenge if the bill became law. But he said then that the bill, the main sponsor of which was Sen. Larry Grooms, R-Berkeley, was a “dramatically different model” compared to McMaster’s proposed private-grant program with COVID-relief funds, expressing confidence that the bill, if enacted, could withstand a legal challenge. “What you have is an appropriation held in trust, and the trustee is essentially the parent,” Hembree said about the bill, contending that it would not provide direct funding to private schools. “The (state education) department is like a bank that holds the money.” The Nerve in February asked David Hodges, an attorney with the Virginia-based Institute for Justice who specializes in educational issues, about whether South Carolina’s current constitutional direct-funding ban could be used as the basis for future litigation challenging enacted school-choice legislation. “First, if the legislature enacted a program that provided scholarships for students to attend private schools, including religious ones, there would be no aid, direct or even indirect, to private schools,” Hodges said in his written response. “Rather, any scholarship funds that found their way to private schools would do so only as an incident of the private choices of scholarship recipients. It is the scholarship recipients, not their chosen schools, who are the beneficiaries in such programs.” “Second,” Hodges continued, “parents have a constitutional liberty to direct the upbringing and education of their children, including sending them to private schools, whether religious or not. Hypothetically, if a South Carolina court interpreted the state’s Blaine Amendment as a complete bar to financial aid for students who attend private schools, then it would be penalizing parents for exercising this constitutional liberty.” For now, although McMaster signed this year's school-choice bill into law on May 4, another legal challenge in the state's top court hasn’t yet materialized. The Nerve last week asked the South Carolina Education Association, one of the successful petitioners in the 2020 state Supreme Court ruling against McMaster’s private-grant proposal, if it planned to contest the new school-choice law, though a spokesperson provided no response by publication of this story. Asked the same question, Columbia lawyer W. Allen Nickles III, an attorney for the petitioners in the 2020 case, said in a written response this week to The Nerve, “I don’t have anything to share at this time.” Brundrett is the news editor of The Nerve (www.thenerve.org). Contact him at 803-394-8273 or [email protected]. Follow him on Twitter @RickBrundrett. Follow The Nerve on Facebook and Twitter @thenervesc. Nerve stories are free to reprint and repost with permission by and credit to The Nerve.

By RICK BRUNDRETT Oconee County Council Chairman Matthew Durham will tell you he ran on a campaign promise of low taxes and limited government growth. Durham, who was elected to County Council in 2020 and became its chairman this year, says he was alarmed that the county’s annual budget grew by 45% since 2016, contending that if limited to population growth plus inflation, overall spending during the period should have increased by no more than 22%.So Durham joined last month with two other conservative council members in passing a fiscal year 2024 general-fund budget that totaled $60.7 million – $6 million-plus less than what originally was proposed for the fiscal year that started July 1, and nearly $231,000 less than the final amended budget for last fiscal year. In a recent interview with The Nerve, Durham said he plans this year to push for passage of an ordinance that would limit future spending increases to population growth plus inflation. “I’m not against spending money,” he said. “But everything should be justified. What is the taxpayer going to see for how this money is being spent?” If passed, such an ordinance likely would be the first of its kind among counties statewide. “We are not aware of any county ordinances of this kind,” Mary-Kathryn Craft, spokeswoman for the South Carolina Association of Counties (SCAC), said in a recent written response to The Nerve. State law limits annual fiscal-year increases in county, local municipality and school district millage rates to population growth plus inflation, and caps increases in property reassessments every five years to a total of 15%. There also are homestead property tax breaks for seniors and exemptions for school operating taxes on owner-occupied homes. But while those laws can limit revenue growth, nothing in state law directly caps spending at the local level. And counties have been doing plenty of big spending in recent years, a review by The Nerve found. Most of the state’s 46 counties – big and small – approved initial general-fund budgets from fiscal year 2017-18 to fiscal year 2021-22 that exceeded population-growth-plus-inflation caps had those limitations been in place, according to The Nerve’s review of SCAC records, county audits and budget records, and county budget ordinances. Approved spending above the caps in 39 counties where records were available totaled nearly $129 million since fiscal 2018. The median spending amount above the caps –the midway point among the 39 counties – was $1.8 million over the period. Overall, initially adopted general-fund budgets by the 39 counties for fiscal 2022 were nearly 6.5% more than the total $2 billion in population-and-inflation capped budgets for that year, The Nerve’s review found. Last year, the South Carolina Policy Council – The Nerve’s parent organization – recommended implementing a “sustainable” budget at the state level, defining it as population growth plus inflation. The Policy Council’s analysis, done with help from the Texas Public Policy Foundation, found that over the last decade, state general-fund appropriations grew by $76.5 billion, yet under the sustainable budget model, that growth should have been capped at $69.5 billion. That worked out to $7 billion in total overspending during the decade, or 15 percentage points over what would have been allowed under a sustainable budget. By not following the sustainable budget model over the 10-year period, individual state taxpayers effectively carried an additional tax burden of $180 in 2022, the Policy Council’s analysis found. Separately, the Policy Council in 2021 recommended that the governor enforce the law requiring state agencies to justify their entire requested budget amounts for the upcoming fiscal year when submitting those requests to the Governor’s Office. The Nerve’s latest review assumed there was no wasteful spending in the initially adopted fiscal 2018 county budgets, which served as the base year in the review. If any of those budgets contained wasteful spending and if those amounts could have been eliminated for the purpose of the review, that likely would have increased the gap between the affected counties’ adopted and capped fiscal 2022 budgets. Six counties in The Nerve’s review showed initially adopted fiscal 2022 budgets below their respective capped budgets for that year, with percentages under the cap ranging from less than 1% to less than 5%. Online budget records for Allendale County were not readily available. Durham told The Nerve that he had researched the Policy Council’s sustainable-budget model but found nothing comparable at the county or municipal levels. Big above-cap spending The Nerve’s review of available county budgets statewide found that the following counties had the largest percentage differences between their initially adopted fiscal 2022 general-fund budgets and what those budgets would have been had they been capped at population growth plus inflation since fiscal 2018. The caps were based on annual millage-rate-limitation percentages provided to counties by the S.C. Revenue and Fiscal Affairs Office, which factored population growth and inflation for those years.   County FY22 adopted budget FY22 capped budget % Difference Dollar Difference Laurens $38.4 million $29.4 million 30.25% $8.9 million Jasper $38.3 million $30.7 million 24.78% $7.6 million Chester $25 million $20.6 million 20.95% $4.3 million McCormick $10.3 million $8.7 million 18.29% $1.6 million Union $20.1 million   $17.2 million 16.97% $2.9 million   The Nerve reached out to top administrators in the five counties for explanations about their respective budgets. In Laurens County, after providing an initial chart on county property-tax revenues, county Administrator Thomas Higgs referred The Nerve to online county audits and directed that any additional questions be submitted through a formal request under the S.C. Freedom of Information Act. Higgs didn’t’ respond to a separate follow-up request for an explanation about why there was an additional total $8.9 million in approved spending above the annual population-and-inflation caps since fiscal 2018. In a recent interview with The Nerve, Jasper County Administrator Andrew Fulghum said the additional total $7.6 million in approved spending above the caps for his county was needed primarily to bolster fire, ambulance and police services. “It’s mainly to ramp up that capacity to serve those emergency services,” he said. “I’ve been here 19 years. There was a base need in these departments, and we’ve been finally able to move them to that.” Fulghum said based on the most recently available figures from the state Revenue and Fiscal Affairs Office, Jasper County had the highest-percentage yearly population growth (5.2%) of any county, and was at or near the top of the population-rate-growth list over the previous several fiscal years. He also said the additional $7.6 million in spending since fiscal 2018 was done without raising county millage rates, though noting that raising the rates up to the state-allowed caps would have been allowed. Individual property taxes generally are determined by multiplying the millage rate by the property assessment. Fast-growing areas can raise significant tax revenues without increasing millage rates if they have big overall increases in assessment values that come with new construction. Fulghum said lowering the operating millage rate in his county isn’t feasible despite a fast-growing population, contending, “Residential development does not pay for itself.” ‘Reviewed every dollar’ In a written response to The Nerve, Union County Supervisor Phillip Russell, who noted he has been in his elected position for a little more than seven months, gave several reasons for the additional total $2.9 million in spending above the caps in recent years, including, among other things: The county absorbed an emergency medical system that previously had been run by a local hospital system. The county used federal American Rescue Plan Act (ARPA) funds for a jail addition that was needed because of overpopulation, though he noted those dollars covered only 60% of the total cost. The county helped municipalities and unincorporated county areas in the removal of a large, old mill building and mill houses; and funded “utility infrastructure upgrades to improve quality of life.” “We are a rural county with a lot of needs, requested by a lot of our citizens,” Russell said. “We are doing all we can to manage our funds to the best of our ability, to increase business, jobs, and housing.” “I can’t speak for the past,” he added, “but I know that Council and I reviewed every dollar this year in our budget work sessions, and we had to make some hard decisions. There isn’t enough money for us to misrepresent, nor would our council allow such.” Chester County Administrator Brian Hester gave an initial general response about county revenues, contending that “you can’t take that CPI + Growth factor and apply it to the bottom line of the budget and get an accurate assessment of what a budget should be.” Hester didn’t respond to a follow-up question about what specifically constituted the additional total $4.3 million in spending above the caps in his county since fiscal 2018. McCormick County Administrator Columbus Stephens didn’t respond to a written request from The Nerve seeking comment. It wasn’t just smaller counties that had initially approved general-fund budgets since fiscal 2018 above what those budgets would have been if limited to population-and-inflation caps, The Nerve’s review found. Following are five larger counties that had similar spending patterns:                                                    County           FY22 adopted budget  FY22 capped budget   % Difference  Dollar Difference Spartanburg $119.9 million $112.5 million 6.56%   $7.3 million Greenville $205.8 million $193.4 million 6.41% $12.4 million Lexington $160.7 million $155.6 million 3.28% $5.1 million Horry $188.3 million $182.9 million 2.97% $5.4 million Charleston $271.6 million $266.3 million 1.97% $5.2 million   In his interview with The Nerve, Durham, the Oconee County Council chairman, acknowledged that even if a county ordinance to cap annual spending passed this year, a less-conservative county council could later decide to rescind it. But he said he believes something needs to be done to rein in spending in his Upstate county. “It’s just common sense,” he said. “You shouldn’t be growing faster than inflation and your population.”   Brundrett is the news editor of The Nerve (www.thenerve.org). Contact him at 803-394-8273 or [email protected]. Follow him on Twitter @RickBrundrett. Follow The Nerve on Facebook and Twitter @thenervesc. Nerve stories are free to reprint and repost with permission by and credit to The Nerve.

By RICK BRUNDRETT When it came to reining in lawmakers’ spending on their favored local projects for the upcoming fiscal year, Gov. Henry McMaster used a veto butter knife on earmarks totaling more than $709 million. In his annual written veto message released Tuesday, McMaster vetoed just six out of 515 state budget earmarks approved by lawmakers for the fiscal 2023-24 fiscal year that starts July 1. The six projects totaled $1.5 million – a fraction of 1 percent of the overall $709.4 million in earmarks, The Nerve found in a review of House and Senate earmark lists overwhelmingly approved last week by the Legislature.The $709.4 million equates to about $134 for every man, woman and child in South Carolina. The vast majority of the earmarks would be covered out of an approximately $2 billion pot of actual and projected state surplus funds. “Finally, I applaud the General Assembly for passing the most transparent and accountable budget in modern times,” the Republican McMaster said in his veto message. Touting his “ongoing cooperation, communication, and collaboration” with the Republican-controlled, 170-member Legislature, McMaster in his veto message provided four examples of what he described as “deliberative and meritorious” earmark appropriations. Under Senate and House rules, earmarks are special funding requests by lawmakers for specific projects or programs that didn’t originate with a written agency budget request or weren’t included in the prior fiscal year’s state appropriations. Senators and House members over the years routinely have sponsored earmarks for their pet projects in their home districts – typically with few details revealed publicly in advance, as The Nerve has reported. But this year, lawmakers put earmark spending on steroids. The Nerve last month revealed that senators collectively made 172 earmark requests totaling $314.4 million, while House members as a group proposed 350 earmarks totaling $398.7 million. The Nerve’s latest review found that lawmakers who made up a six-member joint conference committee that worked out differences between the House and Senate budget versions made relatively few changes to the chambers’ earmark lists, approving 342 House earmarks totaling more than $396.5 million and 173 Senate earmarks totaling about $312.9 million. The chambers’ earmarks ranged from $6,000 to $55 million. The median earmark – the halfway point on the overall list – was about $432,000. Lawmakers last week approved a fiscal 2023-24 state budget totaling $41 billion, which includes state, federal and “other” funds. Given McMaster’s relatively light veto touch, they likely won’t immediately reconvene to decide whether to override his total 11 vetoes, several of which didn’t involve specific funding requests. Besides the $709.4 million in earmark projects, lawmakers this year also set aside $1.29 billion in actual and projected state surplus funds to bring a Scout Motors electric-vehicle plant to Richland County, which works out to approximately $240 for every S.C. resident, as The Nerve revealed last month along with other details of the taxpayer-backed incentives agreements for the Volkswagen company. McMaster in his veto message described the project as a “great victory for our state,” predicting it will “bring opportunity and prosperity to the region for generations to come.” The South Carolina Policy Council – The Nerve’s parent organization – in April called on lawmakers to accelerate tax relief to South Carolinians with state surplus funds. Power broker spending The Nerve’s latest review found that Sen. Harvey Peeler, R-Cherokee, who is the former Senate president and current chairman of the budget-writing Senate Finance Committee, sponsored or co-sponsored 14 earmarks totaling $45.7 million. That amount included $20 million for “York County Water and Sewer – Blue Granite Acquisition Costs,” and $10 million for “Spartanburg Downtown Development Infrastructure,” according to the Senate earmark list. Spartanburg officials revealed publicly last month that the city had accumulated $34 million in state earmarks over the last three years for downtown development projects tied to a proposed minor league baseball stadium, according to a Post and Courier story. Peeler, whose legislative district includes parts of York and Spartanburg counties, was one of three senators on the joint legislative committee that worked out differences between the Senate and House versions of the fiscal 2023-24 state budget. The other two Senate members were Senate President Thomas Alexander, R-Oconee; and Sen. Nikki Setzler, D-Lexington, who is the former Senate minority leader. Alexander sponsored five earmarks totaling $12.4 million, including $5.5 million for the “City of Walhalla Community Center” and $5 million for the “City of Westminster Recreation Facility,” according to the Senate earmark list. Setzler was the sole sponsor of four requests totaling $8.2 million, including $7 million for a riverwalk expansion project in the city of West Columbia, The Nerve’s review found. On the House side, Speaker Murrell Smith, R-Sumter, sponsored or co-sponsored 11 earmark requests for his home district totaling $39.9 million, including $15 million for the Shaw Sumter Military Museum and a collective $13.8 million for various park projects. The original three House members on the state budget conference committee were Reps. Bruce Bannister, R-Greenville, who is chairman of the budget-writing House Ways and Means Committee; Bill Herbkersman, R-Beaufort; and David Weeks, D-Sumter,  who was later replaced by Rep. Todd Rutherford, D-Richland, who is the House minority leader. Bannister was the sole sponsor of a $20 million earmark for “Public Space Upgrades & Safety Improvements” in the city of Greenville, and a $1 million funding request for the “Cancer Survivors Park Alliance,” plus co-sponsored a $4 million earmark for a “multi-purpose stadium project” in the city of Mauldin, according to the House earmark list. Rutherford was the sole sponsor of seven earmarks totaling $19.3 million, including $10 million to be used for a project aimed at eliminating certain railroad grade crossings in the city of Columbia;  he also co-sponsored three other earmarks totaling $3.2 million, The Nerve’s review found. Following are the 10 most-expensive House and Senate earmarks, as well as each funding sponsor, as described in the chambers’ earmark lists: * Publicly Owned Aeronautics Infrastructure – New and Existing Business: $55 million. Sponsors: Senate Finance Natural Resources and Economic Development Budget Subcommittee, chaired by Setzler. That amount would be used to refurbish buildings owned by the South Carolina Technology and Aviation Center, a public entity in Greenville County, and leased to aerospace giant Lockheed Martin for its F-16 production and maintenance program at the site, according to S.C. Department of Commerce records provided recently to The Nerve under the state’s open-records law. *Elevate SC-22 Over the Waccamaw River: $30 million. Sponsors: Sens. Luke Rankin, R-Horry; Greg Hembree, R-Horry; Stephen Goldfinch, R-Georgetown; and Kent Williams, D-Marion. *Town of Fort Mill – Downtown Economic Development: $25 million. Sponsor: Rep. Raye Felder, R-York. *City of Greenville – Public Space Upgrades & Safety Improvements: $20 million. Sponsor: Bannister. *Spartanburg Downtown Infrastructure: $20 million. Sponsor: Rep. Max Hyde, R-Spartanburg. *York County Water and Sewer – Blue Granite Acquisition Costs: $20 million. Sponsors: Peeler and Sen. Wes Climer, R-York. *The Peace Center: $17.5 million. Sponsor: Rep. Chandra Dillard, D-Greenville. *Shaw Sumter Military Museum: $15 million. Sponsor: House Speaker Smith. *South Carolina Quantum Association Curriculum Development and Use Study: $15 million. Sponsor: Sen. Dick Harpootlian, D-Richland. *Piedmont Technical College – Saluda Advanced Manufacturing Center and New Campus: $14.3 million. Sponsor: Sen. Shane Massey, R-Edgefield, who is the Senate majority leader. McMaster in his veto message praised the earmark, calling it an “example of how a strategic investment can transform a rural community.” In contrast, McMaster last year vetoed a $25 million funding request by Harpootlian for the Quantum Association project, contending then that the proposed “supercomputer” would be owned and operated by a “yet-to-be-created” nonprofit, and that the budget proviso authorizing the project would create a “dangerous precedent.” Details dribbled out In his latest veto message, McMaster claimed that the Legislature’s leadership “now provides for not only the public disclosure of the sponsors and recipients of earmarked appropriations, but they also disclose the activity, function, or project for which the earmark is intended, the public purpose served, the budget, a description of community support, and details on the identity and function of the recipient organization.” Yet as The Nerve previously reported, the House posted its initial earmark list – with scant details – on the Legislature’s website on May 11, just several hours after The Nerve made a formal request for the list under the state’s open-records law. Background records on those earmarks weren’t published on the website until after the budget conference committee report was adopted this month – leaving little opportunity for most taxpayers to review details of the proposals in advance. The Senate last month provided its original earmark list – with few specifics – to The Nerve under the Freedom of Information Act but did not publish it on the Legislature’s website. At The Nerve’s written request, Senate Clerk Jeff Gossett on Friday provided the budget conference committee’s approved earmark list, though it was posted later on the Legislature’s website and isn’t specified in other online budget records. He said the conference list was not amended by the full Legislature in passing the state budget last week. The Policy Council in December published recommendations to improve transparency in S.C. government, including posting earmark requests on the Legislature’s website within 24 hours of the request, noting there is a “significant delay between when earmarks are requested and posted online, and the forms lack important details.”   State Rep. Rob Harris, R-Spartanburg, in February introduced a government-transparency bill mirroring the Policy Council’s recommendations, though the bill hasn’t moved out of the House Ways and Means Committee, chaired by Bannister. Brundrett is the news editor of The Nerve (www.thenerve.org). Contact him at 803-394-8273 or [email protected]. Follow him on Twitter @RickBrundrett. Follow The Nerve on Facebook and Twitter @thenervesc. Nerve stories are free to reprint and repost with permission by and credit to The Nerve.

By RICK BRUNDRETT Taxpayers in South Carolina likely will be on the hook for more than the $1 billion already dispersed to help a recently created Volkswagen company build its first electric vehicle plant near Columbia. On top of that, under a state incentives agreement obtained by The Nerve, Virginia-based Scout Motors Inc., an independent company backed by the Volkswagen Group, which is headquartered in Germany, will have to comply with an ESG-related German law dealing with environmental, human rights and property rights issues.The Nerve over the past year has reported extensively about the liberal environmental, social and governance movement in South Carolina. In a May 2022 story, for example, the president of an Anderson-based food company expressed concerns that two corporate customers, including a foreign-based company, which he asked The Nerve not to identify, were starting to pressure his business to comply with ESG-related practices. The 192-page state incentives agreement with Scout Motors – nearly a quarter of which was partially or entirely blacked out in the copy provided to The Nerve – provides numerous taxpayer-backed benefits to the company while laying out relatively easy paths for it to meet job creation and investment requirements. The S.C. Department of Commerce recently provided the agreement and related documents to The Nerve under the state Freedom of Information Act. Besides receiving state benefits, Scout Motors, which Volkswagen launched last year, would save millions in property taxes over 40 years under a separate fee-in-lieu-of-taxes and incentives agreement with Richland County, which would allow the industrial project site to be assessed at the lowest rate applied to owner-occupied homes, The Nerve’s review found. The manufacturing plant, which would build electric pickup trucks and sport utility vehicles, would cover 1,100 acres on an approximately 1,600-acre site off Interstate 77 at the town of Blythewood, according to state and local officials. Scout vehicles were last produced from 1960 to 1980; production at the Blythewood site is set to begin by the end of 2026. “Scout Motors will provide thousands of South Carolinians with previously unimagined opportunities and prosperity for generations to come,” Republican Gov. Henry McMaster said in a prepared statement on March 3 in announcing the project. “The Palmetto State, with its rich history, superior people, and sterling automotive manufacturing reputation, is the perfect place to re-start this iconic American brand.” The state incentives agreement requires that a minimum of 4,000 “qualified” jobs be created “within the State” and a minimum of $2 billion be invested at the plant and project site over no longer than an initial eight-year “achievement” period. But Scout Motors itself would have to create at least 400 jobs and invest at least $400 million during the period, allowing the differences to be made up by company “affiliates” – defined as any “business entity” directly or indirectly controlled by Scout – and “counted suppliers” that provide “products, services and/or personnel” in connection with the  project, under the agreement. And up to 10% of the 4,000 jobs, or 400 employees, could be “badge” workers, defined in the agreement as “cafeteria, security, and janitorial maintenance personnel” employed by third parties. No average wage or wage range for plant workers is specified in the agreement. In a separate cost-benefit analysis provided by Commerce to The Nerve, the average hourly wage and salary, as well as the total annual payroll, are blacked out for the planned 4,000 workers. In an ironic twist, starting with the effective date of the agreement and continuing for two years after the start of production at the Scout Motors plant, local government agencies would be banned from offering “discretionary” incentives or tax credits to “competitive electric vehicle production facilities” within a  “defined boundary” of Richland County, while a similar incentives prohibition would apply to state agencies dealing with “competitive vehicle production facilities” within 75 “road surface miles” of the Blythewood site. Volkswagen had earnings last year of $24.1 billion in U.S. dollars, according to a February Reuters story. Billion-dollar taxpayer gift When it comes to doling out taxpayer-funded incentives to major corporations, S.C. lawmakers typically have moved with uncharacteristic speed. In just one week in March, the Republican-controlled Legislature overwhelmingly approved an amended resolution, which was signed by McMaster on March 20 and took effect the same day, appropriating a total of $1.29 billion in actual and projected state surplus funds to “Project Connect” – the initial code name for the Scout Motors project. That amount works out to be about $240 for every man, woman and child in South Carolina – which is on top of the hundreds of millions of state surplus funds that lawmakers have earmarked mainly for their favored local projects for the fiscal year that starts July 1, as The Nerve revealed earlier this month. In their latest fiscal 2024 budget versions, the 124-member House and 46-member Senate designated none of their earmarks for taxpayer refunds. The South Carolina Policy Council – The Nerve’s parent organization – has called for accelerating tax relief with surplus funds. A joint legislative conference committee has yet to publicly release its budget recommendations. The amended resolution for the Scout Motors project – the original sponsors of which were Rep. Bruce Bannister, R-Greenville, who is the Ways and Means Committee chairman; House Speaker Murrell Smith, R-Sumter; and Rep. Chris Murphy, R-Dorchester – mandated that nearly $1.1 billion of the total $1.29 billion appropriation be dispersed by the state treasurer to Commerce within five days of when the law took effect. That transfer was made as required, according to written responses last week from Commerce and the Treasurer’s Office to The Nerve. Asked what the money, which is more than twice the amount of Commerce’s total current budget, has been spent on to date, Commerce spokeswoman Kelly Coakley in her written response said $27.9 million was used by Richland County for land acquisition, while $12,200 was provided to the Haynsworth Sinkler Boyd law firm, which has offices in the Carolinas, for attorney fees. “Costs must be incurred before S.C. Commerce can make payments,” Coakley said. The amended resolution requires that besides land acquisition, the nearly $1.1 billion is to be spent on a bridge to support the construction of a rail spur; site improvements and mitigation; road access and related improvements; soil stabilization; water and wastewater infrastructure; an employee training center; and “any such other purpose as is necessary and recommended” by Commerce. Another $200 million of the $1.29 billion appropriation is to be loaned by Commerce to the “Project Connect sponsor,” which is not identified in the resolution though is listed in the county incentives agreement as Scout Motors, for “additional soil stabilization.” The S.C. Technical College System’s “readySC” program will provide employee training for Scout Motors under the state incentives agreement, which specifies that a minimum 40,000-square-foot, “state-of-the-art” training center be built near the proposed plant. The agreement also requires that Commerce provide the first $25 million toward the center’s construction. In addition, the readySC program must provide temporary hiring and training space “at no cost or charge” to Scout Motors while the permanent training center is being built. Under the state agreement, Scout Motors would be required to repay “all economic development funds expended” if it didn’t create at least 400 jobs and invest at least $400 million – not the overall promised 4,000 jobs and $2 billion investment – by the end of the initial “achievement” period, or eight years after the funds were approved. The company would have to repay a portion of project funding if it couldn’t meet the overall 4,000-job, $2-billion-investment requirements through company “affiliates” or “counted suppliers” during the period, under the agreement. Those repayments would be calculated independently based on 50% of certain expended funds. The calculations wouldn’t include public funding for several big-ticket items connected to the project, such as a new interchange and the railway bridge, according to the agreement. Incentives goody bag A cost-benefit analysis included with the incentives agreement estimated various public costs over 15 years, including: *$850 million in grants through the Coordinating Council for Economic Development (CCED), made up of the directors or board chairpersons of 11 state agencies, including Commerce, and which by law is headed by Commerce Secretary Harry Lightsey, who was appointed in 2021 by McMaster. The Nerve repeatedly has pointed out the secrecy surrounding the CCED. *$200 million in public infrastructure improvements; *$118 million in job development credits, which are rebates of a portion of employee wage withholdings; *$39 million in increased state education costs; *$26.7 million in corporate job tax credits; *$17.8 million in additional “multi-county industrial park” job tax credits; *$15 million in investment tax credits; and *$12 million in “special schools,” typically the cost of employee training provided by readySC. The state agreement also requires that state and local agencies provide the “same or equivalent assistance with state and local tax incentives” for a planned “Phase II” of the project, which would involve an additional $2 billion in capital investment and up to 4,000 additional “qualified” jobs – which by definition could include workers employed by company “affiliates” and “counted suppliers,” as well as “badge” employees. In her written response to The Nerve, Commerce spokeswoman Coakley said the total current number of company affiliates and counted suppliers with Scout Motors “has not been determined.” In its project analysis, the CCED estimated a rosy benefit-to-cost ratio of 13:1 over 15 years, though the total direct and indirect payroll figures were blacked out of that calculation. Of the 192-page state agreement provided by Commerce to The Nerve, 47 pages, or about 24.5%, were partially or entirely redacted, including a “Parent Company Guarantee” from Volkswagen, the project schedule and site plan specifications, and even the corporate email address of Scott Keogh, Scout Motors’ president and CEO. The Policy Council has proposed greater transparency in the state incentives process. Besides grants and tax breaks, the state agreement, which includes Richland County, the town of Blythewood and city of Columbia as parties, provides a variety of other public benefits to the company, including: *Commerce “agrees to use its best efforts to encourage” state universities and colleges to consider all eligible full-time employees and their dependents eligible for in-state tuition rates; *Commerce and Richland County will provide a groundbreaking ceremony at the project site at “no cost or charge” to the company; *Richland County will “facilitate” reimbursement to Scout Motors for lease payments at a temporary office building of at least 40,000 square feet within “reasonable proximity” of the project site through 2025 or earlier if the company vacates the building; *Richland County will “dedicate” six acres within the Blythewood Industrial Park for future “childcare, health and wellness, and/or recreational uses, to support the workforce and local community”; and *Richland County, at “its sole cost and expense,” will name or rename all roads within the industrial park, as requested by Scout Motors. In addition, Commerce and the Governor’s Office are required to assist Scout Motors in relocating employees, either temporary or full-time, and their families to the United States with “respect to obtaining necessary visa and work permits from the federal government.” ESG-related mandates For its part, Scout Motors is required under the state agreement to comply with the “German Supply Chain Due Diligence Act” in establishing that the project site was: *Never the subject of “an unlawful eviction or unlawful taking of land, forest and waters in the acquisition, development or other use of land, forests and waters, the use of which secures the livelihood of a Person”; *Never “attributed to Indigenous Peoples as an essential part of their identity”; and *Never the subject of “handling, collection, storage and disposal of waste in a manner that is not environmentally sound,” based on regulations under provisions of the Stockholm Convention of May 23, 2001, on “Persistent Organic Pollutants.” The state agreement requires that Richland County provide “such reports and diligence items currently in the County’s possession” to help Scout Motors comply with the German law. The law applies “due diligence obligations” on companies that have their “central administration, principal place of business, administrative headquarters, statutory seat or branch office” in Germany to comply with “environmental and human rights standards in their supply chains,” according to an October 2022 IBM blog. For example, in terms of “human rights risks,” the law bans, among other activities, employment and wage discrimination, the employment of children 15 years old and younger, and interference with “freedom of association and the right to collective bargaining,” the blog noted. Effective January of this year, the law applies to German-based companies with more than 3,000 employees; starting next January, it will cover German-based firms with at least 1,000 workers, according to the blog. Depending on the severity of the violation, fines can range up to about $8.6 million in U.S. dollars. The Volkswagen Group, headquartered in Wolfsburg, Germany, has 120 production plants worldwide with more than 660,000 employees, according to the company’s website. An August 2021 article by the Jones Day law firm, which has offices in the U.S. and elsewhere in the world, described the German law and similar legislation in France as the “forerunners of a new trend to regulate ESG risks along supply chains.” The Nerve last week asked Commerce if it would play any role in helping Scout Motors comply with the German law, and whether the law also applied to BMW, another German-based automaker that announced last year it would be making a $1.7 billion capital investment to manufacture all-electric vehicles at its Spartanburg County plant. “Regardless of whether agreements require compliance with applicable law (including German laws that may be applicable to German companies and their subsidiaries), companies must comply with all applicable local, state, federal and international laws,” Commerce spokeswoman Coakley said in her written response. “Enforcement of applicable law is the responsibility of the local, state, federal or international authorities with appropriate jurisdiction.” Coakley, however, didn’t provide direct answers to The Nerve’s specific questions about the German law. Brundrett is the news editor of The Nerve (www.thenerve.org). Contact him at 803-394-8273 or [email protected]. Follow him on Twitter @RickBrundrett. Follow The Nerve on Facebook and Twitter @thenervesc. Nerve stories are free to reprint and repost with permission by and credit to The Nerve.

By RICK BRUNDRETT Like the 46-member S.C. Senate, the 124-member S.C. House apparently can’t resist spending hundreds of millions in state surplus dollars – mainly on lawmakers’ favored local projects. Bolstered by a rosy prediction last week by official revenue forecasters that the state’s general fund surplus for this fiscal year was expected to grow by about $564 million, House members on the same day designated nearly $400 million in earmarks primarily for projects in their respective legislative districts.The Nerve’s review of the House’s earmark list found that 108 House members – 73 Republicans and 35 Democrats – collectively made 350 requests totaling $398.7 million. The list was posted last Thursday on the Legislature’s website several hours after The Nerve submitted a formal request to the House for the document under the state’s open-records law. House members on May 9 approved their amended version of a $41 billion total state budget for fiscal 2023-24, which starts July 1, including earmarks that would be covered out of $2 billion in actual and projected surplus funds. In an official release on May 9, the S.C. Revenue and Fiscal Affairs Office estimated that lawmakers will have an additional total $4.34 billion in recurring and nonrecurring state revenues to appropriate for next fiscal year. Before the Legislature convened last week, The Nerve revealed, based on an earmark list obtained under the S.C. Freedom of Information Act, that 43 senators collectively made 172 earmark requests totaling $314.4 million – most of which would be covered with state surplus funds – when it passed its state budget version last month. The Senate’s earmark list has not been posted on the Legislature’s website – and Senate rules don’t require it. Under Senate and House rules, earmarks are special funding requests by lawmakers for specific projects or programs that didn’t originate with a written agency budget request or weren’t included in the prior fiscal year’s state appropriations. Senators and House members over the years routinely have sponsored earmarks for their pet projects. The Nerve for years has reported about the lack of transparency and public input on earmarks. The South Carolina Policy Council – The Nerve’s parent organization – last December published recommendations to improve transparency in S.C. government, including posting earmark requests on the Legislature’s website within 24 hours of the request, noting there is a “significant delay between when earmarks are requested and posted online, and the forms lack important details.” State Rep. Rob Harris, R-Spartanburg, in February introduced a government-transparency bill mirroring the Policy Council’s recommendations, including posting earmark requests on the Legislature’s website within 24 hours of filing, as The Nerve reported then. Harris was among a small group of House members who requested no earmarks for next fiscal year, according to the House’s earmark list. Harris’ bill has remained stuck in the budget-writing House Ways and Means Committee, chaired by Rep. Bruce Bannister, R-Greenville. All but one of the 25 committee members, including Bannister, sponsored or co-sponsored at least one earmark, The Nerve’s latest review found. The Nerve’s analysis found that Republican House Speaker Murrell Smith – that chamber’s top officer – sponsored or co-sponsored the collective most-expensive earmark requests – 11 earmarks totaling nearly $40 million – mainly for local projects in his home county of Sumter, including a $15 million request for the Shaw Sumter Military Museum. The Nerve on Monday submitted written questions to Bannister and Smith through his spokesperson. No response was received from either lawyer-legislator by publication of this story. Smith was asked why his own earmark list was far more pricey compared to most other House members’ requests. Bannister was asked when exactly House members first started submitting requests to his committee; in last week’s Nerve story, House Clerk Charles Reid said he had “no document(s) responsive” to The Nerve’s request for a House earmark list. The Nerve also asked Smith and Bannister about why the approximately $400 million in requested House earmarks shouldn’t be refunded to taxpayers. That amount works out to be about $75 for every man, woman and child in South Carolina; the total requested Senate earmarks equate to about $60 for every S.C. resident, as The Nerve reported last week. The proposed Senate and House earmarks are in addition to approximately $1.3 billion in state surplus funds reserved for incentives to bring a Scout Motors electric-vehicle plant near Columbia. That amount equates to about $240 for every resident in the state. The Policy Council has called on lawmakers to use state surplus dollars to accelerate tax relief for South Carolinians. The Nerve’s latest review found that the 350 House earmark requests range from $6,000 to $25 million, with 77 requests of at least $1 million. As with the Senate’s earmark list, the House’s list contains many vaguely worded project descriptions. Multimillion-dollar requests Following are the top-12 House earmark requests of at least $10 million, along with each funding sponsor, according to the earmark list: *Town of Fort Mill – Downtown Economic Development: $25 million. Sponsor: Rep. Raye Felder, R-York. *City of Greenville – Public Space Upgrades & Safety Improvements: $20 million. Sponsor: Rep. Bruce Bannister. *Spartanburg Downtown Infrastructure: $20 million. Sponsor: Rep. Max Hyde, R-Spartanburg. *The Peace Center: $17.5 million. Sponsor: Rep. Chandra Dillard, D-Greenville. *Shaw Sumter Military Museum: $15 million. Sponsor: Rep. Murrell Smith. *Town of Seneca – Downtown Revitalization: $12 million. Sponsor: Rep. Bill Sandifer, R-Oconee. *Lexington Conference Center: $10 million. Sponsors: Reps. Paula Calhoon, R-Lexington; Chris Wooten, R-Lexington. *Murrells Inlet Dredging: $10 million. Sponsor: Rep. Lee Hewitt, R-Georgetown. *Pickens County – Highway 183: $10 million. Sponsors: Reps. David Hiott, R-Pickens; Neal Collins, R-Pickens. *Saluda Grade Rail Trail: $10 million. Sponsor: Rep. Max Hyde. *Florence County – Poyner Building Renovation: $10 million. Sponsor: Rep. Phillip Lowe, R-Florence. *City of Columbia – Assembly St. Railroad: $10 million. Sponsor: Rep. Todd Rutherford, D-Richland. As with the Senate earmark list, the single-largest number of proposed House requests would be funneled through the S.C. Department of Parks, Recreation and Tourism, budget records show. The single most-expensive earmark – $55 million – on the Senate’s list also was retained in the House’s latest budget version. That amount, described in budget records as only “Publicly Owned Aeronautics Infrastructure – New and Existing Business,” would be used to refurbish buildings owned by the South Carolina Technology and Aviation Center, a public entity in Greenville County, and leased to aerospace giant Lockheed Martin for its F-16 production and maintenance program at the site, according to an April 21 Post and Courier news story. The Nerve earlier this month asked the S.C. Department of Commerce – the agency through which the $55 million would flow – for details related to the Senate’s earmark request, but no records were provided then. The Nerve has since submitted a formal request for those records under the state’s open-records law. In a rare move, Republican Gov. Henry McMaster last week ordered the Legislature to return in a special session to work on the state budget and several other matters. The regular legislative session ended last Thursday; lawmakers are back in Columbia this week. Under the S.C. Constitution, the Legislature is required to pass an annual state budget. A joint conference committee made up of Reps. Bannister; Bill Herbkersman, R-Beaufort; and David Weeks, D-Sumter; and Sens. Harvey Peeler, R-Cherokee, who is the Senate Finance Committee chairman; Nikki Setzler, D-Lexington; and Thomas Alexander, R-Oconee, who is the Senate president, was appointed to work out differences between the chambers’ budget versions. The six conference committee members each sponsored or co-sponsored multiple earmarks, The Nerve’s reviews found. Brundrett is the news editor of The Nerve (www.thenerve.org). Contact him at 803-394-8273 or [email protected]. Follow him on Twitter @RickBrundrett. Follow The Nerve on Facebook and Twitter @thenervesc. Nerve stories are free to reprint and repost with permission by and credit to The Nerve.

By RICK BRUNDRETT Through largely hidden budget earmarks, S.C. senators have proposed a total of more than $314 million for projects next fiscal year mainly in their respective legislative districts – including dozens of $1 million-plus requests, a review by The Nerve found. The 46-member Senate two years ago changed its rules purportedly to require more disclosure of historically secret taxpayer-funded earmarks, but the chamber hasn’t posted online its latest earmark list, though it passed a $38-billion, fiscal year 2023-24 state budget version on April 19.The Nerve recently obtained the Senate earmark list under the S.C. Freedom of Information Act. A separate request under the open-records law was made for any House earmarks; House Clerk Charles Reid in a written response said the 124-member chamber has “no document(s) responsive to your request.” The new fiscal year starts July 1. The House, which passed its budget version in March, was scheduled today to resume debate on the Senate’s version, though it’s unclear whether House members will agree to the earmarks. Any differences between the chambers’ spending plans would have to be resolved by a joint conference committee. Under Senate and House rules, earmarks are special funding requests by lawmakers for specific projects or programs that didn’t originate with a written agency budget request or weren’t included in the prior fiscal year’s state appropriations. Senators and House members over the years routinely have sponsored earmarks for their pet projects. Under a 2021 Senate rule change, before an annual spending bill receives a key second reading, the Senate Finance Committee chairman must attach an earmark “statement” identifying the senator making the request, an explanation of the project or program, and the funding amount. A similar procedure is required for conference committee reports. But that rule doesn’t specifically require that the earmark list be made readily available to the public. In online budget versions, earmarks often are vaguely worded and are not labeled as earmarks, with no listing of which lawmakers sponsored the requests. The Nerve for years has reported about the lack of transparency and public input on Senate and House earmarks. The South Carolina Policy Council – The Nerve’s parent organization – last December published recommendations to improve transparency in S.C. government, including posting earmark requests on the Legislature’s website within 24 hours of the request, noting there is a “significant delay between when earmarks are requested and posted online, and the forms lack important details.” State Rep. Rob Harris, R-Spartanburg, in February introduced a government-transparency bill mirroring the Policy Council’s recommendations, including the requirement that earmark requests be posted on the Legislature’s website within 24 hours of filing, as The Nerve reported then. The bill has remained stuck in the House Ways and Means Committee. Bipartisan money grabs The Nerve’s latest review found that 43 of the Senate’s 46 members – 27 Republicans and 16 Democrats – as well as two Senate Finance subcommittees, collectively made 172 earmark requests totaling $314.4 million. The earmark requests ranged from $9,340 to $55 million; there were 56 earmarks of at least $1 million. All but one of the Senate Finance Committee’s 23 members sponsored or co-sponsored at least one earmark request. Outside of subcommittee requests, Sen. Harvey Peeler, R-Cherokee, who is the Finance Committee chairman, individually sponsored or co-sponsored the most requests (14), followed by Sen. Darrell Jackson, D-Richland (12), who also serves on the committee, The Nerve’s analysis found. Peeler, for example, who formerly served as the Senate president, sponsored four earmarks totaling $7.4 million for the town of Clover, which he represents, in York County for water and sewer projects, “economic development/revitalization,” replacement lighting at a park, and a police training facility, according to the earmark list. Ten earmarks sponsored solely by Peeler totaled $13.5 million. In comparison, Jackson’s 12 individual earmarks totaled $2.1 million, including five separate $300,000 requests for local government or nonprofit projects, records show. The Nerve’s review also found that the chairpersons of the Senate’s 15 standing committees each sponsored or co-sponsored at least one earmark, including Senate President Thomas Alexander, R-Oconee, who chairs the Interstate Cooperation Committee and individually sponsored five requests totaling $12.4 million. Alexander, for example, sponsored earmarks for the following projects in Oconee County, according to the earmark list: $5.5 million for the “City of Walhalla Community Center,” $5 million for the “City of Westminster Recreation Facility,” and $1 million for the “Walhalla Performing Arts Center.” In addition, Alexander also chairs the Senate Finance Health and Human Services Budget Subcommittee, which collectively made four earmark requests totaling $26 million, records show. The Nerve last year revealed that Alexander reported a total of more than $850,000 in income over a 10-year period from local, county and state agencies mainly in Oconee County through his office supply business. Neither Alexander nor Peeler responded to written requests last week from The Nerve seeking comment on their sponsored earmarks. The Nerve’s review found that $312.1 million of the total $314.4 million in Senate earmarks would be funded with state surplus funds. That amount represents 23% of the net $1.34 billion in actual and expected surplus money for fiscal 2023-24, according to the Senate’s version of the total state budget, which includes state, federal and “other” funds. To put the $314.4 million into some perspective, it represents more than the total budgets of dozens of state agencies and would equate to about $60 for every man, woman and child in South Carolina. And that amount is on top of nearly $1.3 billion in state surplus funds – which works out to approximately $240 for every S.C. resident – reserved for incentives to bring a Scout Motors electric-vehicle plant near Columbia. The Policy Council has called on lawmakers to use state surplus dollars to accelerate tax relief for South Carolinians. Big-ticket items Following are the 10 most-expensive Senate earmark requests, along with each funding sponsor, as described in the earmark list obtained by The Nerve: *Publicly Owned Aeronautics Infrastructure – New and Existing Business: $55 million. Sponsors: Senate Finance Natural Resources and Economic Development Budget Subcommittee, chaired by Sen. Nikki Setzler, D-Lexington, who is the former Senate minority leader. *Elevate SC-22 Over the Waccamaw River: $30 million. Sponsors: Sens. Luke Rankin, R-Horry; Greg Hembree, R-Horry;  Stephen Goldfinch, R-Georgetown; and Kent Williams, D-Marion. *York County Water and Sewer – Blue Granite Acquisition Costs: $20 million. Sponsors: Sens. Wes Climer, R-York; and Peeler. *South Carolina Quantum Association Curriculum Development and Use Study: $15 million. Sponsor: Sen. Dick Harpootlian, D-Richland. *Piedmont Technical College – Saluda Advanced Manufacturing Center and New Campus: $14.3 million. Sponsor: Sen. Shane Massey, R-Edgefield, who is the Senate majority leader. *Berkeley County Courthouse Relocation: $10 million. Sponsors: Sens. Larry Grooms, R-Berkeley; and Brian Adams, R-Berkeley. *Spartanburg Downtown Development Infrastructure: $10 million. Sponsors: Sens. Scott Talley, R-Spartanburg; and Peeler. *Alzheimer’s Disease Research Center Designation: $10 million. Sponsors: Senate Finance Health and Human Services Budget Subcommittee, chaired by Alexander. *Ronald McDonald House – Charleston: $9 million. Sponsors: Senate Finance Health and Human Services Budget Subcommittee. *City of West Columbia – Riverwalk Expansion and Connectivity: $7 million. Sponsor: Setzler. As for the $55 million “publicly owned aeronautics infrastructure” project, those funds would be used to refurbish buildings owned by the South Carolina Technology and Aviation Center (SCTAC), a public entity in Greenville County, and leased to aerospace giant Lockheed Martin for its F-16 production and maintenance program, according to an April 21 Post and Courier news story. The Nerve’s review found that the 172 earmarks, including the $55 million request, initially were adopted by the Senate Finance Committee on April 4, though online budget records do not list which lawmakers sponsored the requests or label the amounts as earmarks. Last week, The Nerve asked the S.C. Department of Commerce – the agency through which the $55 million would flow – for its written records about the earmark request, but no documents were released. In a written response to The Nerve, agency spokeswoman Kelly Coakley said that “while Commerce is aware of this proposed item, we cannot speculate (about) the legislative intent behind the pending budget item,” noting that the state budget has “not been finalized.” Yet Commerce last year provided The Nerve with a document showing that a $9 million payment by Commerce to SCTAC’s Board of Directors in October 2021 –  described by another Commerce spokesperson as “pass-thru” state funding, was to be used by Lockheed Martin for a runway project for military aircraft, as The Nerve reported then. Neither Setzler, whose Senate Finance subcommittee sponsored the earmark, nor representatives of SCTAC or Lockheed Martin, responded to written or phone messages from The Nerve seeking comment about the $55 million earmark request. The $15 million South Carolina Quantum Association earmark sponsored by Harpootlian is $10 million less than what he sought last year to initiate the project. In his veto message last year, Republican Gov. Henry McMaster said the proposed “supercomputer” would be owned and operated by a “yet-to-be-created” nonprofit, contending that the budget proviso would create a “dangerous precedent” and was “an end run around the state procurement laws.” The latest earmark would be funneled through Commerce. The Nerve’s latest review found that the single-largest number of Senate earmarks – 68 – would flow through the state Department of Parks, Recreation and Tourism, ranging from a $9,340 earmark sponsored by Sen. Billy Garrett, R-McCormick, for the Promised Land Community Association to Setzler’s $7 million earmark for the West Columbia Riverwalk project. Senators designated a total of 26 state agencies to channel money mainly to municipal or county governments, or local nonprofits, The Nerve’s analysis found. The only senators who didn’t make any individual earmark requests, according to the earmark list, were Sens. Penry Gustafson, R-Kershaw; Dwight Loftis, R-Greenville; and Tom Young, R-Aiken, who serves on the Senate Finance Committee. Here is the complete earmark list. Brundrett is the news editor of The Nerve (www.thenerve.org). Contact him at 803-394-8273 or [email protected]. Follow him on Twitter @RickBrundrett. Follow The Nerve on Facebook and Twitter @thenervesc. Nerve stories are free to reprint and repost with permission by and credit to The Nerve.

By Dallas Woodhouse Bills under consideration in the S.C. Legislature would remove a quirk in state law that unnecessarily regulates the relationship between title insurance agencies and their underwriters. A recently filed state House bill along with its Senate counterpart would embrace the free-market system and allow the two parties to negotiate commission payments on their own terms. South Carolina and Connecticut are the only two states that impose a cap on the commission paid to a title examiner (agent) when someone buys title insurance.“This change will free small business owners (title insurance agencies) to negotiate commissions with big out-of-state insurance companies that do business here,” said real estate lawyer Nathan Galbreath of Greenville, managing partner of Nelson & Galbreath, which has offices statewide and in Atlanta. “The net result will be to immediately put over $45 million into small businesses throughout South Carolina every year.” Said real estate attorney Trey Ingram, president of Holliday Ingram, which has offices in the Upstate and Lowcountry, about the proposed legislation: “South Carolina consumers benefit because this will foster greater competition between insurers, thereby producing better products at more competitive rates and higher revenue for local small businesses.” Title insurance is commonly a policy meant to protect home buyers and mortgage lenders from financial losses caused by title defects, such as outstanding liens and back taxes. When calculating title insurance commissions, the normal split in most states is roughly 70%-80% for the title agent and 20%-30% for the insurer. But South Carolina law caps the split for agents at 60%, though agents do most of the work in researching title claims, which can be time-consuming. Agents greatly reduce the risk assumed by underwriting insurance companies while often being required to compensate the insurance company for some losses. S.C. lawmakers in 1988 passed broad legislation regulating the title insurance business, which, among other rules, established the 60% cap on commission that a title agent can earn. The bill history indicates it was fast-tracked through the Legislature, bypassing both the House and Senate committee process. The current House bill (H.3830), filed in January, would remove the cap and place South Carolina among the vast majority of states that use a free-market approach instead of an arbitrary standard. A similar proposal was filed in 2021. “South Carolina is one of only three states nationwide (Connecticut and Florida also regulate commission splits) to reject the free negotiation of title insurance commission in favor of a regulatory cap or minimum,” said Bryce Fiedler, the Policy Council’s senior policy analyst. “Under this system, South Carolina agents have among the worst commission splits in the United States.” “South Carolina agents perform all the substantive functions that give rise to a title policy: title examination, title review, curing title defects, certifying title, drafting the title commitment, and actually issuing the title policy,” Fiedler continued. “To be clear, the Policy Council can’t possibly know what the proper split is between agents and insurance underwriting companies, nor can the state of South Carolina.” There is no evidence from the other 47 states that South Carolina consumers will face higher insurance rates with the proposed change in state law. The Policy Council contends the opposite, as free-market pressures likely would lower premiums for consumers. There also is no clear legal or moral justification for the state’s current law, which puts the government in the position of picking winners and losers. It’s a system that works against South Carolina’s hardworking professionals and favors large, out-of-state multinational corporations. Woodhouse is executive director of the South Carolina Policy Council – the parent organization of The Nerve.

By RICK BRUNDRETT Update: 1/17/24 - The S.C. Senate unanimously passed House bill 3690, which was cited in this story. The bill, which is expected to be signed into law by Gov. Henry McMaster, would require that state pension investments be made based on "pecuniary," or financial, factors, which, as House Speaker Murrell Smith told The Nerve last year for this story, would ban investments based on "political causes" or "activism investing." As S.C. lawmakers move closer to banning liberal ESG factors in state pension plan investments, the commission overseeing those funds is reducing at least one global management firm’s control over shareholder votes that come with the billions of public retirement dollars flowing to companies. But some conservatives are skeptical of the commission’s latest actions. Michael Hitchcock, the S.C. Retirement System Investment Commission’s (RSIC) chief executive officer, recently told The Nerve that in “response to the criticism over ESG” (environmental, social and governance) policies, New York-based BlackRock Inc., which as of last fiscal year managed more than $10 billion in state pension investments,  developed a “Voter’s Choice Program” that will allow the commission to direct how its shareholder proxy votes will be cast “as if we owned the shares directly.” Critics contend that BlackRock, which has been ranked as the world’s largest asset manager with about $8.6 trillion in assets under management at the end of 2022, and other major firms that manage state pension investments nationwide, have used their shareholder voting power to push corporations to adopt ESG-related policies, such as dramatically cutting carbon emissions by certain target dates, or implementing workplace “diversity, equity and inclusion” programs. Hitchcock in his written response last month to The Nerve said the RSIC hired, effective Jan. 20 of this year, Glass Lewis, a San Francisco-based proxy advisory service, to cast shareholder votes on behalf of the RSIC, based on the “Voter’s Choice Program” and according to “guidelines that we agreed upon.” Asked directly, though, whether those guidelines would completely ban Glass Lewis from considering ESG factors in proxy voting on behalf of the RSIC, Hitchcock replied, “In my view, yes or no does not fully answer your question.” Hitchcock contended that providing “clear objective guidelines” is a “more effective means of ensuring that our proxies will be voted in a manner consistent with the standard to maximize the value of the investment for all proxy votes, including voting against proxy questions that a reasonable person would interpret as promoting ESG principles that are unrelated or harmful to the profitability of a particular company.” Contacted recently by The Nerve, Scott Shepard, director of the Free Enterprise Project at the National Center for Public Policy Research in Washington, D.C., described Glass Lewis as “more left-wing” than BlackRock, adding that Glass Lewis opposes all “right-of-center” shareholder proposals. “Handing things over to Glass Lewis is just like jumping out of the frying pan into the fire,” Shepard contended. Meanwhile, the S.C. House last week overwhelmingly approved a bill, titled the “ESG Pension Protection Act,” that would require any “commission engagement with a company regarding the exercise of shareholder proxy votes” be for the “sole purpose of maximizing shareholder value” and based “solely on pecuniary factors,” which would exclude the “promotion, furtherance, or achievement of environmental, social, or political goals, objectives, or outcomes.” The bill (H. 3690), the main sponsor of which is Rep. Bill Taylor, R-Aiken, and which has 53 co-sponsors, would allow the commission to hire a proxy advisory service such as Glass Lewis, but only if the hired firm has “a practice and commits in writing to follow proxy guidelines” that are “consistent with the requirements” of the bill. Yet according to an analysis of the bill by the S.C. Revenue and Fiscal Affairs Office, the RSIC “noted that whether an external investment manager would vote proxy consistent with the requirements of this bill is currently unknown.” “While I believe that the RSIC has responsibly managed the trust, we want to statutorily guarantee they will continue to do so,” House Speaker Murrell Smith, R-Sumter, who is a bill co-sponsor, said in a prepared statement last month to The Nerve while the bill was still in a House committee. “Our goal is to ensure that the RSIC is prioritizing shareholder value and maximizing returns over supporting political causes and engaging in activism investing.” The bill was referred to the Senate Finance Committee, chaired by Sen. Harvey Peeler, R-Cherokee. This year’s regular legislative session is set to end next month. An investigation by The Nerve found that BlackRock, which managed four public-stock indexes in the state pension plan that as of last June 30 totaled more than $10.5 billion in market value, and Boston-based State Street Corp., another pro-ESG investment firm that managed a total of more than $4 billion in a separate index, were among the five-largest collective shareholders at the end of 2022 in the plan’s four biggest indexes. Hitchcock in his written response last month said the RSIC is “close to agreeing to a similar approach to proxy voting” with State Street as the “one we are implementing with BlackRock.” As a group, BlackRock, State Street and about 50 other investors held shares with a total market value of more than $2.6 trillion as of Dec. 30 among the 19 biggest companies, by publicly traded stock, that were included in one or more of the four largest indexes, The Nerve’s review found. Most of those companies, which include well-known names such as Amazon, Apple, Google and Microsoft, have adopted specifically identified ESG or other liberal policies or goals, company records show. The Nerve over the past year has extensively reported about ESG issues in South Carolina, including proposed legislation related to the state pension plan. The South Carolina Policy Council – The Nerve’s parent organization – last month issued a number of recommendations to deal with the ESG movement in the Palmetto State, including requiring “stronger protections in place for proxy voting, so that ESG-minded investment managers aren’t free to advance their agenda using the public’s money.” At the federal level, President Joe Biden last month used his first veto of his presidency to reject a Republican-led resolution that would have prevented investment managers from basing decisions in private retirement plans on ESG factors. The U.S. House later failed to override the veto. The Nerve last year reported about the Biden administration’s proposed rule to allow managers of private retirement plans to promote ESG factors in those plans, and on other federal ESG issues. ‘All about corporate votes’ Generally, employer and employee contributions in the state pension plan that are overseen by the S.C. Public Employee Benefit Authority (PEBA), along with investment portfolio earnings managed by the RSIC, are the main revenue sources that fund benefit payments to retirees or their beneficiaries. Under state law, the RSIC has seven voting members, two of whom are appointed by the governor, with the state treasurer, comptroller general, and the chairmen of the Senate Finance and House Ways and Means committees each making an appointment. The other voting member is an eligible state retiree unanimously appointed by the other six commissioners. To be eligible to serve, commissioners must meet at least one of nine qualifications, such as having at least 12 years of professional experience in the financial management of pension or insurance plans, or as a certified public accountant with financial management, pension or insurance audit expertise, under state law. The current commission chairman is Bill Hancock, who was elected as chairman by fellow commissioners and, according to Secretary of State records, was appointed to his seat by S.C. Treasurer Curtis Loftis in 2017. Commissioners by law serve four-year terms and receive an annual salary of $20,000. In an annual fiscal 2022 report, PEBA listed the total number of retirees and beneficiaries at 173,786 in the state’s five separate retirement systems covering general employees, first responders, state lawmakers, judges and solicitors, and the S.C. National Guard. The average annual benefit in the two largest systems covering general employees and first responders was $21,147 and $21,688, respectively, according to the report. ESG critics contend that when dealing with public pension plans, BlackRock and other liberal investment- management companies hired by government agencies could substitute ESG factors – such as reducing the effects of climate change, increasing diversity on corporate governing boards, or supporting social justice causes – for traditional financial considerations. That can result in investments having lower rates of return and plans being underfunded, they say. There is no single-accepted, national definition of ESG, though the movement has been growing nationally in recent years. In a written response last month to The Nerve, Hitchcock said the RSIC doesn’t use ESG as a “consideration in making investment decisions,” describing it as an “ill-defined amalgamation of factors that shift depending on the perspective of a particular individual and the consideration of which have little to no benefit in enhancing return because of their non-pecuniary nature.” But major investment firms hired to manage public pension plans often use their shareholder proxy-voting power to pressure companies to adopt ESG or other liberal agendas, according to critics. “ESG is all about corporate votes,” Loftis said in an interview last month with The Nerve. “Conservatives across this country in red states sent their money to state pension plans, and most of the time, that money was converted into left-wing votes, which has allowed Wall Street and Main Street to go from conservative to radical left-wing in 10 years or less.” Keith Brainard, a spokesman for the National Association of State Retirement Administrators, told The Nerve last year that BlackRock, as the world’s largest asset manager, is “likely under contract with a large number of public pension funds and public pension plan sponsors (states and cities),” noting there are about 5,000 public retirement systems in the U.S. Loftis said he’s concerned that although the RSIC can “get the votes (BlackRock’s shareholder proxy votes) back,” it won’t “do anything with them.” Loftis in October made national headlines when he announced he was divesting the final $200 million of BlackRock holdings from a $5 billion portfolio managed by his office. Other states that have pulled some or all of their BlackRock-managed assets since last year include Arkansas, Florida, Louisiana, Missouri, Texas, Utah and West Virginia. A proxy vote typically is a ballot cast by a person or firm on behalf of company shareholders who can’t attend shareholder meetings or who don’t want to vote on certain issues. Those ballots can cover a variety of topics, including executive compensation and benefits, the makeup of a company’s board of directors, and mergers or acquisitions. The total number of companies in each of the five public-stock “MSCI” (Morgan Stanley Capital International) indexes in the state pension plan ranged as of last month from 1,826 to 9,126, according to MSCI’s website. An index generally is a way to measure the price performance of a group of securities over time. Hitchcock in his written response last month said BlackRock casts proxy votes for shares owned by a “collective investment trust” on “behalf of the investors.” Hitchcock told The Nerve for a story last May that the state’s public-stock portfolio is “all passively invested” and “spread across the world,” describing the RSIC as “50-year investors.” He said then that neither BlackRock nor State Street makes “any investment decisions for us whatsoever.” Generally, passive investing refers to a “buy-and-hold portfolio strategy for long-term investment horizons, with minimal trading in the market”; and unlike active trading, doesn’t seek to “profit from short-term price fluctuations or market timing,” according to Investopedia, a financial information website. In its analysis of the ESG bill passed last week by the House, the state Revenue and Fiscal Affairs Office said the RSIC’s management of proxy voting “in-house” would cost more than $1 million, including the hiring of five full-time investment officers at a salary and benefits totaling $245,000 for a senior officer and $161,000 for each of the other four workers. Hitchcock’s annual compensation is $361,633, according to the state salary database. ‘Explicitly left-wing’ As of last June 30, the public-stock indexes managed by BlackRock and State Street totaled $14.6 billion in market value, which represented 38.3% of the overall $38.2 billion market value of all investments in the state pension plan, net of fees, according to an RSIC annual report. For the last two fiscal years, BlackRock and State Street were the only investment management firms involved with the public equity portfolio in the state pension plan, RSIC records show. The total market value of that portfolio dropped by 16.28% as of last June 30 compared to the previous year, though it had an overall one-year increase of nearly 42% in fiscal 2021. BlackRock’s and State Street’s management fees for fiscal 2022 totaled $3,036,438 and $711,525 respectively, according to information provided by Hitchcock to The Nerve. The cost to hire Glass Lewis to manage RSIC’s proxy votes through BlackRock’s “Voter’s Choice Program” is $159,205, “which is being offset by a corresponding reduction in BlackRock’s management fee,” he said. In his interview last month with The Nerve, Shepard, of the National Center for Public Policy Research, said Glass Lewis is “an explicitly left-wing organization,” contending that the proxy advisory firm doesn’t support shareholder proposals that protect the “civil rights of people they don’t call diverse,” and that it accepts the “UN (United Nations) line on decarbonization without any concern whether decarbonization according to a political schedule is going to be bad for a company.” In a recent written response to The Nerve, Glass Lewis spokesman Dimitri Zagoroff said while the firm is “unable to comment on any specific client’s voting policy,” it generally follows the “voting policy determined by that client.” Client preferences can be “tailored adjustments to one of our wide variety of ‘thematic’ voting template options,” including one template focusing on “climate and ESG issues,” and another template that concentrates on “oversight and financial factors, ignoring environmental and social issues,” he said. Hitchcock in his written response said Glass Lewis is “currently the only proxy advisory service that has both the capability to manage the number of proxy votes we have exposure to and that also offers the ability to choose thematic voting guidelines that we agree with,” noting that the indexes the RSIC invests in “comprise over 9,000 stocks that may each have multiple proxy vote questions during the year.” Hitchcock also said that according to the voting guidelines, Glass Lewis will “primarily follow company management’s recommendation when deciding how to cast a particular proxy vote, unless management’s recommendation runs counter to the best interest of the shareholders,” adding that the RSIC will receive “regular reporting” from Glass Lewis to “ensure that they are voting in line with the guidelines.” Shepard, however, identified another proxy advisory firm that he contended could offer the same services without the RSIC having to “fight the left-wing bias” of Glass Lewis. In a written response last month to The Nerve, BlackRock spokeswoman Amanda Friedman didn’t answer specific questions about the firm’s management of stock investments in the state pension plan. But she cited a passage from BlackRock Chairman and CEO Larry Fink’s 2023 annual letter to investors contending that it’s “not the role of an asset manager like BlackRock to engineer a particular outcome in the economy.” In his 2022 annual letter, however, Fink asked that businesses “demonstrate how they’re going to deliver on their responsibility to shareholders, including through sound environmental, social, and governance practices and policies,” contending that most shareholders, employees, customers, communities and regulators “now expect companies to play a role in decarbonizing the global economy.” BlackRock has about 16,000 employees in 38 countries, including more than 8,000 workers and 190,000 financial advisors in its U.S. offices, according to its website. A State Street spokesman declined comment when contacted recently by The Nerve. The company has about 42,000 employees worldwide; its investment management arm is State Street Global Advisors, company records show. In its annual 2021 ESG report, State Street said that as “one of the world’s largest service providers and managers of institutional assets,” it believes that “addressing environmental, social, and governance (ESG) issues can help generate better long-term outcomes for the world’s investors and the people they serve.” Billion-dollar influencers The Nerve’s latest investigation found that the investment management firms below collectively were the top-five shareholders, as reported last Dec. 30, among the 19 biggest companies, by publicly traded stocks, that were included in one or more of the four-largest, public-stock MSCI indexes in the state pension plan as of March 10 and March 13 of this year. The Nerve’s review was based on information listed on the MSCI and Yahoo Finance websites. Investment Firm          Total No. of Shares*      Total Share Value* Vanguard Group              4.3 billion                     $684.8 billion BlackRock Inc.                 3.5 billion                     $565 billion State Street                      2 billion                         $323.6 billion FMR LLC                           1.4 billion                      $235.2 billion Geode Capital                   943 million                   $148 billion *The totals included shares in Google (Alphabet Inc.) that are designated with voting rights; another large class of Google stock doesn’t come with voting rights and wasn’t included in the review. BlackRock last fiscal year managed a fifth public-stock MSCI index in the state pension plan, which focuses on emerging markets worldwide. As the smallest index among the five indexes, it was not part of The Nerve’s analysis. Overall, The Nerve’s review found that the 53 top investors among the 19 largest companies that were included in one or more of the four biggest indexes were holders of nearly 17 billion total shares with a collective market value of more than $2.6 trillion as of Dec. 30. Like BlackRock and State Street, the Vanguard Group, FMR (Fidelity Management & Research) LLC and Geode Capital (Management) also are proponents of ESG-related goals, policies or programs, company records show. Vanguard’s corporate website, for example, says its company goal is to reach “carbon neutrality” in 2025 throughout its global operations involving 18,000 employees, noting, “We consider climate change to be a material risk to many companies and their shareholders’ long-term financial success.” The Pennsylvania-headquartered company last year dropped out of the Net Zero Asset Managers, an international group of asset managers committed to the goal of net-zero greenhouse gas emissions by 2050 or earlier – a move ESG critics say was the result of pushback by conservative states. Besides combating climate change, Vanguard also supports diversity, equity and inclusion (DEI) initiatives within its company, according to its annual 2022 DEI report. Boston-based FMR supports “integrating ESG considerations across our products, services, and investment decisions,” while Geode Capital Management, also headquartered in Boston, in its “Environmental, Social & Governance (‘ESG’) Mission Statement” said as a “signatory to the Principles for Responsible Investment (PRI),” it “promotes ESG principles in our stewardship of investments in the funds and accounts we manage, as well as in our own corporate activities,” company records show. The Nerve sent written questions to Vanguard, FMR and Geode Capital inquiring about their ESG-related policies and proxy voting. An FMR spokesperson acknowledged receiving The Nerve’s questions but gave no further comment; the other two firms didn’t respond. ‘Abundance of cowardice’ In his interview with The Nerve, Loftis, the state treasurer, contended that BlackRock, Vanguard and other major investment-management firms “work against the interest of South Carolinians every day, and they do so because we gave them money, and they took that money and, with the (shareholder proxy) votes that came along with that money, voted against us.” “There’s not a left-wing idea out there that they haven’t put into the corporations,” he said about the investment firms’ voting power. ESG critics say it’s no coincidence that many large corporations that benefit from state pension investments have ESG goals, policies or programs, given the shareholder proxy-voting power held by pro-ESG firms hired to manage the investments. Following are some examples of ESG-related initiatives at several of the biggest companies included in public-stock indexes in South Carolina’s pension plan: *Apple’s 2022 ESG Report – “Committed an additional $55M to our Racial Justice and Equity Initiative,” including funding for “organizations driving criminal justice reform and environmental justice.”   *Microsoft’s 2021 Environmental Sustainability Report – “We granted $100 million to Breakthrough Energy Catalyst to accelerate the development of climate solutions the world needs to reach net-zero across four key areas … With net zero becoming the new normal … the world must move from climate pledges to climate progress.”   *Amazon’s 2021 Sustainability Report – “In 2021, we supported the U.S. federal government’s actions to address climate change, including supporting emissions reducing investments in the Bipartisan Infrastructure Law and the climate provisions in the proposed Build Back Better legislation.” The company also noted that it has “publicly stated our position on several key issues,” including “recognition of the fundamental importance of diversity, equity and inclusion.”   *Google’s (Alphabet) 2022 Sustainability Bond Impact Report – “In August 2020, we issued $5.75 billion in sustainability bonds, leading the way with the largest sustainability or green bond issuance by any company in history at the time. The net proceeds funded new and ongoing projects that are environmentally or socially responsible and enable investors to join us in tackling critical issues.”   *UnitedHealth Group’s 2021 Sustainability Report – “We engaged with key suppliers in one-on-one conversations to better discuss relevant ESG issues.”   The Nerve asked the above companies in writing about how much influence major investment-management firms have on shareholder proxy votes in their respective companies. Amazon spokesman Glenn Kuper in an email response didn’t provide specifics, saying generally that the “ownership percentages of various shareholders, including investment management firms, is in the public record.” “Their influence on the vote is based on how many votes they have,” he added. “I really don’t have anything beyond that.” Microsoft in an automatic email reply acknowledged receiving The Nerve’s request but didn’t give any further response. Apple, Google and UnitedHealth Group didn’t respond. Loftis said conservative leaders in South Carolina and other states need to take tougher stands to stop ESG agendas from spreading through state pension systems. “The left outfought us,” he said. “We’ve had an abundance of cowardice.” Brundrett is the news editor of The Nerve (www.thenerve.org). Contact him at 803-394-8273 or [email protected]. Follow him on Twitter @RickBrundrett. Follow The Nerve on Facebook and Twitter @thenervesc. Nerve stories are free to reprint and repost with permission by and credit to The Nerve.

By RICK BRUNDRETT Citizens would have far easier access to state and local government records and meetings in South Carolina under a wide-ranging S.C. House bill introduced Thursday. The legislation was  based largely on transparency recommendations released in December by the South Carolina Policy Council – The Nerve’s parent organization, said the bill’s sponsor, Rep. Rob Harris, R-Spartanburg.“I had been gnawing on this idea and when I read it (the Policy Council’s proposals), I said, ‘There’s the kind of basic framework, the skeleton, of what needs to be done,’ and  I just ran with it and got some other help,” Harris told The Nerve in an interview Thursday afternoon. “Transparency increases accountability and inspires confidence in our public institutions,” said Bryce Fiedler, the Policy Council’s senior policy analyst, in a written statement. “We applaud the members who have signed on to this legislation and encourage other members to do so in the interest of open government.” The bill, titled the “Government Transparency Act” and co-sponsored by 13 other House Republicans, would require that: *Local school board and state legislative committees, including the Judicial Merit Selection Commission, which nominates judicial candidates, provide “live electronic access,” such as livestreaming, of public meetings, including archiving of the recordings for later viewing. *Local and county government agencies and school districts publish on their websites required employee compensation; budgets, audits and financial reports; a detailed list of local taxes and fees; a searchable database of revenues and expenditures; and documents circulated during open meetings within 24 hours after the meetings. *State agencies currently exempted from reporting the salaries of higher-paid employees to the S.C. Department of Administration provide that information quarterly to the department or post it on their own websites. Currently, 16 state entities, including the Judicial Department and state-owned utility Santee Cooper, are exempt. *State agencies making annual budget requests post on their websites full descriptions of the need and purpose of any recurring or new appropriations. *Lawmakers requesting state budget earmarks for specific projects or programs put in writing details about the request, including the sponsoring legislator’s name, and the amount, purpose and recipient of the money. Requests would have to be posted on the Legislature’s website within 24 hours of the filings. The bill mirrors the Policy Council’s proposals, which cover livestreaming of school board and legislative meetings; government spending, including earmarks; and access to public records at the state and local levels. A Policy Council poll released last June found that nearly 80% of likely S.C. voters strongly or somewhat supported requiring school boards and other local government bodies to broadcast their public meetings on the internet. The Nerve for years repeatedly has pointed out the lack of transparency when it comes to salaries of higher-paid employees in certain state agencies, budget earmarks, and the screening process for judges. Asked about transparency in general in state and local government in South Carolina, Harris, a freshman lawmaker, told The Nerve, “It’s bad, and even in the Legislature … with the procedure of voting, if they don’t have to be on the record, they don’t like to be,” adding, “Nobody should ever be afraid of how they vote, and I’m never going to hide that.” South Carolina citizens are entitled to know how their state and local government agencies operate, Harris said. “Right here, moms and dads are dealing with their little part of government, and it’s not transparent,” he said. “That’s why I included (in the bill) all the documentation (requirements).” In the end, Harris said, “These are all public servants, and the public agencies are spending our tax dollars,” adding, “Why would anyone in the world want to make that secret, except that they have ulterior motives?” Besides Harris, the bill’s co-sponsors include Republican Reps. Thomas Beach of Anderson County, April Cromer of Anderson County, Jay Kilmartin of Lexington County, Brian Lawson of Cherokee County, Josiah Magnuson of Spartanburg County, RJ May of Lexington County, Travis Moore of Spartanburg County, Adam Morgan of Greenville County, Alan Morgan of Greenville County, Roger Nutt of Spartanburg County, David O’Neal of York County, Jordan Pace of Berkeley County and Ashley Trantham of Greenville County. The bill was referred to the House Ways and Means Committee, chaired by Rep. Bruce Bannister, R-Greenville. The official deadline this year for one chamber of the 170-member Legislature to pass legislation to be considered by the other chamber is April 10. Brundrett is the news editor of The Nerve (www.thenerve.org). Contact him at 803-394-8273 or [email protected]. Follow him on Twitter @RickBrundrett. Follow The Nerve on Facebook and Twitter @thenervesc. Nerve stories are free to reprint and repost with permission by and credit to The Nerve.

Update 2/22/23: Sen. Josh Kimbrell, R-Spartanburg, introduced a bill (S. 559) today that would ban banks and credit unions from using “social,” or ESG-based, credit scores in deciding whether to make loans to individuals or businesses. The bill, which is co-sponsored by seven other Republicans, was referred to the Senate Banking and Insurance Committee. By RICK BRUNDRETT A state senator says he plans to again push legislation that would help protect borrowers from being denied credit because they don’t hold liberal “environmental, social and governance” views. In an interview Monday with The Nerve, Sen. Josh Kimbrell, R-Spartanburg, who co-sponsored a similar bill last year with Sen. Sean Bennett, R-Dorchester, said he also would like a new bill to ban ESG factors from being considered in the state pension plan. “It certainly is a priority of mine to see some movement on this,” said Kimbrell, who previously worked for years as a commercial banker. “I’m hopeful we can do something soon.” Kimbrell said he hopes the new bill, which currently is being drafted, can move through the Senate Banking and Insurance Committee, of which he and Bennett are members, over the “next three to six weeks,” with the goal of passing legislation this year. The official deadline this year for one chamber of the 170-member Legislature to pass bills to be considered by the other chamber is April 10. Contacted Wednesday by The Nerve, Sen. Ronnie Cromer, R-Newberry, who chairs the Banking and Insurance Committee, said he would have to see whatever legislation is introduced by Kimbrell and Bennett before deciding whether to commit to it, noting, “We’ll more than likely let the bill have a hearing.” Cromer added, though, he supports Kimbrell’s and Bennett’s legislative goal in general. “I think an applicant for a loan should be judged on their past history of loan payments, on their net worth, on their assets versus liabilities,” he said. “I don’t think it ought to have anything to do with the fact that they may believe or not believe in some of the social justice issues that are coming about now.” Critics contend that ESG scores routinely are being used by investment and accounting firms, banks and credit rating agencies to grade companies on how well they have adopted certain liberal policies or values, such as reducing the effects of climate change, increasing diversity on their governing boards, and supporting social justice causes. There is no single-accepted national standard for determining ESG scores. Regarding public pension plans, critics say investment management companies could substitute ESG factors for traditional financial considerations, resulting in investments having lower rates of return and plans being underfunded. Kimbrell said he believes no one should be approved or denied credit based on “where they stand on climate change or guns.” “What I’ve said on the floor of the Senate, it’s essentially a social FICO score,” he said. “If you start being denied credit based on what you believe, not whether you pay your bills, that is a very dangerous precedent.” Under last year’s Senate bill, which didn’t make it out of the Banking and Insurance Committee, banks and credit unions would have been required to disclose that they used ESG factors in denying credit or charging different interest rates for similar transactions. The disclosure requirement also would have applied to insurers that denied or reduced coverage based on ESG criteria. Kimbrell said the fear of being denied credit because of poor ESG scores is more than hypothetical, referring to a 2018 announcement by a Bank of America official that the company planned to stop lending money to gun manufacturers that made “military-style” firearms for civilian use. South Carolina Bankers Association president and CEO Fred Green told The Nerve last year that he didn’t believe the then-Senate bill was necessary, contending, based on a survey of association members, that banks doing business in the state don’t use ESG scores – which Kimbrell still disputes. “I don’t think most of the community banks (are using ESG scores in credit decisions), but I think that’s where the big guys are headed,” Kimbrell said. “Bank of America may try to tell me that’s not what they’re doing, but I don’t believe that for a second. I’ve talked to them; I’ve seen the reports.” In its annual 2022 proxy statement, Bank of America (BOA) says it has “long operated our company to drive and deliver Responsible Growth,” including “through our wide-ranging ESG activities.” One such goal, according to the statement, is to achieve “net zero greenhouse gas (GHG) emissions in our financing activities, operations, and supply chain before 2050 (Net Zero Goal).” BOA’s website also says that its  “ESG strategy, policies and practices” include “Stakeholder Capitalism Metrics” developed by the International Business Council (IBC) of the World Economic Forum, noting the bank’s CEO chairs the IBC and “partnered on the development of these metrics.” The ESG movement often is referred to as “stakeholder capitalism” or “sustainable investment.” Kimbrell said besides ESG disclosure requirements, he would like a new bill to include a ban on ESG factors in state investments. The Nerve first reported on the issue last May, revealing that two major investment firms that are big ESG proponents – New York-based BlackRock and Boston-based State Street Corporation – handle a substantial portion of the pension plan for state retirees. Lawmakers currently are considering at least two House bills aimed at prohibiting the investment of state retirement funds based on ESG factors, one of which was filed initially in December by Rep. Doug Gilliam, R-Union. The other bill, sponsored by Rep. Bill Taylor, R-Aiken, and co-sponsored by 46 other Republicans, including House Speaker Murrell Smith, R-Sumter, and Gilliam, was introduced last month after The Nerve reported about Gilliam’s bill. Gilliam’s bill is before the House Ways and Means Committee, while Taylor’s bill was referred to the chamber’s Labor, Commerce and Industry (LCI) Committee. Gilliam also is the main sponsor of another bill before the LCI Committee that generally would ban government agencies from awarding a contract of at least $50,000 to a company that uses “any environmental, social, and governance (ESG) standards,” or engages in “economic boycotts” against other businesses legally involved in, among other things, “fossil fuel-based” or firearms-related industries. The contract ban would apply to a company with at least 10 full-time employees. Brundrett is the news editor of The Nerve (www.thenerve.org). Contact him at 803-394-8273 or [email protected]. Follow him on Twitter @RickBrundrett. Follow The Nerve on Facebook and Twitter @thenervesc. Nerve stories are free to reprint and repost with permission by and credit to The Nerve.

By RICK BRUNDRETT Update: 5/4/23 – Gov. Henry McMaster signed S.39 into law. The House last week approved the Senate bill by a vote of 79-35 on a key second reading. The S.C. Senate on Tuesday gave key approval to a bill that would provide $6,000 scholarships to low- and middle-income students to attend private or other public schools. The bill, sponsored by Sen. Larry Grooms, R-Berkeley, was passed after a lengthy floor debate that began on Jan. 18. Another compromise school-choice bill, which focused on low-income students, died in the 46-member Senate at the end of the last regular legislative session in June.The Senate on Tuesday voted 28-15, mainly along party lines, to approve second reading of the bill, which Grooms initially filed in November and later was amended multiple times in committee and on the floor. The bill will go to the 124-member House for its consideration after the Senate gives it an expected routine third reading scheduled for today. Under a successful amendment proposed Tuesday by Sen. Greg Hembree, R-Horry, who chairs the Senate Education Committee, scholarships would be offered in school years 2024-25, 2025-26, and 2026-27 and all subsequent years to students in families with household incomes of up to 200%, 300% and 400%, respectively, of federal poverty guidelines. For example, the current federal poverty guideline for a family of four is $30,000. Based on that figure, a family of four could be eligible for the scholarship program with a household income of up to $60,000, $90,000 and $120,000, respectively, in the first three years of the program. Contacted Monday by The Nerve before the full Legislature convened, Hembree said he expected the bill to pass the Senate this week, noting, though, the final version could be amended further, including proposals to expand the program to middle-class families. Hembree said it’s “tough to predict” the bill’s chances in the House, adding, “I’m hoping they can land somewhere close to where we are.” “We will work through their bill and flesh out what our House members see as supportive of our state’s children and families, and that offers as many educational opportunities as possible,” Rep. Shannon Erickson, R-Beaufort, who chairs the House Education and Public Works Committee, said in a written response Monday to The Nerve. In a statewide poll released last week by the South Carolina Policy Council – The Nerve’s parent organization – 60% of 637 likely S.C. voters said they strongly or somewhat approved of a scholarship program for low-income, K-12 students to attend private schools. The Policy Council found similar support for the program in a June poll. In the latest random survey, the percentage of respondents who strongly supported the scholarship proposal was 32% – nearly double the rate of those who strongly disapproved. The margin of error in the poll, conducted Jan. 17-19 by Tennessee-based Spry Strategies, was 3.9 plus or minus percentage points. “Passing educational choice options for parents is widely popular in South Carolina among all ages, races, genders and political persuasions,” said Dallas Woodhouse, the Policy Council’s executive director, in a prepared statement issued with the poll results. “We know of no other legislation the General Assembly could possibly pass that would be as unifying as this critical legislation, which bridges every political divide known to man.” Expanding school choice is one of the Policy Council’s top priorities for this legislative session. Besides school choice, the Policy Council’s latest poll also solicited voters’ opinions in a variety of other areas, including taxes, inflation, government transparency and abortion. The full survey results can be found here. Contacted Tuesday by The Nerve, Spencer Jordan, executive director of the South Carolina Independent School Association (SCISA), said the latest school-choice bill is a “great first step, and secondarily to all of this, I think it speaks volumes for the direction of the state in providing school choice among the constituents and youth of our state.” “I’m not against the concept of education savings accounts, which is what they’re (lawmakers) proposing,” Edward Earwood, executive director of the South Carolina Association of Christian Schools (SCACS), told The Nerve. “Basically, their concept is the money follows the kids, and I don’t see a problem with that.” Scholarships to benefit thousands The latest version of the Senate bill would provide $6,000 scholarships per student to a maximum 5,000 eligible students in the 2024-25 school year, with the number of recipients growing to a maximum 10,000 in 2025-26, and a maximum 15,000 in 2026-27 and following school years. The total cost of the program would range from $30 million in the first year to up to nearly $98.6 million in the third year, based on annual adjustments to per-pupil state allocations, according to a recent fiscal impact statement from the S.C. Revenue and Fiscal Affairs Office. Gov. Henry McMaster’s proposed state budget for next fiscal year, which starts July 1, would provide $25 million in lottery funds toward the creation of education scholarship accounts to “allow low-income parents to choose the type of education environment and instruction that best suits their child’s unique needs.” As of last November, there were a total of 789,232 students actively enrolled in pre-kindergarten through grade 12 in S.C. public schools, including charter schools, according to the S.C. Department of Education’s 45-day headcount. Earwood said there currently are a little more than 12,000 students attending 75 SCACS schools, while Jordan noted the SCISA student population totals about 35,000 in 134 schools, though he estimated the overall independent-school population in South Carolina at 50,000 to 60,000 students. Under the amended Senate bill, public funds would be deposited in individual, online “Education Scholarship Trust Fund” (ESTF) accounts and allocated to parents of eligible students to pay for qualifying expenses, including tuition and fees, textbooks, computers, tutoring and transportation costs capped at $750 per school year, at approved public or private schools. The Department of Education would administer the program. Parents, for example, could use the scholarships to send their children to other public schools outside their home districts, assuming there was available space at the out-of-district schools, Hembree said. “Quite honestly,” he added, “I wouldn’t be surprised if we saw as many students use the scholarship for that purpose as you might see students transferring to a private school.” Jordan said tuition in his organization averages about $7,000. Earwood said tuition in his group averages about $5,000 at rural schools and approximately $8,000 to $10,000 at schools in more populated areas. In comparison, the estimated per-pupil state revenue for this school year, excluding bond revenue and charter schools, averages $7,777; including federal and local property tax revenues, the total estimated per-pupil revenue averages $16,702, Department of Education records show. ‘Dramatically different model’ The amended Senate bill generally would require ESTF recipients to take state standardized or, as an alternative, “nationally norm referenced formative assessment” tests in grades three through eight; and for grades nine through 12, “nationally norm referenced or formative assessment” tests, all of which would be approved by the Department of Education. The type of standardized test required of students attending private schools was a key point of contention in last year’s legislative debate. “That’s a major component of (private) schools being willing to accept these types of funds moving forward, simply because there’s a perception out there that there’s going to be too much government overreach,” said Jordan. Eligible schools under the current bill could not discriminate based on race, color or national origin, though independent or religious schools would not be banned from “exercising an exemption allowed under federal law.” Receipts for all allowable expenses would have to be provided to parents to ensure that funds are spent properly. The legislation also would require the state Education Oversight Committee to publish graduation rates and “associated learning gains” of private schools in the program, based on certain levels of participation, while complying with all student privacy laws. In addition, a new, 10-member “ESTF Review Panel,” chaired by the governor or his designee, could make recommendations to the Legislature and Department of Education. Any enacted school-choice bill likely will face a legal challenge, said Hembree, the former top prosecutor for Horry and Georgetown counties, when interviewed Monday, though he added the bill was drafted in a way to “make it constitutionally sound.” In 2020, the S.C. Supreme Court unanimously ruled that McMaster’s plan to use $32 million in federal COVID-relief funds for private-school tuition grants was unconstitutional. “I’m not challenging the (2020) opinion, but this is a dramatically different model,” Hembree said about the latest Senate bill. “What you have is an appropriation held in trust, and the trustee is essentially the parent. The (education) department is like a bank that holds the money.” In a related matter, under a recently filed joint resolution, the main sponsor of which is House Speaker Murrell Smith, R-Sumter, voters statewide would be asked whether to repeal the section of the S.C. Constitution that bans public funding for the “direct benefit” of any religious or other private educational institution. Brundrett is the news editor of The Nerve (www.thenerve.org). Contact him at 803-394-8273 or [email protected]. Follow him on Twitter @RickBrundrett. Follow The Nerve on Facebook and Twitter @thenervesc. Nerve stories are free to reprint and repost with permission by and credit to The Nerve.

By RICK BRUNDRETT Jeremy Sark says he’s no longer worried about Mauldin officials closing his longtime U-Haul dealership, though the Upstate city hasn’t abandoned a controversial zoning practice at the center of his case. The Mauldin City Council without comment during a meeting last month reversed a zoning change that would have forced Sark to move his North Main Street dealership by Dec. 31 after nine years in operation.  The decision came after Sark in September sued the Greenville County city of about 26,000, City Council, Mayor Terry Merritt and David Dyrhaug, the city’s business and development services director.The Nerve in October examined Sark’s case in-depth. A key legal issue in the case involved a little-known zoning practice known as “amortization,” which Sark’s lawsuit contended was used by the city to try to circumvent the state constitution’s ban on the taking of private property for private use. S.C. voters in 2006 overwhelmingly approved strengthening the state constitution to better protect private property owners from government land grabs. Under “amortization” – which a longstanding state law allows – the process often involves rezoning an area where a targeted business is located – making that business a “nonconforming use” – and requiring it to close after a certain period without paying anything to the property owner. The city of Mauldin a year ago amended its zoning ordinance to ban the rental or sale of “moving trucks, trailers, intermodal containers and temporary portable storage units” in virtually all zoned areas of the city. Sark in his lawsuit contended the city changed the zoning to attract a private developer as part of its plan, known as the “City Center” project, to turn the city’s center into a “walkable downtown area.” Although Sark could continue to operate his automotive repair shop, called Sarks Automotive, at his current location, where he’s been since 2013, the zoning change would have forced him to move his U-Haul dealership to another part of the city by Dec. 31. But the City Council at its Dec. 19 meeting changed its collective mind and revised the zoning ordinance to allow Sark to keep his U-Haul business at his North Main Street site – located over a mile from the proposed City Center project – though one of his attorneys says another nearby U-Haul dealership wasn’t exempted. “It helps me keep going, so that’s good,” Sark told The Nerve when contacted last week. “I don’t think they need to run people off.” Sark said while’s he not opposed to the City Center project, he doesn’t believe city officials should discriminate against longtime businesses such as his. He contended in his lawsuit that potential investors and developers reportedly told the mayor that the city’s Main Street looked “old,” specifically pointing out an existing U-Haul dealership. Sark last year told The Nerve he would have to lay off an employee if forced to move his U-Haul dealership. He said he currently has 15 workers at his North Main Street site, along with general manager Marie Dougherty. Sark and John Abney Jr., who owns the property where Sarks Automotive and the U-Haul dealership are located, were represented for free by the Virginia-based Institute for Justice; and the Columbia-based Nelson, Mullins, Riley & Scarborough firm, which was ranked last year as the state’s largest law firm. On its website, the Institute for Justice describes itself as a “nonprofit, public interest law firm” with a mission to “end widespread abuses of government power and secure the constitutional rights that allow all Americans to pursue their dreams.” ‘Unconstitutional practice’ In a written response last week to The Nerve, Institute attorney Seth Young, who is one of the plaintiffs’ lawyers, said while Sark was successful in getting the city to reverse course in his case, another U-Haul operator who also has a food store at the same location eventually will have to close the truck rental business, noting the site abuts the City Center project area. That business owner wasn’t a plaintiff in Sark’s lawsuit. Young contended that Mauldin officials are “continuing on with their unconstitutional practice of amortization.” “In other words, the City did not have some sudden change of heart and choose to act in keeping with the South Carolina Constitution,” he said. Asked if he were concerned that the city could try again to force Sark to move his U-Haul business, Young replied, “Because we did not win in court and because they haven’t actually renounced amortization, it’s a possibility they could try this again as it relates to Jeremy.” He added, though, he doesn’t believe any such city action likely would occur “at least in the short-term.” In the meantime, Sark’s lawsuit will remain on file “until we have the signed amended ordinance in hand,” Young said. Sark told The Nerve that under the city changes approved last month, he can have only two instead of four U-Haul trucks parked in front of his business, though he doesn’t think that will affect his revenues because “I can still run them 24/7, and after hours I can still rent them and park them in front.” The Nerve last week sent written questions to city attorney Daniel Hughes, asking, among other things, about the city’s position on amortization, and whether it planned to use the process in the future against other businesses, including Sark’s. Hughes didn’t respond by publication of this story. In the city’s formal response to Sark’s lawsuit, Hughes wrote that the city’s decisions in the case were “within the sound and lawful discretion of the City officials, were in accord with the criteria provided by State law and the provisions of the pertinent City Ordinances, were supported by the facts and evidence, and were not arbitrary, were not clearly erroneous, and were correct as a matter of law.” Besides raising the amortization issue, the suit also alleged the city violated Sark’s equal rights and due process protections under the state constitution. In an interview last year with The Nerve, Institute attorney Bob Belden contended that amortization is “something cities do to avoid their compensation obligation under eminent domain,” adding, “It allows them, in their view, to take property on the cheap.” “Amortization pulls the rug out on property and business owners,” Belden said in a prepared statement after the City Council’s action last month. “We hope that other South Carolina cities won’t follow Mauldin’s lead by even trying to use amortization to deprive people of safe, reasonable property uses.” Contacted last week, Scott Slatton, spokesman for the Municipal Association of South Carolina, said his organization was “unaware of any amortization” cases statewide within the last five years. Brundrett is the news editor of The Nerve (www.thenerve.org). Contact him at 803-394-8273 or [email protected]. Follow him on Twitter @RickBrundrett. Follow The Nerve on Facebook and Twitter @thenervesc. Nerve stories are free to reprint and repost with permission by and credit to The Nerve.

By RICK BRUNDRETT State retirement funds could not be invested based on controversial environmental, social or governance (ESG) factors, under a House bill filed for the new legislative session that starts next week. The Nerve in May revealed that two major investment firms that manage a substantial share of South Carolina’s pension plan – New York-based  BlackRock and Boston-based State Street Corporation – are big supporters of the ESG movement. As of fiscal year 2021, about $18.5 billion of the approximately $39 billion market value of all investments by the pension plan was managed by BlackRock and State Street, pension records show. The state Retirement System Investment Commission’s annual investment report for last fiscal year, which ended June 30, has not yet been publicly released. Critics contend that ESG scores routinely are being used by investment and accounting firms, banks and credit rating agencies to grade companies on how well they have adopted certain liberal policies or values, such as reducing the effects of climate change, increasing diversity on their governing boards, and supporting social justice causes. There is no single accepted national standard for determining ESG scores. Regarding public pension plans, ESG critics say investment management companies could substitute ESG factors for traditional financial considerations, resulting in investments having lower rates of return and plans being underfunded. There were 173,786 retirees and beneficiaries in South Carolina’s five retirement systems, according to the state Public Employee Benefit Authority’s annual report for the 2022 fiscal year. “If we don’t feel like they’re (state investment managers) looking out for our best interests, and if we’re investing to make money, they may make some money, but if their practices are not in our best interests … to make our (state) pension grow, that’s where we can step in, and that’s what we’re trying to do,” said Rep. Doug Gilliam, R-Union, when contacted this week by The Nerve. Gilliam prefiled a bill last month which, among other things, requires that state investment managers “take into account only financial factors when discharging its duties with respect to a plan and may not consider environmental, social, and governance (ESG) standards.” The bill specifies that investment managers can’t take actions to “further social, political, or ideological interests” beyond what “controlling federal or state law requires,” including: Eliminating, reducing, offsetting or disclosing greenhouse gas emissions; Divesting from or limiting investments in any company for “failing, or not committing, to meet environmental standards or disclosures,” or “supporting the manufacture, distribution, sale, or use of firearms”; or Access to abortion, sex or gender change, or transgender surgery.   “We want our (state) pension to grow, and we want it to grow as fair as we can get it,” Gilliam told The Nerve. Gilliam designated his bill for referral to the budget-writing House Ways and Means Committee. The full Legislature reconvenes on Tuesday. Michael Hitchcock, CEO of the S.C. Retirement System Investment Commission (RSIC), told The Nerve last year that neither the BlackRock nor State Street investment firms makes “any investment decisions for us whatsoever.” He said then that the pension’s plan public-equity portfolio is “all passively invested” through an index, which is a way to measure the price performance of a group of securities over time. BlackRock – the world’s largest asset manager – and State Street as of June 30, 2021, were managing publicly traded stocks totaling about $13.6 billion and $4.9 billion in market value, respectively, according to the most recently available RSIC annual investment report. The companies were the only investment management firms involved with the public equity portfolio of the state pension plan for fiscal 2020-21. Republican State Treasurer Curtis Loftis, who by law appoints one member to the RSIC’s seven-member governing board, made national news in October when he announced he would divest the final $200 million of BlackRock holdings from a $5 billion portfolio managed by his office. Loftis in an April Nerve story shared his general concerns about the ESG movement. Following Loftis’ October announcement, Dallas Woodhouse, executive director of the South Carolina Policy Council – The Nerve’s parent organization – publicly called on state lawmakers to take further steps to protect state taxpayers. Asked about Gilliam’s bill, Hitchcock in a written response Wednesday to The Nerve said the RSIC is “guided by the standard found in our existing governing statutes that requires us to always act in the sole interest of our plan participants and for the exclusive purpose of providing benefits.” Hitchcock continued: “As a result, we make investments that we believe will provide us with the best risk adjusted return and do not consider or promote non-pecuniary goals, objectives, or outcomes, including but not limited to what is commonly referred to as ESG. However, if the General Assembly will gain comfort by providing us with additional guidance in this area, then we look forward to working with them to achieve this goal.” Gilliam’s bill isn’t the only prefiled legislation aimed at banning liberal policies in public-finance decision making. A bill co-sponsored by Reps. Melissa Oremus, R-Aiken, and Mike Burns, R-Greenville would, among things, generally prohibit government entities from entering into contracts of $100,000 or more with businesses having at least 10 full-time employees that boycott another company engaging in the “exploration, production, utilization, transportation, sale, or manufacturing of fossil fuel based energy, and does not commit or pledge to meet environmental standards beyond applicable federal and state law.” “It’s just saying that if you’re going to do business in South Carolina, it’s a free market here, and we’re not going to put all these regulations on you,” Oremus told The Nerve when contacted this week. The bill was designated for referral to the House Labor, Commerce and Industry Committee. Brundrett is the news editor of The Nerve (www.thenerve.org). Contact him at 803-394-8273 or [email protected]. Follow him on Twitter @RickBrundrett. Follow The Nerve on Facebook and Twitter @thenervesc. Nerve stories are free to reprint and repost with permission by and credit to The Nerve.

By RICK BRUNDRETT S.C. municipalities and counties that ban short-term rentals would face the loss of state aid and property taxes under a House bill filed for the second time since last year. Contacted this week by The Nerve, Rep. Lee Hewitt, R-Georgetown, who is the bill’s main sponsor, said his proposal has “got the attention of a lot of local governments that have reached out to me.”“Everybody now is trying to come up with some solutions on how we can make this work … in trying to protect people’s property rights and maybe give the cities and counties some teeth in enforcement,” said Hewitt, the broker-in-charge of sales at Garden City Realty. The Nerve in July focused on the statewide battles over short-term rentals (STRs), as well as the perspectives of STR property owners and managers. In September, the South Carolina Policy Council – The Nerve’s parent organization – released a detailed report aimed at striking “a balance between renters’ property rights and community interests.” Hewitt praised the Policy Council’s report, noting that it is “very, very good, and I think we could use that for moving forward.” A growing number of STR property owners and property management businesses in South Carolina have voiced concerns about efforts by local governments to effectively ban or severely restrict STRs in residential areas. They contend that some existing or proposed ordinances infringe on their property rights. The vast majority of STR owners take care of their properties and ensure that guests don’t disturb neighbors, they say. Critics contend that STRs aren’t regulated enough. They typically cite loud parties and trash left by guests, along with parking problems, which they say interferes with the enjoyment of their properties and lowers property values. The Policy Council as of July identified at least 11 municipalities that had existing or proposed STR ordinances:  Charleston, Columbia, Folly Beach, Greenville, Hilton Head, Mauldin, Mount Pleasant, North Charleston, Rock Hill, Spartanburg and Travelers Rest. As of November, there were 41,963 available Airbnb or Vrbo listings in South Carolina, 95% of which were entire home listings, according to information provided Wednesday to The Nerve by AirDNA, which tracks STRs worldwide. The November figures for the Palmetto State represented a 19% increase from a year earlier and a 26% jump from November 2019. The bill sponsored by Hewitt and co-sponsored by Rep. Melissa Oremus, R-Aiken, defines a short-term rental as a “residential dwelling that is offered for rent for a fee and for fewer than twenty-nine consecutive days.” Under the bill, municipalities and counties that ban STRs could no longer collect property taxes on the investor-owned homes based on a 6% assessment rate. Instead, local governments would receive taxes based on the owner-occupied rate of 4%, according to Hewitt. In addition, the bill also would stop state payments to those municipalities and counties from the Local Government Fund. Lawmakers appropriated a total of $318.6 million to the fund for this fiscal year, which started July 1. “At the end of the day,” banning STRs, is “affecting the coffers of the state of South Carolina” with the loss of accommodations taxes, Hewitt said, adding, “They (local governments) continue to want more and more money, but they continue to find ways to hurt the state with their revenue streams.” Hewitt said he hopes that local governments can “come up with something good that makes it where everybody is happy,” warning, though, that “if not, I’m prepared to move forward with the way I had it (the bill) written.” The initial bill version was prefiled in November 2021 but never made it out of the House Judiciary Committee this year, though Hewitt noted that it passed the House as a separate amendment by a vote of 112-1 at the end of the regular legislative session. The latest bill was prefiled last week, with a proposed referral to the House Medical, Military, Public and Municipal Affairs Committee; the legislation is expected to be formally introduced when the Legislature reconvenes next month. Meanwhile, municipalities statewide continue to grapple with the issue. As of October, for example, the city of Columbia had dropped its initial proposal – which The Nerve examined in-depth in July – to effectively ban STRs in residential areas, though a special City Council committee was exploring ways to cap the total number of STRs in those areas, according to a story in The State newspaper. The “Columbia Short-Term Rentals Ad Hoc Committee” met again on Wednesday. WIS-TV reported that one of the proposals included requiring STR operators to obtain a business license, though there would be a cap, which wasn’t specified, on the total number of STRs that could operate annually. The capital city – the state’s second-largest city – had an estimated population last year of more than 137,500, U.S. Census records show. Informed about the city’s efforts to cap the number of STRs, Hewitt told The Nerve, “Well, they’re back to picking winners and losers.” Interviewed by The Nerve for the July stories, Ari Bargil, a property rights attorney with the Virginia-based Institute for Justice, questioned the constitutionality of annual caps imposed by S.C. municipalities. He also said then that local governments could face legal challenges if they violate the “vested rights” doctrine by banning or severely restricting STRs even though the affected property owners legally rented their houses before the bans or restrictions took effect. The Nerve in July also reported about the ongoing STR debate in the coastal town of Mount Pleasant, which as of last year had an estimated population of more than 92,000. Under the town’s existing ordinance, the maximum number of STRs in the municipality is capped at 400. In an email response Wednesday to The Nerve, Michele Reed, the town’s director of planning, land use and neighborhoods, said the Town Council last month amended the ordinance to establish an earlier permit-application period for current STR operators. Those operators who don’t apply by today will have to “get in line come January 1 like those without a permit to see if there are any left.” “This was put in place to ensure the cap of 400 is maintained,” Reed said, adding that other possible ordinance changes likely will be on the town’s Planning Committee agenda for its Jan. 3 meeting. Brundrett is the news editor of The Nerve (www.thenerve.org). Contact him at 803-394-8273 or [email protected]. Follow him on Twitter @RickBrundrett. Follow The Nerve on Facebook and Twitter @thenervesc. Nerve stories are free to reprint and repost with permission by and credit to The Nerve.

By RICK BRUNDRETT A state senator-lawyer wants the six-figure salaries of S.C. judges to be based on what a federal district judge makes – which typically would guarantee them annual raises. And that could be in addition to any yearly pay hikes authorized in the state budget. State employees, including judges, received a base 3% increase for this fiscal year. In a bill prefiled on Nov. 30, Sen. Gerald Malloy, D-Darlington, who is an attorney, proposed changing state law to require that the annual salary of the S.C. Supreme Court chief justice be the same as what a U.S. District Court judge earns. The annual pay of Supreme Court associate justices would equal 95% of the chief justice’s salary, while the salaries of Court of Appeals, circuit and family court judges would be determined on sliding percentages of what associate justices make, under the bill. U.S. District Court judges earn $223,400 annually. S.C. Supreme Court Chief Justice Donald Beatty, who heads the state Judicial Department, makes slightly more than that at $223,987, which includes the 3% raise given to state employees, according to department salary lists provided this year to The Nerve. The annual salaries of the other judges, as of August, are as follows, with the current active number of full-time judges by category in parentheses, according to court records: *Supreme Court associate justices (4):  $213,321; *Court of Appeals chief judge (1):  $211,187; *Court of Appeals associate judges (7):  $207,987; *Circuit court judges (48):  $202,654; and *Family court judges (57):  $197,321 The Nerve in December 2018 revealed that Beatty was seeking a 33% pay hike – which would have brought his salary up to the then-$208,000 pay of a U.S. District Court judge – for himself and other appellate and lower-court judges. Lawmakers and Gov. Henry McMaster approved the raises the following year. But state law wasn’t changed then to require that the chief justice make the same as a federal district judge. Malloy’s bill would specifically do that. Federal court records show that U.S. District Court judges have received pay hikes every year since 2013, with increases collectively totaling more than 28% during the period. The Nerve over the past year has focused on the state Judicial Department’s lack of transparency when comes to judges’ pay and perks. The salaries, for example, of about 120 higher-paid judges, including Beatty’s, aren’t included in the online state salary database. The department earlier this year released its then-salary list of judges and top court staff to The Nerve only after the South Carolina Policy Council – The Nerve’s parent organization – hired a law firm to press for the release of the records. The Policy Council recently published seven recommendations to improve transparency in state government, including requiring the Judicial Department and 15 other state entities to provide salary information to the state salary database. The Nerve last week sent written questions to Malloy about his bill, inquiring why he wants state judges’ salaries to be tied to federal district judges’ pay, whether judicial salaries should be included in the state salary database, and whether all elected judges should publicly report their annual salaries to the State Ethics Commission, as other public officials are required to do. Malloy didn’t respond by publication of this story. His bill likely will be referred next month, when the Legislature reconvenes, to the Senate Judiciary Committee, of which he is a member. Under federal law, federal judges get raises “whenever the pay of other federal employees increases – typically annually,” David Sellers, a U.S. Courts spokesman, said in a written response to The Nerve. Federal employees receive “locality pay” adjustments in addition to a cost-of-living increase, referred to as the “employment cost index” (ECI), though judges receive only the ECI increase, he said. Federal judges this year received a 2.2% ECI increase, Sellers said. Raises usually take effect Jan. 1, though it often is delayed until an appropriations bill is passed and typically is made retroactive to Jan. 1, he added. Malloy’s bill doesn’t address whether state judges would be excluded from across-the-board pay raises that other state employees receive if their salaries automatically increased because of what federal district judges earn. This year’s 3% state pay raise for S.C. judges was effective for the first pay date on or after the start of the fiscal year on July 1, as authorized in a state budget proviso.  And the total payroll for the state’s court system likely will continue to grow in the coming years. More black robes Lawmakers in June passed a compromise bill, which was signed into law by McMaster, to add four new circuit court seats (2nd, 9th, 14th, 15th circuits) and three new family court seats (1st, 7th, 16th circuits), increasing the total number of resident circuit and family court seats from 33 and 52, respectively, to 37 and 55, respectively. With existing at-large judicial seats, the total number of circuit and family court judgeships increased to 53 and 63, respectively. In his fiscal 2023-24 budget request, Beatty asked for an additional $4.1 million in recurring general funds to cover the seven new court seats and support staff. Contacted last week by The Nerve, Erin Crawford, the chief attorney for the state Judicial Merit Selection Commission (JMSC), which screens judges for election by the Legislature, said in a written response that the JMSC’s “tentative plan” would be to screen for the seven seats next fall if lawmakers appropriated funds for those positions. Beatty also is requesting $6 million to provide a law clerk for each of the 63 family court judges, and another $4 million in general funds to replace other revenue sources for 38 existing administrative support positions. In addition, he is seeking $2.2 million in recurring general funds to add three Court of Appeals judges and support staff. Under state law, the Court of Appeals, which is the state’s second-highest court, has nine members. Beatty in his budget request said the additional three judges and staff will assist in “reducing the backlog of cases” in that court, allow judges “more time to devote to hearing complicated matters,” and help filed cases to “move more efficiently through the court system.” The Judicial Department’s total budget this fiscal year, which includes state, federal and “other” funds, is $112.6 million. In a related matter, lawmakers will fill a Supreme Court seat with the retirement of justice Kaye Hearn, plus two existing Court of Appeals seats, as well as elect circuit and family court judges, in a joint session tentatively scheduled for Feb. 1. Supreme Court justices serve 10-year terms; the full terms of Court of Appeals, circuit and family court judges are for six years. South Carolina and Virginia are the only states where their legislatures play a primary role in electing judges. Brundrett is the news editor of The Nerve (www.thenerve.org). Contact him at 803-394-8273 or [email protected]. Follow him on Twitter @RickBrundrett. Follow The Nerve on Facebook and Twitter @thenervesc. Nerve stories are free to reprint and repost with permission by and credit to The Nerve.

By RICK BRUNDRETT Most South Carolina workers probably don’t receive big retirement checks from their employers at the same time they’re getting their regular pay. But under state law, eligible senior judges can receive separate “retire-in-place” paychecks equal to 90% of their six-figure salaries. And the law allows them – as well as other state and local public officials – to keep their public retirement income secret. The Nerve this year has been highlighting the S.C. Judicial Department’s lack of transparency about judicial pay and other benefits. Last month, The Nerve revealed that more than 70 state Supreme Court, Court of Appeals, circuit and family court judges in 2021 traveled to pricey resorts for conferences hosted by special-interest legal organizations that picked up part or all of the costs, though the trip records aren’t posted on the department’s website. The legislatively controlled Judicial Merit Selection Commission, which by law can review judges’ financial records in secret, is scheduled to hold screening hearings this week for the next round of judicial elections to be held early next year, including a Supreme Court seat. South Carolina and Virginia are the only states where their legislatures play primary roles in electing judges. S.C. Public Employee Benefit Authority (PEBA) records show that as of July 1, 2021, there were 16 “retire-in-place” members in the Judges and Solicitors Retirement System, which covers judges elected by the Legislature, as well as circuit solicitors and public defenders, and executive-branch judges on the Administrative Law Court. The identities of the 16 recipients weren’t disclosed in PEBA’s most-recent “actuarial valuation” report. In a recent written response to The Nerve, PEBA spokeswoman Angie Warren declined to identify the amount of retire-in-place benefits for the 16 recipients, citing “confidentiality concerns that are implicated when such small numbers are involved.”  In a 2018 Nerve story, state Supreme Court associate justices John Kittredge and Kaye Hearn confirmed they were receiving the special retirement pay. Kittredge said then he was receiving about $11,000 per month in gross retirement benefits, which worked out to be $132,000 annually, though he pointed out he netted less than $6,000 monthly after taxes. Hearn, who by law must retire from the state’s top court by the end of this year, declined at the time to say what she was receiving. In 2014, then-Chief Justice Jean Toal and then-Associate Justice Costa Pleicones, who later became chief justice, told The Nerve they were receiving about $131,000 and $125,306, respectively, in retire-in-place benefits. The Nerve last month in writing asked all current five members of the Supreme Court, including Chief Justice Donald Beatty, Kittredge and Hearn; as well as eight members of the Court of Appeals – the state’s second-highest court – including Chief Judge Bruce Williams, if they are receiving the retirement benefit and if so, the yearly or monthly amount. The only Supreme Court justice to respond was John Few, who said in an email response that he was not receiving the retirement benefit. Court of Appeals judges D. Garrison Hill, Stephanie McDonald and Paula Thomas in written responses said they were not getting the benefit. The Nerve in October reported that Beatty’s current annual salary is $223,987; if he receives the retire-in-place benefit on top of that, he could get as much as $201,588 in additional yearly gross pay. The other four justices’ yearly salaries are $213,321. As the Court of Appeals’ chief judge, Williams makes $211,187 annually, while other judges on the nine-member court earn $207,987, according to an updated salary list provided by court officials to The Nerve in August. Circuit and family court judges receive $202,654 and $197,321, respectively. The Judicial Department earlier this year released its then-judicial and staff salary list only after the South Carolina Policy Council – The Nerve’s parent organization – hired a law firm to pressure the agency to release the records. Among the state’s five retirement systems, the Judges and Solicitors Retirement System (JSRS) has the fewest number of retirees, though it pays the highest benefits, with an average annual benefit of $145,609 for 168 retirees – including the 16 retire-in-place members – as of July 1, 2021, PEBA records show. Paid annual benefits to 229 JSRS retirees and beneficiaries totaled $26.6 million. In comparison, the average yearly benefit for 125,086 retirees in the South Carolina Retirement System (SCRS), the largest of the five systems, which covers general employees, was $22,486 as of July 1, 2021, PEBA records show. Total benefits paid to 148,008 retirees and beneficiaries in that system were $3.1 billion. Special treatment To be eligible for the 90% retire-in-place benefit, judges must have at least 32 years of “credited” service, which can include not only their years on the bench but also any allowed service credit “purchased or transferred into the system,” according to information provided by PEBA for The Nerve’s 2018 story. Although he didn’t respond to The Nerve’s written questions last month, Chief Justice Beatty could be eligible for the benefit under state law, based on his judicial experience combined with his prior years of service in the military and as a House member in the early 1990s. The General Assembly first elected him as a circuit court judge in 1995 and elevated him to the Court of Appeals in 2003; he was elected to the Supreme Court in 2007 and as chief justice in 2016. By law, eligible judges can’t start receiving the retirement pay along with their regular salaries until they are 60 years old, though the 90% benefit can be deposited in a special account, payable when they turn 60. Judges are required to retire in the year they turn 72. The retire-in-place benefit was added to a retirement bill in 2007 while Toal was the chief justice, legislative records show. In her recent written reply to The Nerve, PEBA spokeswoman Warren said eligible lawmakers who participate in the General Assembly Retirement System (GARS), as well as certain members of the SCRS and police officers (PORS) retirement systems who are elected, also can receive retire-in-place benefits. But she noted those amounts could “vary widely from member to member, particularly when a member is retiring based upon reaching a certain age rather than the total amount of service.” Warren referred The Nerve to PEBA’s handbooks for those retirement systems, though only the JSRS specifically allows the 90% retire-in-place benefit. As for the number of SCRS, PORS and GARS members who receive retire-in-place benefits, Warren said PEBA does not “track that particular demographic.” Under state law, eligible lawmakers who receive retirement pay while in office must give up their $10,400 base annual salary but can continue to receive $12,000 yearly “in-district” expense payments. The Nerve in 2010 identified as many as then-active 18 senators and a dozen House members from both parties who might have been receiving the benefit. Retire-in-place pay is different from benefits paid to former government employees who return to public jobs after retiring, according to Warren. Generally, those workers can earn up to $10,000 annually without affecting their retirement benefits. When it comes to transparency, elected and other government officials who must report their taxpayer-funded salaries on annual statements of economic interests (SEIs), which are filed with the State Ethics Commission and are available online, aren’t required to list the amount of any public retirement income, under state law. And, as The Nerve has pointed out, judges who are elected by the Legislature and are part of the “unified” court system are exempted by law from filing yearly SEIs. Besides that, their annual salaries aren’t included in the online state salary database, maintained by the Department of Administration. Brundrett is the news editor of The Nerve (www.thenerve.org). Contact him at 803-394-8273 or [email protected]. Follow him on Twitter @RickBrundrett. Follow The Nerve on Facebook and Twitter @thenervesc. Nerve stories are free to reprint and repost with permission by and credit to The Nerve

By RICK BRUNDRETT S.C. voters in Tuesday’s general election easily approved constitutional amendments to increase the state’s two main “rainy-day” funds. With all 46 counties reporting, the proposals to expand the General Reserve Fund (GRF) and Capital Reserve Fund (CRF) passed by about 62% of the vote, according to unofficial State Election Commission results. Of the more than 1.5 million total votes cast, at least 939,000 voters said “yes” to each amendment. The South Carolina Policy Council – The Nerve’s parent organization – for months publicly supported passage of both amendments, partnering last week with Americans for Tax Reform, a national taxpayer advocacy group, in a series of statewide meetings with voters and the media. “South Carolina voters sent a clear signal they support conservative, smart budgeting policies by strongly supporting both amendments,” SCPC Executive Director Dallas Woodhouse said in a prepared statement. “With passage of these amendments, voters are helping South Carolina avoid large cuts to government services or unwanted tax increases in difficult economic times due to an economic recession or large natural disasters.” “We also thank legislators on both sides of the aisle for coming together in a historic, bipartisan way for the good of South Carolina,” Woodhouse added. “With stronger reserve accounts, lawmakers can responsibly look at further tax relief and reform to make S.C. more competitive for jobs and new business.” Woodhouse in August expressed concerns the amendments might not pass following a statewide Policy Council poll indicating that the proposals could fail because of a lack of voter awareness and complex voter language. One of the amendments would increase the GRF over four fiscal years from 5% to 7% of general fund revenues from the latest completed year. The other amendment would raise the CRF from 2% to 3% of those revenues. Two state lawmakers – Rep. Gary Simrill, R-York, the former House majority leader who announced earlier this year he would not seek re-election after serving 30 years; and longtime Sen. John Scott, D-Richland – told The Nerve in August that enlarging the two reserve accounts was needed to help offset a possible recession. The GRF and CRF balances for the fiscal year that ended June 30 were $458.9 million and $183.5 million, respectively, state comptroller general records show. This fiscal year’s state budget, which includes state, federal and “other” funds, totals $38 billion. The CRF amendment requires lawmakers to use that reserve to offset midyear budget cuts if necessary. Under the current state constitution, the CRF can’t be used to offset midyear cuts but must be tapped to replenish the GRF if that account was needed to cover “operating deficits of state government.” Amendments to the S.C. Constitution must be approved by two-thirds of each chamber of the 170-member General Assembly and a majority of qualified voters in the next general election for House members, followed by a majority vote of each legislative chamber supporting ratification. By near-unanimous votes, the Legislature in June passed a joint resolution and a companion bill to increase the two reserve funds. Brundrett is the news editor of The Nerve (www.thenerve.org). Contact him at 803-394-8273 or [email protected]. Follow him on Twitter @RickBrundrett. Follow The Nerve on Facebook and Twitter @thenervesc. Nerve stories are free to reprint and repost with permission by and credit to The Nerve.

By RICK BRUNDRETT The South Carolina Policy Council – The Nerve’s parent organization – and Americans for Tax Reform, a national taxpayer advocacy group, are touring the state next week to promote proposed constitutional amendments on the Nov. 8 ballot to increase the state’s two main “rainy-day” funds, according to a news release from the organizations. “The amendments do not raise taxes,” SCPC and ATR said in the release. “They simply require our state to save more of the money it already collects. If passed, South Carolina’s reserve accounts will be more in line with those in other states.” “It’s important as we get closer to the election that we focus peoples’ attention on what is at the end of the ballot,” said Dallas Woodhouse, SCPC’s executive director. The Nerve in August reported that according to a statewide poll by the Policy Council, a plurality of voters indicated general support for the proposals when explained in plain language. But the total expressed support didn’t break the 50% mark and dropped noticeably when voters were given the exact text of the amendments as it will appear on the general election ballot. One of the amendments would increase the General Reserve Fund (GRF) over four fiscal years from 5% to 7% of general fund revenues from the latest completed fiscal year, while the other amendment would raise the Capital Reserve Fund (CRF) from 2% to 3% of those revenues. SCPC and ATR will meet voters and the media at the following locations next week: Monday, Oct. 31 10:30 a.m. Greenville 20 E. Broad St., Greenville (near Camperdown Plaza), Greenville, SC 29601     2:30 p.m. Columbia South Carolina Policy Council office building 1323 Pendleton St., Columbia, SC 29201     3 p.m. Statewide press call Join via Zoom (click here)     Tuesday, Nov. 1 11 a.m. Charleston Joe Riley Waterfront Park – Pineapple Fountain Vendue Range, Concord Street, Charleston, SC 29401     2 p.m. Florence James Allen Plaza 109 South Dargan St., Florence, SC  29501   Brundrett is the news editor of The Nerve (www.thenerve.org). Contact him at 803-394-8273 or [email protected]. Follow him on Twitter @RickBrundrett. Follow The Nerve on Facebook and Twitter @thenervesc. Nerve stories are free to reprint and repost with permission by and credit to The Nerve.

By RICK BRUNDRETT Last year, dozens of state judges attended one or more conferences at pricey resorts hosted by special-interest legal organizations that paid for all or part of their stays, The Nerve found in a review of court administration records. Trip details involving the 77 S.C. Supreme Court, Court of Appeals, circuit and family court judges who traveled to in- or out-of-state conferences in 2021 aren’t published on the Judicial Department’s website. Neither are their annual salaries, which also are exempted from the state salary database for higher-paid agency employees. Besides that, the judges, who are elected by the S.C. Legislature, by law don’t have to file yearly income-disclosure reports with the State Ethics Commission, which are required of most other elected officials and are posted on the commission’s website. For years, the S.C. Judicial Department – the third branch of government with a current total budget of $102.5 million – has lacked transparency about judicial pay and perks, as well as other details about its internal operations. Court officials in August provided an updated salary list of judges and department staff making at least $50,000 annually, which The Nerve requested along with judges’ travel records. The Judicial Department earlier this year released its then-salary list only after the South Carolina Policy Council – The Nerve’s parent organization – hired a law firm to press for the release of the documents. The latest list shows yearly salaries for judges ranging from $197,321 for 57 family court judges to $223,987 for Supreme Court Chief Justice Donald Beatty, who convinced state lawmakers in 2019 to give himself and other judges a 33% pay raise. Bruce Williams, the chief judge of the Court of Appeals, makes $211,187. The current annual salaries for 48 circuit court, eight other Court of Appeals and four associate Supreme Court judicial seats are $202,654, $207,987 and $213,321, respectively, according to the salary list. The Judicial Department is among 16 state agencies that are exempted from providing information for the state salary database, maintained by the Department of Administration. The Nerve’s review of judicial travel records found that appellate, circuit and family court judges as a group traveled to more than a dozen in- and out-of-state locations in 2021. Organizations that hosted events during the year, which included a virtual conference, covered a total of $147,882 in registration, flight, hotel, food and court rules book costs, as well as unspecified “activity” costs, for 99 S.C. judges. The total number of judges in The Nerve’s review represents 83% of the current number of full-time judges for those levels of court. The covered travel expenses in 2021 were listed on an internal court form, which has to be filed annually with the Office of Court Administration, which Beatty oversees as the chief justice, under a heading labeled, “Nature of Gift, Bequest, Favor, or Loan.” Of the 99 judges in The Nerve’s review, 40 reported collective paid-for expenses of at least $1,000, with 19, including Beatty, listing covered costs totaling $3,000 or more. The average was about $1,500. Presented with The Nerve’s findings, two state lawmakers said they would generally support improving transparency in the Judicial Department. “I’m just an old retired cop; I’m not an attorney,” said Rep. William Bailey, R-Horry, who is a member of the House Judiciary Committee and the former director of the North Myrtle Beach Public Safety Department. “But I can you tell you … all those things that deal with taxpayer dollars should be open.” Said Sen. Penry Gustafson, R-Kershaw, who sits on the Senate Judiciary Committee: “If we want to strengthen public faith in our state government, it’s through transparency. That is the one thing I hear from constituents. They want to know what we’re doing.” Tourist jurists Of the total covered costs, $110,716, or nearly 75%, collectively was paid by the South Carolina Defense Trial Attorneys’ Association (SCDTAA) and the South Carolina Association for Justice (SCAJ), records show. In 2021, the SCDTAA, whose lawyer members represent defendants in civil cases, held its four-day annual meeting in November at The Sanctuary at the Kiawah Island Golf Resort, and a three-day summer conference in July at the upscale Omni Grove Park Inn in Asheville, N.C, according to its website. The SCDTAA on its website says its purpose is to “promote justice, professionalism and integrity in the civil justice system by bringing together attorneys dedicated to the defense of civil actions.” Last year, the organization recorded $75,979 in expenses “made on behalf of Judiciary,” according to its required filing, as a lobbyist principal, with the State Ethics Commission. The SCAJ, made up of plaintiff attorneys, held a three-day annual convention in August 2021 at the Marriott Resort & Spa on Hilton Head Island, according to its website. The organization on its site says it fights “tirelessly to protect the rights of the individual; to seek justice through open and fair courtrooms; to resist unjust laws; to support policies that hold wrongdoers accountable; to strengthen the justice system through education and action; and to uphold the highest standards of ethical conduct and integrity in the legal profession.” State Ethics Commission records show that the SCAJ reported a total of $52,457 in expenditures “made on behalf of Judiciary” in 2021. The Ethics Commission filings by the SCAJ and SCDTAA listed total covered expenditures for each judge who attended their respective conferences, though no details were provided about the event locations and costs. Both groups invited judges not included in The Nerve’s review, such as federal judges, according to written replies from the leaders of those organizations. Each organization has one or more paid state lobbyists, Ethics Commission records show. The SCAJ, for example, made a total of nearly $105,000 in lobbyist payments last year. Of the 99 judges in The Nerve’s review, 23 circuit or appellate judges attended SCAJ and SCDTAA conferences last year, while another 52 judges attended one of those events – mostly family court judges who went to the SCAJ convention. Other tourist destinations where legal conferences were held last year included, according to judicial travel records and the host organizations’ websites: *The South Carolina Public Defender Association’s annual conference at the Hilton Myrtle Beach Resort; *The Injured Workers’ Advocates’ annual convention at the Omni Grove Park Inn in Asheville, N.C.; and *The Appellate Judges Education Institute’s annual summit at the Hyatt Regency Austin in Austin, Texas Judicial silence, secrecy State court rules require judges to avoid even the appearance of impropriety in both their professional and personal conduct, noting that public confidence in the judiciary is “eroded by irresponsible or improper conduct by judges.” Earlier this month, The Nerve asked Beatty to respond to unanswered questions sent in writing to the department in August related to judicial ethics and transparency. Beatty was asked: *If there is at least the appearance of a conflict of interest for judges who attend events hosted by legal organizations whose members have or could have cases before those judges. *Why judicial travel records and annual salaries aren’t posted on the Judicial Department’s website; and *Why the S.C. Supreme Court doesn’t require state judges to publicly report their stock holdings, as required on federal judicial income-disclosure forms. Beatty, whom S.C. lawmakers elected in 2016 as the chief justice, didn’t respond to The Nerve’s written questions. Under the state’s “unified” court system, the chief justice is the administrative head of the Judicial Department. South Carolina and Virginia are the only states where their legislatures play a primary role in electing judges. Regarding travel records, The Nerve this month attempted to survey appellate, circuit and family court judges statewide about whether they believed their attendance at SCAJ or SCDTAA conferences posed potential conflicts of interest, and whether they had earned any required continuing legal education credits at those events. In addition, The Nerve sought responses from other state judges who, according to court records provided to The Nerve, didn’t list any conference costs covered last year. None of the judges responded to the written questions. In a letter to The Nerve, Judicial Department spokeswoman Ginny Jones took issue with The Nerve’s attempts to contact judges. “I understand that you are currently contacting judges individually, asking for information about their continuing legal education credits and why they did or did not attend certain conferences,” Jones said. “Let me clear: This is not public information, and Judicial Branch judges are in no way obligated to provide it to you.” Jones in her letter also said although the department will “continue to respond to your requests for public information,” it will not “entertain your questions asking us for speculative answers or opinions.” Jones last year told The Nerve in writing that the department’s position is that the S.C. Freedom of Information Act “does not apply to the Judicial Branch.” The Nerve recently contacted Charles Geyh, an Indiana University law school professor who teaches and writes in the areas of judicial conduct and ethics, about ethical issues related to conference travel by S.C. judges. In a written response, Geyh said while he sees “no inherent problem with the host of an educational seminar reimbursing judges for the expenses of their attendance,” it “gets dicey when the host or a sponsor is a party in a case before the judge, or has a clear interest in the outcome of cases before the judge.” He added that the “contours of a SC judge’s ethical responsibilities could be made a lot clearer if the (state) supreme court brought its code into the 21st century,” noting that South Carolina is among the “minority of jurisdictions that has not updated its code of judicial conduct following the ABA’s (American Bar Association) 2008 overhaul of its model code.” Work or pleasure? Beatty’s travel-disclosure form showed a total of $3,617 in covered costs in 2021 for events hosted by the SCAJ, SCDTAA, South Carolina Public Defender Association and the South Carolina Bar, the professional organization for the state’s approximately 11,000 licensed lawyers. Beatty and other state judges were invited as guest speakers or panelists at a number of hosted events, according to the organizations’ meeting agendas. Court records reviewed by The Nerve show that the SCAJ covered registration and room costs for judges who attended at its annual convention, while the SCDTAA also paid for meal and unspecified “activity” costs at its events. At least nine judges took their spouses on conference trips, according to their travel-disclosure forms. In a written statement provided to The Nerve on behalf of SCAJ President Jennifer Burnett, the organization said under advisory opinions issued by S.C. Supreme Court and South Carolina Bar committees, the SCAJ and SCDTAA are authorized to provide “complimentary registration fees and travel expenses” for judges attending “sponsored activities devoted to the improvement of the law or the legal system.” Separately, The Nerve’s review found that the South Carolina Bar last year covered a total of $13,874 in registration fees for its January virtual convention and the cost of an updated court rules book for 78 appellate, circuit or family court judges. Under state court rules, judges generally are required to annually complete at least 15 hours of approved continuing legal education (CLE). In a written response to The Nerve in August, David Ross, the South Carolina Bar’s executive director, said more than 20 CLE seminars are offered at the Bar’s yearly convention, allowing members the “opportunity to receive all of their annual mandatory continuing legal education credit.” “The SC Bar Convention is the premier legal education annual event in our state, and it has long been a tradition to gather as many members – both lawyers and judges – at the same training and meeting to hear the latest updates in South Carolina law across a variety of practice areas,” he said. All state appellate, circuit, family, masters-in-equity, probate and administrative law court judges are invited to the convention, “with the registration fee waived,” Ross said. The SCAJ invites state and federal judges in South Carolina to its annual convention “in accordance with the state’s ethics rules and laws,” according to its written statement provided to The Nerve. The statement noted that 12 hours of continuing legal education are offered during the convention, which permits “attorneys and judges alike to receive their mandatory continuing legal education credits for continued licensure with the South Carolina Bar.” At the same time, the Marriott Hilton Head Resort & Spa, where last year’s and this year’s annual event was held, on its website says there are “endless opportunities for fun, from teeing off at one of three PGA golf courses to swimming on the beach or in our resort’s indoor and outdoor pools to unwinding at our hotel’s exquisite spa.” SCDTAA President Graham Powell in an August written response to The Nerve said his organization offers “numerous continuing legal education seminars to our members” at its summer and annual meetings, noting it invites “as our guests all of the members of the state and federal judiciary in South Carolina.” There also are plenty of opportunities for fun and relaxation at those events. For example, The Sanctuary at the Kiawah Island Golf Resort, where last year’s annual meeting was held, describes itself as a “casual but elegant building, reminiscent of a grand seaside mansion,” with indoor and outdoor pools, a “five-star” spa, and more than a dozen “restaurants, cafes and eateries across the resort,” according to its website. Neither SCDTAA nor SCAJ officials answered The Nerve’s specific questions about why their respective organizations covered various event costs for judges but not for most other attendees. The SCDTAA will hold this year’s annual meeting next month at The Ritz-Carlton resort on Amelia Island in Florida, according to the organization’s website. Brundrett is the news editor of The Nerve (www.thenerve.org). Contact him at 803-394–8273 or [email protected]. Follow him on Twitter @RickBrundrett. Follow The Nerve on Facebook and Twitter @thenervesc. Nerve stories are free to reprint and repost with permission by and credit to The Nerve.

By RICK BRUNDRETT In less than three months, Jeremy Sark’s U-Haul dealership on North Main Street in the city of Mauldin could close after nine years in operation. But it’s not by choice. Although his automotive repair shop, called Sarks Automotive, can stay open at the same location, a city zoning change would require him to move his U-Haul business to another part of the city of about 26,000 residents, located between Greenville and Simpsonville. The current zoning ordinance, which the Mauldin City Council approved amending in January, would ban the rental or sale of “moving trucks, trailers, intermodal containers and temporary portable storage units” in areas not zoned “S-1” after Dec. 31 of this year. Sark’s U-Haul truck-and-trailer rental business currently is in a different zoning district. In a lawsuit filed last month, Sark contends the city changed the zoning to attract a private developer as part of its plan to turn the center of the city into a “walkable downtown area.” Sark’s approximately 1.6-acre property, which he leases, is located over a mile from the proposed “City Center” project; another U-Haul dealership not operated by Sark abuts the planned project area. The case is not a typical zoning dispute. Instead, it highlights what critics contend has been a practice by some states to use a little-known zoning procedure to push private economic development – at the expense of other private property owners without paying them anything. Contacted recently by The Nerve, Sark said while he’s not opposed to the planned downtown project, “you don’t run out your small businesses to do something.” “It’s very hard just to see them try to bully the little guys,” Sark said about the city’s zoning change. Sark, who’s been at his North Main location since 2013 and operates the automotive shop with general manager Marie Dougherty, said he will have to lay off one of his 10 employees if he’s forced to close his U-Haul dealership with the expected loss of revenue. U-Haul rentals generate a total of about $60,000 yearly, he said, adding that doesn’t include income from repairing rental trucks or new business from U-Haul customers who later use his auto repair services. The Phoenix-based U-Haul company, which has been operating since 1945, describes itself on its website as the “biggest do-it-yourself rental operation in the world,” noting it owns the largest fleet of trucks, trailers and towing devices “in the industry.” A lawyer representing Sark told The Nerve he’s concerned that if the lawsuit, which alleges state constitutional violations, isn’t successful, other South Carolina municipalities could make similar zoning changes to force out reputable businesses that those governments no longer want in particular areas. “If the city (of Mauldin) is allowed to destroy a normal business like a U-Haul dealership by giving the person who runs the dealership 11 months to wind it up – expressly for the purpose of benefiting a private investor or a private developer – it’s hard to conceive of a motivation that would stop Greenville from doing the same thing next week or Simpsonville from doing it the week after,” said Bob Belden, an attorney with the Virginia-based Institute for Justice. Belden noted his organization has litigated similar zoning issues in Texas and North Carolina. In a recent interview with The Nerve, S.C. Sen. Chip Campsen, R-Charleston, said he believes Mauldin’s amended zoning ordinance raises several potential legal issues. Campsen authored a 2006 constitutional amendment banning government agencies in South Carolina from using their eminent domain powers to take private property for private economic development. “Normally when you have this happen, you have a nonconforming use that is permitted,” said Campsen, who is an attorney, about Sark’s situation, though he is not involved with the legal case. “When you go to do rezoning, you just don’t wipe existing businesses off the face of the landscape.” Sark, Sarks Automotive and John Abney Jr., who owns the property where the auto repair shop and U-Haul dealership are located, are plaintiffs in the lawsuit, which was filed Sept. 8 in Greenville County Circuit Court. Besides the city of Mauldin, the Mauldin City Council, mayor Terry Merritt and David Dyrhaug, the city’s business and development services director, are named as defendants. Sark and Abney are being represented for free by the Institute for Justice and the Columbia-based Nelson Mullins Riley & Scarborough law firm, according to Institute for Justice attorney Seth Young, who is one of the plaintiffs’ lawyers. On its website, the Institute for Justice describes itself as a “nonprofit, public interest law firm” with a mission to “end widespread abuses of government power and secure the constitutional rights that allow all Americans to pursue their dreams.” Nelson Mullins is South Carolina’s largest law firm, according to this year’s annual ranking of the state’s law firms by the South Carolina Lawyers Weekly publication. Mauldin city officials have not yet formally responded to the suit. The Nerve on Sept. 22 asked in writing for a response to the allegations in the suit and was referred to city attorney Daniel Hughes, who didn’t reply by publication of this story. The lawsuit asks a judge to declare the amended zoning ordinance unconstitutional as it applies to Sark’s U-Haul dealership. It also seeks temporary and permanent orders allowing Sark to continue operating the business at his current location. ‘Naked land grab’ Among other claims, the lawsuit alleges the city’s actions amount to an “unconstitutional taking.” The S.C. Constitution specifies that private property “shall not be taken for private use without the consent of the owner,” and that private property can’t be “condemned” by government agencies through their eminent domain powers for the “purpose or benefit of economic development.” Sark contends that Mauldin city officials want his U-Haul dealership out of its current location as part of its plan for the City Center project. The suit cites a December 2021 story by Greenville television station WYFF quoting mayor Merritt as saying potential investors or developers have remarked that “your main street looks old,” and that a “convenient (sic) center with U-Haul is parked on the side of N. Main St.” with “40 to 50,000 cars passing you every day.” Merritt in the story also was quoted as saying that “we need to clean that up,” according to the suit. The city in December 2020 announced it had a retained a Greenville-based development firm for the proposed City Center project, the suit noted. Sark told The Nerve he can’t understand why the city wants him to move his U-Haul dealership given that he never has been cited for any safety, health or nuisance violations. “They’ve had no problem with it since 2013, and now all of a sudden this guy (private developer) comes in and says, ‘This looks trashy,’” he said. The state constitution was amended about 16 years ago to protect private property owners from government overreach. In 2006, S.C. voters overwhelmingly approved strengthening the state constitution following a 2005 U.S. Supreme Court ruling in a Connecticut case, commonly known as the “Kelo” decision, which allows government agencies to take private property through their eminent domain powers and turn it over to a private developer for the purpose of economic development. The controversial ruling sparked a nationwide backlash, with many states changing their laws or constitutions to protect their citizens’ property rights. “Kelo was a horrible decision,” Sen. Campsen told The Nerve. “The (U.S. Supreme) Court got it wrong, and that’s why I authored the constitutional amendment in the wake of Kelo that basically says that if you condemn (private) property, it must be for public uses.” Under S.C. law, government agencies must go through a formal process to take private property for public uses, such as building a public road or school. Affected property owners must receive “just compensation” for their property, either in a settlement or determined in a trial. Sark’s lawsuit contends the city of Mauldin is trying to circumvent the state constitution’s ban on the taking of private property for private use through “amortization,” which is allowed under a longstanding but little-known state law. That process often involves rezoning an area where a targeted business is located – making that business a “nonconforming use” – and requiring it to close it after a certain period of time without paying anything to the affected property owner. “Amortization is something cities do to avoid their compensation obligation under eminent domain,” said Belden of the Institute for Justice. “It allows them, in their view, to take property on the cheap.” Belden described amortization as a “pernicious tool” and an exercise of a local government’s “police power,” contending that it “cloaks this naked land grab on the presumption of validity that attaches to zoning ordinances.” The S.C. Supreme Court in a 2000 ruling allowed amortization in a Myrtle Beach case involving now-banned video poker machines, though Belden noted that decision dealt with what legal observers generally classify as a “sin” or “vice” business, not a nationally reputable company such as U-Haul. Other alleged violations Sark in his lawsuit also alleges the city of Mauldin violated his equal rights and due process protections under the state constitution. The suit contends that in amending the zoning ordinance, the city classified Sark’s U-Haul dealership and certain other businesses in the general-commercial zoning district as “nonconforming,” but required only truck-and-trailer rental businesses like Sark’s to move after Dec. 31. As examples, the suit noted that an auto parts store, a used car dealership and a car rental business on North Main Street near Sark’s location are “all treated as legal nonconforming uses and allowed to continue operating as they were before.” Belden told The Nerve he is aware of three other U-Haul businesses in the city, two of which are located in same zoning district where Sark’s dealership operates, which he said means those businesses would have to move along with his client’s under the amended ordinance. Sark said his current contract with U-Haul doesn’t allow him to immediately move his dealership to another location in the city. Generally, state law allows municipalities to grandfather in “nonconforming” properties that lawfully existed before zoning changes were made. “It has been operating continuously for more than nine years now and doesn’t pose a nuisance to any other properties,” Belden said about his client’s U-Haul dealership. “Under a South Carolina law, Jeremy and Sarks Automotive have what’s called a vested right to continue operating the U-Haul business.” In the end, Sark said he just wants to be treated fairly. “It comes down to, don’t push my business out the door,” he said. Brundrett is the news editor of The Nerve (www.thenerve.org). Contact him at 803-394–8273 or [email protected]. Follow him on Twitter @RickBrundrett. Follow The Nerve on Facebook and Twitter @thenervesc. Nerve stories are free to reprint and repost with permission by and credit to The Nerve.

By RICK BRUNDRETT South Carolina voters in November will decide whether to approve constitutional amendments to increase the state’s two “rainy-day” funds, though a just-released poll casts doubt on their passage. The statewide poll by the South Carolina Policy Council – The Nerve’s parent organization – found that a plurality of voters indicated general support for the proposals when explained in plain language. But the total expressed support didn’t break the 50% mark and dropped noticeably when voters were given the exact text of the amendments as it will appear on the Nov. 8 general election ballot. One of the amendments would increase the General Reserve Fund (GRF) over four fiscal years from 5% to 7% of general fund revenues from the latest completed fiscal year, while the other amendment would raise the Capital Reserve Fund (CRF) from 2% to 3% of those revenues. The GRF and CRF balances as of June 30 were $458.9 million and $183.5 million, respectively, state comptroller general records show. The overall state budget for fiscal 2023, which includes state, federal and “other” funds, is $38 billion. “People who don’t understand ballot questions tend to vote no, and that is concerning for those of us who favor saving more and spending less,” Dallas Woodhouse, the South Carolina Policy Council’s executive director, said in a release Monday on the latest poll results. The poll, which sampled 529 registered South Carolina voters and was conducted by the Washington, D.C.-based Morning Consult, indicated that the proposed amendments could fail because of a lack of voter awareness and complex ballot language, according to the release. The poll surveyed voters about a variety of topics, including President Joe Biden’s job performance, inflation, tax cuts and women’s issues. The margin of error was a plus or minus 4 percentage points. Complete poll results can be found here. Amendments to the S.C. Constitution must be approved by two-thirds of each chamber of the 170-member General Assembly and a majority of qualified voters in the next general election for House members, followed by a majority vote of each legislative chamber supporting ratification. A joint resolution and companion bill to increase the reserve funds passed the Legislature in June by near-unanimous votes. Rep. Gary Simrill, R-York, who is chairman of the House Ways and Means Committee and served on conference committees that approved compromise versions of the joint resolution and companion bill, told The Nerve in a written response Monday that the House “began in earnest in 2019 with a goal of increased reserves.” “This was prior to the pandemic; and when the pandemic hit, having to go into a continuing resolution (to keep state government operating at the prior year levels), those reserves were helpful,” said Simrill, the former House majority leader who announced earlier this year he would not seek re-election after serving 30 years. Simrill added that “codifying increased reserves protects core functions of government in case of a downturn in the economy or for any other reason.” Contacted by The Nerve, Sen. John Scott, D-Richland, who was one of the main co-sponsors of the joint resolution, said healthy reserves are needed to help offset the effects of a recession on state government. “I’ve been through about four recessions,” said Scott, who serves on the Senate Finance Committee. “I’ve been there when we’ve had to lay people off. That’s not a good feeling.” Without the reserves, “you cut straight across the board,” Scott added. “All the agencies and schools take the biggest hits.” Ballot language The Policy Council’s poll found that a collective 40% of S.C. voters generally supported the proposed amendment increasing the GRF when informed it would “help protect critical government services during a recession and help avoid tax increases.” When asked about the other amendment to increase the CRF, a collective 37% of respondents indicated general support. But when given the exact ballot language for both proposals, at least half of the respondents said they were unsure about how they would vote or didn’t understand the question, according to the poll. Following is the amendment language that will appear on the November ballot: Amendment 1: Must Section 36(A), Article III of the Constitution of this State, relating to the General Reserve Fund, be amended so as to provide that the General Reserve Fund of five percent of general fund revenue of the latest completed fiscal year must be increased each year by one-half of one percent of the general fund revenue of the latest completed fiscal year until it equals seven percent of such revenues? Amendment 2: Must Section 36(B), Article III of the Constitution of this State be amended so as to provide that the Capital Reserve Fund of two percent of the general fund revenue of the latest completed fiscal year be increased to three percent of the general fund revenue of the latest completed fiscal year and to provide that the first use of the Capital Reserve Fund must be to offset midyear budget reductions? Under the current constitution, the CRF can’t be used to offset midyear budget cuts but has to be tapped to replenish the GRF if that account was needed to cover “operating deficits of state government.” The constitution allows lawmakers to make annual appropriations from the CRF if it’s not needed to replenish the GRF. In recent years, the CRF has been designated primarily for maintenance, renovation or new building projects at the state’s public colleges and universities, though it has been funded annually to meet the constitutional 2% requirement. State law allows for a “simplified or more detailed explanation” of proposed constitutional amendments. That determination is made by the “Constitutional Ballot Commission,” composed of the S.C. attorney general, and the directors of the State Election Commission and Legislative Council. In an email response to The Nerve, Chris Whitmire, the Election Commission’s deputy executive director, said the following explanations on the proposed constitutional amendments will appear on the November ballot: Amendment 1 explanation: A ‘Yes” vote will increase the amount of money state government must keep in the General Reserve Fund (its “rainy day” fund) from 5% of the previous year’s revenue to 7% of the previous year’s revenue. Amendment 2 explanation: A ‘Yes’ vote will increase the amount of money state government must appropriate to the Capital Reserve Fund (the “reserve and capital improvements” fund) from 2% of the previous year’s revenue to 3% of the previous year’s revenue and require that the Capital Reserve Fund’s first priority is to offset midyear budget cuts at state agencies. Between 1985 and 2018, there were a total of 54 statewide ballot measures, 45, or 83%, of which were approved, according to Ballotpedia, an online politics and elections encyclopedia. In the Policy Council’s release on Monday, Woodhouse said the state’s major political parties and candidates should encourage voters to pass the two constitutional amendments in November as part of their respective get-out-the-vote campaigns. The Policy Council’s latest poll was the second since June, as reported then by The Nerve. The first poll covered a variety of topics, including inflation, tax cuts, energy independence, election reform and confidence, school choice and school board transparency. Brundrett is the news editor of The Nerve (www.thenerve.org). Contact him at 803-394–8273 or [email protected]. Follow him on Twitter @RickBrundrett. Follow The Nerve on Facebook and Twitter @thenervesc. Nerve stories are free to reprint and repost with permission by and credit to The Nerve.

By RICK BRUNDRETT South Carolina is among a group of states investigating a major investment management and ratings company for potential violations connected to liberal environmental, social and governance (ESG) activities, The Nerve has confirmed. Last week, Missouri Attorney General Eric Schmitt announced that 18 other state attorneys general had joined his state’s investigation of Chicago-based Morningstar Inc. and its subsidiary, Sustainalytics. “These ESG investing firms are playing politics with pensions and real people’s livelihoods,” Schmitt said in a prepared statement. The release didn’t identify the 18 other states. In a written statement last week to The Nerve, Robert Kittle, spokesman for Republican S.C. Attorney General Alan Wilson, said the S.C. Attorney General’s Office “signed onto that,” though he declined further comment, citing the pending investigation and referring The Nerve to Schmitt’s release. Wilson also recently joined Republican state attorneys general in two other ESG-related matters, records show. Wilson is the current chairman of the national Republican Attorneys General Association. Critics say ESG scores are being used by banks, investment and accounting firms, and credit rating agencies to grade companies on how well they have adopted certain liberal policies or values, such as reducing the effects of climate change, increasing diversity on their governing boards, and supporting social justice causes. The Nerve in recent months has been investigating the ESG movement in South Carolina. Several S.C. lawmakers, including Sen. Josh Kimbrell, R-Spartanburg, introduced ESG-relatd bills earlier this year. “Economic, social and governance (ESG) scores represent a great threat to free speech and free enterprise in South Carolina and across America,” Kimbrell, a former commercial banker, said in a written response Wednesday to The Nerve. “I intend to reintroduce legislation that will ban financial institutions from pursuing any form of ESG scoring matrix in their credit decisions, and to ensure economic incentives in our state are not allocated based on any form of ESG score.” Asked by The Nerve about whether he would support any related legislative reforms, Wilson on Wednesday issued the following written statement through his spokesman: “I am deeply concerned about ESG issues and I’ve been in touch with both RSIC (S.C. Retirement System Investment Commission) CEO Michael Hitchcock and State Treasurer Curtis Loftis about it. In general, I would support any efforts in the state legislature to address the problem, but I’ll wait to comment until I see specific legislation.” In the Missouri-led investigation, Schmitt in his release said his office last month sent “civil investigative demands” to Morningstar and its subsidiary, Sustainalytics, for records related to Morningstar’s “perceived anti-Israel bias” in ESG ratings for products to investors. The release said Schmitt’s office was looking into “alleged consumer fraud or unfair trade practices,” noting it was the “first investigation of its kind.” Among other records, Schmitt’s office has asked Morningstar to provide “all documents and communications with any federal government or state government entity relating to ESG Services and BDS,” according to the release. “BDS” stands for “boycott, divestment, sanctions,” a Palestinian-led movement that “upholds the simple principle that Palestinians are entitled to the same rights as the rest of humanity,” and “urges action to pressure Israel to comply with international law,” according to a BDS website. In an open letter in June to “our Morningstar community,” Morningstar executive chairman Joe Mansueto and company CEO Kunal Kapoor said neither Morningstar nor Sustainalytics “supports the anti-Israel BDS campaign.” They acknowledged, though, that a separate investigation by an outside law firm identified “limited areas of bias that are outliers over the span of our work but, nevertheless, do not live up to Morningstar’s standards.” Under its “ESG Investing Approaches” section on its website, Morningstar said its “foundational sustainable investing framework outlines the various paths investors can take to act on their sustainability objectives.” Morningstar operates in 29 countries and, according to its latest quarterly federal Securities and Exchange Commission filing, oversees nearly $260 billion in “average assets under management and advisement.” BlackRock’s domination Besides joining Missouri in its investigation of Morningstar, South Carolina also has partnered with other states in an ongoing dispute with BlackRock, the world’s largest investment-asset manager, over state pension funds. In an Aug. 4 letter to Larry Fink, who is the chairman and CEO of New York-based BlackRock, Wilson and 18 other Republican state attorneys general criticized an earlier BlackRock letter to states describing its position on energy investments involving state pension funds, contending that the earlier letter contains “many statements that appear to conflict with BlackRock’s previous public statements and commitments.” “Based on the facts currently available to us, BlackRock appears to use the hard-earned money of our states’ citizens to circumvent the best possible return on investment, as well as their vote,” the attorneys general, led by Arizona Attorney General Mark Brnovich and Nebraska Attorney General Doug Peterson, said in their letter. “Rather than being a spectator betting on the game, BlackRock appears to have put on a quarterback jersey and actively taken the field,” the letter continued. “As a firm, BlackRock has committed to implementing an ESG engagement and voting strategy across all assets under its management, and held over 2,300 company engagements on climate, the most of any category of engagements.” The letter warned that BlackRock’s “actions on a variety of governance objectives may violate multiple state laws.” In a May story, The Nerve revealed that BlackRock – which was overseeing $10 trillion in assets as of January – and Boston-based State Street Corporation, which reported $4 trillion in assets under its management at the end of 2021, collectively managed about $18.5 billion, or nearly half, of the approximately $39 billion total market value of all investments by South Carolina’s pension plan for state retirees in fiscal 2021, according to the S.C. Retirement Investment Commission’s (RSIC) year-end investment report. The report for the fiscal year that ended June 30 of this year likely will not be published until “late fall,” RSIC CEO Hitchcock said in a written response last week to The Nerve. Hitchcock earlier told The Nerve although there are state pension plans “interested in pursuing ESG-related investment theses, that’s not us.” He said neither BlackRock nor State Street makes “any investment decisions for us whatsoever,” noting the pension plan’s public-equity portfolio is “all passively invested” through an index, which is a way to measure the price performance of a group of securities over time. In his latest written response to The Nerve about BlackRock’s and State Street’s performance for the fiscal year that just ended, Hitchcock said, “The returns for FY ’22 are in line with our expectations.” An average total of 171,298 retirees in the state’s five retirement systems or their beneficiaries received pension benefits in fiscal 2021, according to an annual report by the S.C. Public Employee Benefit Authority. Federal ESG fights In another ESG matter, Wilson joined 20 other Republican state attorneys general in an Aug. 16 letter to the U.S. Securities and Exchange Commission protesting a proposed SEC rule that would require more ESG disclosures from investment managers. “The Proposed Rule here continues the Commission’s recent attempt to transform itself from the federal regulator of securities into the regulator of broader social ills,” according to the attorneys general, led by West Virginia Attorney General Patrick Morrisey. The letter contended that the proposed rule would “add onerous reporting requirements for investment funds with no rational justification,“ noting that “perhaps the most burdensome” proposal is a “familiar one now: required (greenhouse gas ) emissions disclosures.” The Nerve in May detailed three other federal ESG-related efforts opposed by Republican state or federal officials in South Carolina, including: *Public comments on ESG practices that were solicited by an obscure federal regulatory organization known as the Municipal Securities Rulemaking Board. In a March letter to the MSRB, a group of state officials from across the U.S, including Wilson and Treasurer Loftis, contended that regulators eventually plan to “require municipalities to make ESG-related disclosures.” *A U.S. House bill passed last year that would require, among other things, publicly traded companies to disclose certain information related to ESG “performance metrics,” climate “change-related risks,” and expenditures of “certain political activities.” The bill passed over the objections of U.S. Rep. William Timmons of Greenville, who told The Nerve in a written statement that “ESG metrics in credit analysis and investment decisions are simply a political tool that have no impact on financial performance or risk.” *A proposed U.S. Department of Labor rule change that would allow managers of private retirement plans to promote ESG factors in those plans. U.S. Sen. Tim Scott joined three other Republican senators in a December letter urging the DOL to withdraw the proposal. Brundrett is the news editor of The Nerve (www.thenerve.org). Contact him at 803-394-8273 or [email protected]. Follow him on Twitter @RickBrundrett. Follow The Nerve on Facebook and Twitter @thenervesc. Nerve stories are free to reprint and repost with permission by and credit to The Nerve.

By RICK BRUNDRETT More than a year after the federal government’s $1.9 trillion coronavirus-relief plan became law, South Carolina’s public school districts have spent relatively little of their share of the money, state records show. U.S. Sen. Tim Scott believes lower-income parents nationwide should be able to use the unspent federal education dollars to help their children recover from learning losses resulting from the pandemic. That would include covering tuition at private schools under his bill introduced last week. “States and school districts have only spent a fraction of the education funds they received through the Democrats’ American Rescue Plan – leaving kids helpless as they struggle to recover from academic setbacks,” the South Carolina Republican said in a prepared statement. “It’s clear that big-government bailouts won’t solve our education crisis.” Of the total nearly $1.9 billion in federal Elementary and Secondary School Emergency Relief (ESSER) funds allocated to S.C. public school districts, including charter schools, under the American Rescue Plan Act (ARPA), about $117.4 million, or 6.2%, has been spent, according to S.C. Department of Education (SCDOE) records. Contacted this week by The Nerve, Edward Earwood, executive director of the South Carolina Association of Christian Schools, said his organization “certainly would embrace” Scott’s bill, which would amend the federal law signed by President Joe Biden in March 2021. “I’m a firm believer that tax dollars paid should be able to be used to serve the taxpayer,” he said. “And if the taxpayers choose an alternative means to public education, I do not see a problem with that offer being made.” S.C. Sen Greg Hembree, R-Horry, who is chairman of the Senate Education Committee and was a key negotiator on a compromise school-choice bill that didn’t pass this year, told The Nerve last week he hadn’t yet read Scott’s bill but would support it in principle. “They (many school districts) have these fund balances that are just stunning, and then, of course, you throw ARPA on top of that,” he said. “The money needs to be used to get our kids caught up.” Hembree said he expects the state school-choice bill to be reintroduced for next year’s legislative session, adding that Sen. Larry Grooms, R-Berkeley, who is an Education Committee member and also the Transportation Committee chairman, likely will be the bill’s main sponsor again. “In December you’ll probably see something that looks kind of familiar,” Hembree said. Next week is the start of the 2022-23 school year for most of the state’s public school districts. As The Nerve reported in June, S.C. residents generally support using public money to allow children to attend private schools, according to the results of a poll released by the South Carolina Policy Council – The Nerve’s parent organization. In addition to school choice, the poll, conducted by Tennessee-based Spry Strategies from May 31 to June 3, sought responses to questions in a variety of areas, including tax cuts, inflation, energy independence, election reform and confidence, and school board transparency. The margin of error was a plus or minus 4 percentage points. Complete results of the poll can be found here. In a related matter, the U.S. Supreme Court in June in a Maine case said religious schools couldn’t be excluded from a state program that offers public tuition assistance for private education. Supporters contend the ruling will help protect religious schools nationwide against government discrimination. As a group, South Carolina’s public schools have ranked among the nation’s worst in recent years. For example, a study released last month by WalletHub, a personal finance website, ranked The Palmetto State’s public schools as the sixth worst among all states and the District of Columbia. At the end of last school year, there were 777,292 S.C. actively enrolled students in pre-kindergarten through grade 12 in public schools, including charter schools, SCDOE records show. In comparison, student enrollment among members of the South Carolina Association of Christian Schools and the South Carolina Independent School Association totals about 11,500 and 36,000, respectively, the organizations’ executive directors earlier told The Nerve. Slow spending by school districts The Nerve recently reviewed SCDOE records of ESSER funds allocated under ARPA to the state’s three-largest public school districts: Greenville County (77,070 actively enrolled students last school year), Charleston County (49,037 students) and Horry County (46,375 students). Those records show that relatively small percentages of their ESSER allocations have been spent. Following is a breakdown of the total amount of allocated and expended funds, with the percentage of spent money in parentheses, according to the state records: *Charleston: $163.2 million allocated, $0 spent (0%) *Greenville: $162.9 million allocated, $35.4 million spent (21.7%) *Horry: $125.2 million allocated, $12.3 million spent (9.8%) Charleston County schools spokesman Andrew Pruitt told The Nerve in a written response this week that the state’s website “often lags a quarter behind the districts’ input,” noting his district to date has spent $20.6 million of the ESSER funding. That amount represents 12.6% of the total allocation, leaving $142.6 million in unspent funds. Pruitt said for this school year, the money will be used for “additional mental wellness support staff and programs, expanding early childhood education, teacher recruiting, expanding support for Acceleration Schools, new English Language Arts curriculum roll-out, implementing health protocols, and expanding multilingual learner support.” In an email response to The Nerve, Greenville County schools spokeswoman Julie Horton said ESSER funds will be used for “continued academic recovery for students; social, emotional and mental health support and services; enhancing CTE (Career and Technical Education), health and safety support; education technology; and continuity of services within the district.” She also said the district plans to “spend down all the money.” Records provided to The Nerve show that the district’s school board has yet to approve a total of $85.5 million in spending requests. (After this story was published, Horton informed The Nerve that the board approved the entire spending plan. She said the $85.5 million hasn’t been spent yet, though she noted the district has “through 2024” to do so.) Horry County schools spokeswoman Lisa Bourcier said in a written response her district plans to “utilize these (ESSER) funds by the grant end date,” which is Sept. 30, 2024. District records show that $22.2 million, or 17.7% of the total allocation, has been spent to date, including a collective $10 million for additional pay for “instruction of quarantined students,” 31 reading/math “learning loss interventionists,” and HVAC upgrades. Another $34.6 million in purchase orders was listed in the records, mostly for planned HVAC upgrades. Those records also show an unspent amount totaling more than $68 million. School choice legislation U.S. Sen. Scott’s bill, titled the “Raising Expectations with Child Opportunity Vouchers for Educational Recovery (RECOVER) Act,” would allow school districts nationwide to direct unspent ESSER funds to parents for scholarships that could be used for private school tuition, tutoring services, books and other curriculum materials, testing fees and educational therapies for children with disabilities. “Child Opportunity Scholarships” would be awarded to families with an annual household income no greater than 300% of the federal poverty level, under the bill. U.S. Rep Burgess Owens, R-Utah, who is introducing companion legislation in the House, said in a prepared statement that “our one-size-fits-all system is leaving our most vulnerable kids behind and pushing parents out of the driver’s seat.” “I am proud to introduce the RECOVER Act with Senator Scott to bring parents off the sidelines of their kids’ education by allowing states to reallocate billions in unspent dollars so that low-income students can receive the targeted support they need to reach their God-given potential,” Owens said. In South Carolina, the state school-choice bill that didn’t pass this year would have provided maximum $5,000 scholarships in the first year of the program – using state surplus funds – to allow a total of 5,000 mainly low-income students in the state, based on Medicaid or Children’s Health Insurance Program (CHIP) eligibility, to attend approved private or public schools. The maximum number of annual scholarship students would eventually grow to 15,000 in subsequent years, under that bill. “It’s going to be a relatively small group of kids who access these funds and make a good match,” state Sen. Hembree told The Nerve last week, noting the permanence of the proposed program was an “absolutely essential” part of the bill. And what about the argument by opponents that tax dollars shouldn’t be spent on private education? “The taxpayer who is sending their children to a private school is paying taxes and tuition,” said Earwood of the South Carolina Association of Christian Schools, who earlier noted that annual tuition for his member schools can range from about $4,000 to $10,000, depending on the location. “Their (opponents) argument is that the public dollars shouldn’t support private education,” he continued. “But my argument would be it’s supporting pupil education; it just happens to be in a private sector.” “I’m in favor of a method where parents can choose their child’s education,” Earwood said. Brundrett is the news editor of The Nerve (www.thenerve.org). Contact him at 803-394–8273 or [email protected]. Follow him on Twitter @RickBrundrett. Follow The Nerve on Facebook and Twitter @thenervesc. Nerve stories are free to reprint and repost with permission by and credit to The Nerve

By RICK BRUNDRETT Editor’s note: Today’s story is the second of two initial articles on short-term rentals in South Carolina. The other story can be found here. Update: The city of Columbia’s ad hoc committee on short-term rentals is set to meet again on Sept. 29, according to city clerk Erika Hammond. Meanwhile, the first reading of an amended ordinance that would establish a two-permit system for short-term rentals was scheduled to be heard at a Mount Pleasant Town Council meeting on Sept. 13, according to Michele Reed, the town’s director of planning, land use and neighborhoods. For Graeme Moore, the city of Columbia’s proposal to effectively ban short-term rentals in residential areas is personal to him. Moore, who operates a Columbia real estate firm, says he’s watching the debate closely because he owns a short-term rental house next to his Columbia home. “A lot of people do this for primary income,” Moore told The Nerve when contacted recently. “That’s not why we do it necessarily, but it helps pay for the house.” Moore is among a growing number of short-term rental (STR) owners and property management businesses in South Carolina concerned about efforts by local governments to effectively ban or severely restrict short-term rentals in residential areas. They view some existing or proposed ordinances as an infringement on their property rights. They contend the vast majority of STR owners take care of their properties and ensure that guests don’t disturb neighbors. Any problems with noise, trash or parking in most places typically can be handled through existing ordinances, they say. The South Carolina Policy Council – The Nerve’s parent organization – has identified at least 11 municipalities that have existing or proposed STR ordinances: Charleston, Columbia, Folly Beach, Greenville, Hilton Head, Mauldin, Mount Pleasant, North Charleston, Rock Hill, Spartanburg and Travelers Rest. The Nerve recently sought out STR owners and property managers statewide to better understand their concerns. “I’m not against regulation,” said Moore, who owns The Moore Company, a real-estate sales firm; and Soda City Rentals, the company’s long-term, property-management division, when asked about Columbia’s proposed STR ordinance. “I am against irrational regulation, and I think this is irrational regulation.” Under the capital city’s proposed ordinance, a short-term rental is defined as the rental of all or part of a “residential dwelling unit” for less than 30 consecutive days. Non-owner-occupied STRs – properties such as vacation homes that are assessed for tax purposes at 6% compared to owner-occupied homes, which are assessed at 4% – would be banned in residentially zoned areas. Among other proposals, STR homes located in commercial areas would be required to have sprinkler systems like hotels. “What you have is a boutique hotel in residential areas,” city councilman Howard Duvall said at an April hearing on the proposed ordinance. “When you have an investor that comes in and buys a property for the purpose of short-term rentals … they should not be allowed in residential areas.” Duvall, who is chairman of a special panel considering the proposal and the former longtime head of the state municipal association, got plenty of pushback during the hearing from STR supporters. “The ordinance as proposed by Duvall – not to be trite – was a bit Draconian,” Moore told The Nerve. “His purpose, in my estimation, is to basically outlaw any short-term rental in any residential district in the city.” If adopted as written, the proposed ordinance, which Duvall described as a “draft,” would follow the lead of cities such as Charleston and Greenville, which have restrictive STR ordinances. During the April 26 meeting of the “Columbia Short-Term Rentals Ad Hoc Committee,” Duvall cited Charleston and Greenville among cities in South Carolina and North Carolina “dealing with this issue right now.” With an estimated population of 137,541 as of July 1, 2021, Columbia is the second-largest city in the state next to Charleston, which had an estimated population of 151,612 last year, according to the U.S. Census Bureau. Charleston severely limits STRs in residential areas, allowing them only if they are the owner’s full-time primary residence. Investment properties are “not eligible for short term renting” except for “commercially zoned properties in the Short Term Rental Overlay,” according to the city’s website. Columbia city housing official David Hatcher contended at the April hearing that STRs are a “growing concern in our community,” though he provided no statistics on noise, trash or other complaints. City councilwoman Tina Herbert, a member of the special committee considering the proposed ordinance, expressed concerns about banning investor-owned STRs in residential areas, saying she believed it “truly impacts the whole (STR) business model and makes it very difficult, which may be the point.” Moore said he typically has charged $325 a night for STR guests to stay in his approximately 2,100-square-foot, three-bedroom, 3.5-bathroom Airbnb house, adding that between rental stays, the property has been used by relatives, friends and business clients. Asked if he believed the proposed STR ordinance will pass as written, Moore replied: “I don’t think it will be passed in its current version. I really think Howard Duvall is the one most fired up about it.” In a July 5 email response to The Nerve, city clerk Erika Hammond said a date had not been set for the next special committee meeting, though she added it “most likely” will be held next month. ‘Overly restrictive’ To the north in Greenville, STR homes, which are defined as rentals for a period of less than 30 days, generally are banned in zoned single-family and multi-family residential areas, according to the city’s website. Bed-and-breakfast inns, which must be owner-occupied to rent rooms, are allowed in commercial districts if they meet certain criteria and in residential districts with a “special exception” permit, the website says. Chad Hensel, who founded a Greenville-based STR management company known as Upstate CoHost, doesn’t like the city’s restrictions on STRs. In 2021, Greenville ranked as the state’s sixth-largest city with an estimated population of 72,095. “From my perspective, the ordinances are overly restrictive,” Hensel told The Nerve when contacted recently. “I’m more on the side of liberty and allowing people to do what they wish with their property.” “There is a real market need,” he continued, “and as a professional host, we’re doing everything we can to fill that need. And in a lot of ways we’re kind of demonized for events that are happening in other parts of the country, or things are really perceived problems rather actual on-the-ground realities.” Asked about the complaint typically cited by STR opponents that the properties often are used as party houses, Hensel said his business does “everything possible to screen guests on the way in.” He also said many property management companies have cameras in parking lots and other common areas for security purposes, and that noise-monitoring software can be used to alert managers when noise becomes excessive. As of last month, Hensel said his firm was managing eight STRs in the Greenville area, with a “couple more coming on line.” Average STR rates in the area range from $80 to $100 a night for smaller apartments to $120 to $180 per night for a typical three-bedroom, two-bath home, he said. He added there are no ordinances banning STRs in unincorporated areas of Greenville County. Property rights threatened Across South Carolina, short-term rental owners come from a variety of backgrounds and have different reasons for becoming landlords. Take Kevin Gowland, for example. When the Canadian resident and his wife were looking for a place to retire eventually, they visited the Charleston area during different seasons before buying a three-bedroom, three-bathroom house in the coastal town of Mount Pleasant in 2011. Gowland, who is a certified public accountant in Canada and the U.S., and his wife rent the approximately 1,450-square-foot house to guests for short stays when they aren’t vacationing there, listing it online through popular vacation-rental sites, including Airbnb and Vrbo. The daily rent is $300, which he noted is the market rate for the tourist area. His annual occupancy rate averages around 40%, he said. In a recent interview with The Nerve, Gowland said he’s concerned that proposed changes to the town’s ordinance regulating STRs would make it harder to rent their house. “I don’t think a town should be able to restrain trade in terms of your property rights,” he said. As of last year, Mount Pleasant was South Carolina’s fourth-largest municipality with an estimated population of 92,398, U.S. Census records show. Under Mount Pleasant’s existing ordinance, which initially was adopted in 2019, short-term rental stays must be less than 30 consecutive days, with the maximum number of STR dwellings in the town set at 400. STR owners have to obtain annual permits. Gowland provided The Nerve with an email he sent to the Mount Pleasant Planning Commission outlining his concerns about proposed amendments to the existing ordinance, including: *A requirement that STR tenants “utilize designated off-street parking assigned” to the STR property. Gowland wrote that the town “seems to be asserting the power to dictate where and what a tenant/lease can do during their stay.” *The town’s right to audit “any STR at any time during the permit period.” Gowland wrote that the provision, “without a limit, opens up the prospect of ‘fishing expeditions.’” *A requirement that STR homes be rented for a minimum total of 120 days in a year; STR owners who don’t meet the minimum would not be exempt the following year from the town’s STR permit cap. Gowland wrote that the provision is “likely an egregious overreach since homeowners will be penalized through no fault of their own due to potential external circumstances (e.g. covid, hurricane etc.) and potentially denied their economic livelihood.” The planning commission at its May 18 meeting denied the proposed ordinance changes, though town spokeswoman Martine Wolfe-Miller in a June email response to The Nerve said the matter is “going back to the Planning Commission in July.” A regular planning commission meeting that was scheduled for last Wednesday was canceled, however. In a written response last Thursday to The Nerve, Michele Reed, the town’s director of planning, land use and neighborhoods, said the commission will hold a public hearing at its regular meeting on Aug. 24 to consider creating “two permit systems” for STR owners, depending on whether they rent their properties for more or less than 72 days a year. The commission also will consider a fee increase for those STR owners who rent their properties for more than 72 days a year, Reed said. Gowland believes the town will continue to push for ordinance changes, some of which he contends “impinge on your property rights.” “The underlying ignorance has not gone away,” he said. Brundrett is the news editor of The Nerve (www.thenerve.org). Contact him at 803-394-8273 or [email protected]. Follow him on Twitter @RickBrundrett. Follow The Nerve on Facebook and Twitter @thenervesc. Nerve stories are free to reprint and repost with permission by and credit to The Nerve.

By RICK BRUNDRETT Editor’s note: The Nerve today is featuring the first of two initial stories on short-term rentals in South Carolina. With South Carolina’s tourism season in full swing, many summer visitors are looking for short-term rentals through popular sites such as Airbnb and Vrbo. As of May, there were 41,715 Airbnb or Vrbo available rentals in South Carolina, a 17% increase over the previous year and a 27% jump from May 2019, according to information provided to The Nerve by AirDNA, which tracks short-term rentals worldwide. But the growing popularity of short-term rentals (STRs) in the Palmetto State hasn’t been a welcome trend in some S.C. municipalities. Across the state, local governments have adopted or are considering ordinances that critics contend severely restrict or effectively ban STRs in residential areas. The capital city of Columbia, for example, has proposed an effective ban on most STRs in residential areas, while the town of Mount Pleasant, which already imposes an annual cap on the number of STRs, is considering other restrictions. “Honest and hardworking hosts, like the ones in this room, they’re going to be forced out of those cities,” David Bergmann, co-owner of a Columbia STR property-management company known as Heartwood Furnished Homes, warned Columbia officials at an April hearing. “And the bad actors who are willing to operate illegally have stepped up to meet demand in those cities.” The South Carolina Policy Council – The Nerve’s parent organization – has identified at least 11 municipalities that have existing or proposed STR ordinances: Charleston, Columbia, Folly Beach, Greenville, Hilton Head, Mauldin, Mount Pleasant, North Charleston, Rock Hill, Spartanburg and Travelers Rest. Asked for its position on STR regulations, Scott Slatton, spokesman for the Municipal Association of South Carolina, told The Nerve in a written statement last month, “The Municipal Association supports the efforts of local elected officials to balance residents’ demands to minimize the effects of STRs on their neighborhoods, protect the property rights of residents and STR owners/operators, and ensure the safety of renters of STRs,” adding the association “assists all cities and towns who seek guidance on any matter, including STR regulations.” State Rep. Lee Hewitt, R-Georgetown, doesn’t believe municipalities or counties should ban STRs. He was the main sponsor of a bill this year that was aimed at prohibiting the practice. “It’s an attack on private property rights,” Hewitt told The Nerve when contacted recently, contending that complete bans potentially are “discriminatory.” Although his bill didn’t get out of committee, Hewitt said he plans to reintroduce it in next year’s legislative session, adding it moved further along this year as an approved House amendment to separate legislation. Hewitt said had his bill passed, local governments that adopted bans could no longer collect property taxes on investor-owned STR homes based on a 6% assessment rate, but instead would receive taxes based on the owner-occupied rate of 4%. “If you’re going to attack private property rights, then you need to look at that property and say, ‘OK, in the scheme of things, here’s how you’re being taxed,’” he said. “You’re a house just like the house next door, so we’re going to treat you just like the house next door.” In addition to lowering property assessment rates if bans were enacted, the bill also would have stopped state payments to those municipalities or counties from the Local Government Fund. Hewitt, the broker-in-charge of sales at Garden City Realty, which also manages vacation rentals, said besides paying property taxes, STR owners benefit their communities in other ways, noting that guests typically eat and shop locally, bolstering employment there while paying hospitality and sales taxes. He questioned, for example, why the coastal town of Mount Pleasant is considering more STR restrictions – which he contended would reduce local tax revenues – while asking voters this November to approve a property tax hike to fund park and recreation projects. “These cities and towns (that ban STRs) are screaming at the state, ‘We need more money,” Hewitt said. “Well, all they’re doing is hurting the state, cutting revenues to the state; and they’re also hurting their communities.” Asked about Hewitt’s bill, Patrick Gleason, vice president of state affairs with the Washington, D.C.-based Americans for Tax Reform, said in a written statement to The Nerve that the legislation is a “great way for state lawmakers to prevent cities and counties from trampling the property rights of South Carolinians.” Designed to ‘keep out people’ A property rights attorney told The Nerve that South Carolina’s existing or proposed STR ordinances could result in court challenges depending on the types of restrictions. “Any time you’re erecting a barrier to the exercise of property rights, there are going to be constitutional implications in enacting that policy,” said Ari Bargil, a lawyer with the Virginia-based Institute for Justice. Bargil represented a Wilmington, N.C., couple who sued the city after it instituted a “lottery” system for STR owners, preventing them from continuing to rent their vacation property if they weren’t selected in a given year. In April, the N.C. Court of Appeals ruled that the city’s STR ordinance violated that state’s constitution. Asked about the legality of Columbia’s proposed ordinance and Charleston’s existing law aimed at banning investor-owned STRs in residential areas, Bargil replied, “I see that as an attack on short-term rentals as such,” adding, “Unless there is a rational reason for that, it may well be unconstitutional under the South Carolina Constitution.” Bargil also questioned the constitutionality of annual caps imposed by S.C. municipalities on the total number of allowed STRs. In addition, he said local governments could face legal challenges if they violate the “vested rights” doctrine – a main issue in the Wilmington, N.C., case – by banning or severely restricting STRs even though the affected property owners legally rented their houses before the bans or restrictions took effect. And how should local governments deal with noise, trash or traffic issues at STRs? Bargil said most places have separate ordinances to address that, adding, “As long as they enforce them, then there shouldn’t be problems.” Bargil said he sees restrictions on short-term rentals increasing nationwide in part because local governments want to blame large STR companies like Airbnb or Vrbo for their own failings to increase the housing supply in their communities in response to rising housing costs. “This is a traditional supply-and-demand problem,” he said. “I think governments recognize this, but nevertheless it’s easier to point the finger at large corporate actors and say, ‘They’re the ones to blame, not us.’ And that’s why we see a lot of these ordinances.” “What they’re really trying to do is keep out people and make them feel uncomfortable,” he added. In the end, Bargil said municipalities must balance the “legitimate interests of the community” with the property rights of STR owners. “No person has a right to rent a property and use it in a way that disrupts the enjoyment of those around them,” he said, though he warned, “Some of the things local governments are doing in response to short-term rentals toes the line of what might exceed the limitations on their powers.” “This is something government has been doing for a really long time,” Bargil said. Brundrett is the news editor of The Nerve (www.thenerve.org). Contact him at 803-394–8273 or [email protected]. Follow him on Twitter @RickBrundrett. Follow The Nerve on Facebook and Twitter @thenervesc. Nerve stories are free to reprint and repost with permission by and credit to The Nerve.

By RICK BRUNDRETT S.C. residents generally support using public money to allow children to attend private schools, a South Carolina Policy Council poll shows – and a key negotiator on a related school-choice bill says he’s pushing to get it passed. It remains to be seen whether the Republican-dominated, 46-member Senate will give final approval to the compromise bill – known as the “Put Parents in Charge Act” – when the Legislature reconvenes Tuesday. But Sen. Greg Hembree, R-Horry, an attorney who is the Senate Education Committee chairman and a member of the conference committee on the Senate bill, said he’s working with other “legal minds” in the Legislature to find a way. “It’s not going away; we’re not quitting,” Hembree said when contacted by The Nerve last week after the bill stalled in the Senate. “We are razor close.” Another conference committee member, Rep. Shannon Erickson, R-Beaufort, who was a co-sponsor of a similar House bill, told The Nerve this week she will work on school choice legislation next year if necessary. “If I’m going to be an advocate for children, I’m going to always try to be looking for what the children need in the spectrum of what our state dollars should provide,” said Erickson, who for years has operated preschools in the Beaufort area. Retired educator and conference committee member Rep. Bill Whitmire, R-Oconee, said when contacted this week he hopes the compromise bill will become law this year, noting, “Parents need a choice whether they want to send their child to a public school or a private school, and I thought this education scholarship account was a good way to do it.” The poll released this month by the Policy Council – The Nerve’s parent organization – found that of 606 likely voters statewide, about 52% approve of the proposed school-choice program for private K-12 schools, with support rates of 64%, 45.5% and 39% among Republicans, independents and Democrats, respectively. The respondents were asked whether they would approve of a state-funded scholarship program for low-income students to attend private schools of their choice, and were informed that the cost per student would be equal to or less than what the state currently pays to educate those children. “Lawmakers are on the verge of delivering a much-needed win for South Carolina families,” said Dallas Woodhouse, the Policy Council’s executive director. “Our poll shows that voters understand the value of giving parents more control over their children’s education. The scholarship program is a great first step in that direction.” Besides school choice, the poll, conducted by Tennessee-based Spry Strategies from May 31 to June 3, sought responses to questions in a variety of areas, including tax cuts, inflation, energy independence, election reform and confidence, and school board transparency. The margin of error was a plus or minus 4 percentage points. The Nerve last week reported about the poll results on tax cuts and a compromise tax-relief bill, which will provide one-time rebates to eligible taxpayers this year, combined with lowering the top individual income-tax rate to 6.5% from 7%. The rate gradually will reduce to 6% over five years if revenue-growth projections are met. Complete results of the poll can be found here. The compromise school-choice bill easily passed the Republican-controlled House on June 15 by a vote of 85-14. But it stalled later in the Senate during a debate that stretched into the night. The bill would provide maximum $5,000 scholarships in the first year of the program to a total of 5,000 mainly low-income students in the state, based on Medicaid or Children’s Health Insurance Program (CHIP) eligibility, to attend eligible private or public schools selected by their parents. The maximum number of scholarship students would be 5,000 in each of the following two years and 15,000 annually in subsequent years. The bill would designate $75 million in state surplus funds for the program. Private school needs Contacted this week by The Nerve, the leaders of two statewide organizations representing private schools say they support the main goals of the bill. “It’s a benefit to the low-income families, and those are the people I feel sorry for,” said Edward Earwood, executive director of the South Carolina Association of Christian Schools, noting the bill would “allow us to serve more kids.” Said Spencer Jordan, executive director of the South Carolina Independent School Association, “Most of the parents we talk to – public and private (schools) – think there is a need for school choice in South Carolina.” Meanwhile, in a related matter, the U.S. Supreme Court in a ruling released Tuesday said religious schools couldn’t be excluded from a Maine program that offers public tuition assistance for private education – a decision that supporters contend will help protect religious schools nationwide against government discrimination. As of April this year, there were 777,111 S.C. students actively enrolled in pre-kindergarten through grade 12 in public schools, including charter schools, according to state Department of Education records. In comparison, the K-12 head count in private schools statewide totaled 33,492 during the 2020-21 school year, those records show. Student enrollment among members of the South Carolina Association of Christian Schools and Independent School Association currently totals about 11,500 and 36,000, respectively, according to Earwood and Jordan. Jordan said the average annual tuition among the 134 schools in his organization is about $8,000. Earwood said yearly tuition among the approximately 75 schools in his group varies greatly, with costs, as an example, running between $4,000 and $5,000 at some rural schools, and $8,000 to $10,000 at other schools in more populated areas. “We’re not going to get rich off of it,” Earwood said about the compromise scholarship bill, noting the $5,000 cap wouldn’t cover tuition costs above that amount, and that a number of churches in his organization already subsidize tuition at their respective schools. Earwood also pointed out that the $5,000 cap is lower than the average amount of tax dollars provided annually for public school students. State Department of Education records show that for this school year, estimated state revenues, excluding bond revenues, for students in regular public school districts averaged $6,937 per student, with a total estimated average of $15,535 per student including federal and local funds. Jordan said while his organization supports the compromise bill’s main goal of offering school choice at the K-12 levels, many of his member schools question whether the legislation allows enough flexibility in the types of standardized assessment tests given to students. “With many of the schools, the concern is whether you would truly have autonomy to elect your curriculum,” he said. “As the South Carolina Independent School Association, of course we are in favor of school choice, but also with keeping our autonomy as independent schools.” ‘Missing link’ Sen. Hembree said although there was a Senate floor amendment requiring private school students to take standardized state assessment tests – which he noted he opposed – the compromise bill would allow those students to take “nationally normed” assessment tests that would be comparable to the state exams. Hembree also said that as part of the six-member, conference committee’s negotiations, House members agreed to a Senate proposal to make the scholarships a permanent program. “It was quite a trick to meld these two really different bills together to get where we wanted to get, and we were able to do that,” he said, describing the compromise legislation as “pro-student, pro-education, pro-family and pro-parent.” Rep. Erickson, one of the three House conference committee members, said school choice already exists at the 4-year-old kindergarten and higher education levels in the state, adding that parents are “asking for the same options for those 12 years in the middle” as it relates to private schools at those grade levels. “That’s kind of the missing link,” she said. Asked about the Senate’s chances of passing the compromise bill when the Legislature reconvenes Tuesday, Erickson replied: “I’m not interfering; the ball’s in their court. I certainly hope and pray they will give it a look.” Brundrett is the news editor of The Nerve (www.thenerve.org). Contact him at 803-394–8273 or [email protected]. Follow him on Twitter @RickBrundrett. Follow The Nerve on Facebook and Twitter @thenervesc. Nerve stories are free to reprint and repost with permission by and credit to The Nerve.

By RICK BRUNDRETT Just days before a legislative conference committee approved a compromise tax-cut bill, South Carolinians expressed strong support for tax relief in a poll released by the South Carolina Policy Council – The Nerve’s parent organization. Contacted last week by The Nerve before the deal was announced, several senators who co-sponsored the original bill were asked about their views on the poll results and the legislation. A Democratic senator recommended, for example, that part of the state’s massive surplus be used to cut corporate income taxes to attract companies to small counties that have lost population. The random sample of 606 likely S.C. voters, who were surveyed from May 31 to June 3, found that a collective approximately 47% of respondents favored permanent state income-tax cuts or one-time rebates compared to about 38% who supported increased government spending in areas such as education, transportation and health care. For those responses, likely voters were asked what they think should be the higher priority for state lawmakers in deciding what to do with a current several billion-dollar surplus. In a related matter, about 78% of respondents said cutting taxes was important for the state to remain competitive, with 54% saying that income tax cuts were very important. Likely voters were asked how important they thought it was for lawmakers to reduce income tax rates. “South Carolina voters clearly understand that the Palmetto State has to enact bold tax relief and reform to compete for jobs and industries with all our neighboring states that have lower or no state income tax,” said SCPC executive director Dallas Woodhouse. “Lawmakers are making a great first step, and there is broad support for their actions.” The poll, conducted by Tennessee-based Spry Strategies, sought responses to questions in a variety of areas, including – besides tax cuts – inflation, energy independence, election reform and confidence, school choice and school board transparency. The margin of error was a plus or minus 4 percentage points. Complete results of the South Carolina Policy Council’s poll can be found here. Last Friday, a House-Senate conference committee announced it had reached a deal on an amended Senate tax-cut bill. The conferees agreed to a one-time rebate to taxpayers – with a maximum individual rebate of about $800 to eligible taxpayers, to be paid in November or December – combined with lowering the top individual income-tax rate to 6.5% from 7% and gradually reducing the rate to 6% over five years if the economy stays healthy, according to a State newspaper story. Budget records show that for the fiscal year that starts July 1, the one-time rebate and initial tax-rate cut collectively will cost $1.7 billion out of a total $6.5 billion in surplus recurring and nonrecurring state funds. The state’s total fiscal 2022-23 budget, which includes state, federal and “other” funds, is $38.1 billion, according to a conference committee version. ‘So much money out there’ Two of the sponsors of the original Senate tax-cut bill – Republican Sens. Josh Kimbrell of Spartanburg and Katrina Shealy of Lexington – told The Nerve when contacted last week they believe it’s important to provide tax relief this year with surplus money. “We have so much money out there right now, and I think people are better stewards of their own money than we are,” said Shealy, who is a Senate Finance Committee member and also chairs the chamber’s Family and Veterans’ Services Committee. “If we put the money back in their pockets, they’re going to spend it … and it’s going to go back into the economy.” Still, she cautioned, lawmakers need to be “frugal” at the same time with the extra tax dollars, adding that the Great Recession of 2007-09 was “like a nightmare.” “It’s the right thing to do in the face of significant inflation we’re seeing nationally to provide as much relief as we can at the state level,” said Kimbrell about the compromise bill. “I think the combination of permanent rate reductions and a rebate is the right approach.” Kimbrell said he has “long advocated” for a “complete repeal” of the state income tax, though he added that “it’s not feasible at the moment.” Nine states have no individual income tax or tax only certain types of investment income: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming, according to the Forbes and Investopedia websites. Contacted last week, S.C. Sen. John Scott, D-Richland, who is a member of the Senate Finance Committee, told The Nerve although he supports using one-time, nonrecurring surplus money for individual tax rebates, he believes that new recurring dollars should be committed primarily to cutting the corporate income-tax rate, which currently is 5%. “We’ve got to look at those counties that have lost population,” Scott said, noting more than 20 mostly small, rural counties lost population in the latest U.S. Census. “I want to give the tax break to all corporations because smaller corporations don’t come unless they feed into the larger corporations.” Scott said he also would give other types of tax incentives to “those smaller corporations that will locate in those counties that have last population.” He added, though, he thinks lawmakers should carry forward as much as the surplus as possible into next year, noting, “The larger the carry forward, the better it is for next year in case the economy goes into a recession.” Assuming the full Legislature, which reconvenes today, gives final approval to the compromise tax-cut bill, it will go to Republican Gov. Henry McMaster, who publicly has supported tax relief plans. Brundrett is the news editor of The Nerve (www.thenerve.org). Contact him at 803-394–8273 or [email protected]. Follow him on Twitter @RickBrundrett. Follow The Nerve on Facebook and Twitter @thenervesc. Nerve stories are free to reprint and repost with permission by and credit to The Nerve.

By RICK BRUNDRETT The Biden administration and Democratic-controlled U.S. House collectively have been focusing on local municipalities, publicly traded companies and private retirement plans to promote the environmental, social and governance movement that is popular among liberal groups, records show. Republican state and federal officials in South Carolina are opposing those efforts, contending, among other things, that mandating ESG factors will hurt taxpayers, businesses and individuals financially. Critics say ESG scores are being used by banks, investment and accounting firms, and credit rating agencies to grade companies on how well they have adopted certain liberal values or policies, such as reducing the effects of climate change, increasing diversity on their governing boards, and supporting social justice causes. The Nerve in recent months has been investigating the ESG movement in South Carolina. At the federal level, an obscure regulatory organization created by Congress in 1975, known as the Municipal Securities Rulemaking Board (MSRB), earlier this year received public comments on ESG practices in the municipal securities market. In a March 8 letter to the MSRB, a group of state officials from across the U.S., including S.C. attorney general Alan Wilson and treasurer Curtis Loftis, criticized the board’s actions. “The seemingly innocuous RFI (Request for Information) questions are actually precursors to MSRB rules that would require municipalities to make ESG-related disclosures,” the officials said. “These communities require funding, and that means access to capital markets.” “Recognizing the special role of America’s state and local governments, Congress enacted a unique regulatory regime for them, requiring that they abide by anti-fraud provisions but exempting them from onerous disclosure requirements that would otherwise drive up the costs of funding and threaten their ability to govern themselves,” they added. “Congress maintained this balance when it created the MSRB, strictly forbidding it to demand disclosures from municipal issuers or to specify the content of disclosures.” The state officials, which included neighboring Georgia’s attorney general and treasurer, noted that the MSRB “candidly admits” its intent to “create access to information demanded by ESG ‘impact investors’” in the municipal bond market, though securities laws already exist to ensure investors have “material information, not whatever data they make seek in pursuit of social schemes.” As of last June 30, outstanding general obligation and revenue bond debt among school districts, municipalities, counties and special purpose districts in South Carolina totaled $14.9 billion, according to an annual report by the S.C. Treasurer’s Office. Contacted this week by The Nerve, Eric Shytle, general counsel with the Municipal Association of South Carolina, said the association currently has “no position on ESG ratings or disclosures.” “My understanding is that the current focus of the MSRB is to be sure that, if municipal bonds are marketed as meeting one or more ESG goals, the proceeds of the bonds are used in a manner that is consistent with the marketing,” Shytle said in an email response, adding that to his knowledge, no S.C. municipality has experienced “adverse ratings actions or market conditions as a result of ESG considerations.” In an email response this week to The Nerve, MSRB spokeswoman Tina Marchetti said the board plans to publish a summary of the “diverse” public comments received on the ESG issue, plus host a series of virtual town halls to “further explore the various themes raised by commenters.” ‘Weaponizing’ rulemaking authority In other federal ESG action, the U.S. House passed a bill last year, titled the “Corporate Governance Improvement and Investor Protection Act,” which would, among other things, require that publicly traded companies disclose certain information related to, according to a bill summary: *ESG “performance metrics”; *Climate “change-related risks,” including “direct and indirect greenhouse gas emissions” and “fossil fuel-related assets”; *Expenditures of “certain political activities”; and *The demographic makeup of the company’s board of directors and executive officers. The bill also would create an advisory committee that would recommend to the Securities and Exchange Commission policies to “facilitate the flow of capital toward environmentally sustainable investments,” according to the bill summary. The U.S. House Committee on Financial Services passed the bill over the objections of Rep. William Timmons of Greenville, who sits on the committee. The bill passed the full House last June by just one vote, mostly along party lines. Asked about his views on ESG, Timmons in a recent prepared statement to The Nerve said, “ESG metrics in credit analysis and investment decisions are simply a political tool that have no impact on financial performance or risk.” “When Republicans take back the House in November,” Timmons continued, “mandating ESG disclosures will have no place on our legislative or regulatory agenda. ESG is just another example of the Left weaponizing and abusing their rulemaking authority to name and shame those who do not fall in line with their woke climate agenda.” The Nerve earlier this month revealed concerns by small S.C. business owners over ESG mandates. The House bill, introduced in February 2021 by California Democratic Rep. Juan Vargas, is now in the U.S. Senate Committee on Banking, Housing and Urban Affairs, though no official actions have been taken, records show. A committee spokesman told The Nerve if the bill doesn’t pass this year, it would have to be reintroduced next year. Sen. Tim Scott, who sits on the banking committee, has been a vocal ESG critic, telling Federal Reserve Board chairman Jerome Powell in a March hearing: “I know that there’s a lot of attention being paid these days to ESG. I think that is a bad direction for the Fed. The Fed should focus its attention on its primary responsibilities and frankly, not even get involved in congressional matters.” In addition, Scott, who also is the ranking member of the Senate Special Committee on Aging, and three other Republican senators in a Dec. 10 letter urged the U.S. Department of Labor (DOL) to withdraw a proposed rule change that would allow managers of private retirement plans to promote ESG factors in those plans. “DOL claims that the proposal will simply ‘remove barriers to plan fiduciaries’ ability to consider climate change and other environmental, social and governance factors when they select investments and exercise shareholder rights,’” the senators said. “However, in reality, the proposal effectively mandates consideration of climate change and ESG factors in all investment and proxy voting decisions.” The proposal also would vastly expand the “circumstances in which retirement plan fiduciaries can pursue ‘woke’ ESG causes even when they provide no financial benefits to plan participants and beneficiaries,” the senators continued. “As a result, it will significantly harm Americans’ retirement savings by allowing plan fiduciaries to promote non-pecuniary policy objectives like lowering global carbon emissions and promoting ‘social justice’ rather than being solely focused on maximizing investment returns.” In a related action, S.C. attorney general Wilson and treasurer Loftis joined other state leaders in a Dec. 13 letter to DOL protesting the proposed rule, titled, “Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights.” “The Proposed Rule promotes a social activist agenda over the interests of employees, retirees, and other retirement fund beneficiaries,” the officials said in the letter. As it stands for now, the issue is still in the “proposed rule stage,” federal records show. The DOL in a news release said the proposal followed an executive order signed by president Joe Biden last May directing the federal government to implement policies to “help safeguard the financial security of America’s families, businesses and workers from climate-related financial risk that may threaten the life savings and pensions of U.S. workers and families.” The Nerve last week revealed that two major investment management firms that handle a large part of South Carolina’s pension plan for state retirees are big supporters of the ESG movement in the U.S. Brundrett is the news editor of The Nerve (www.thenerve.org). Contact him at 803-394–8273 or [email protected]. Follow him on Twitter @RickBrundrett. Follow The Nerve on Facebook and Twitter @thenervesc. Nerve stories are free to reprint and repost with permission by and credit to The Nerve.

By RICK BRUNDRETT Two major investment management firms that handle a large chunk of South Carolina’s pension plan for state retirees are big proponents of the controversial environmental, social and governance (ESG) movement, The Nerve found in a review of pension and other records. Of the approximately $39 billion market value of all investments by the pension plan at the end of last fiscal year, about $18.5 billion, or nearly half of the total, was managed by two of the world’s largest asset managers – New York-based BlackRock and Boston-based State Street Corporation, pension records show. BlackRock – the world’s largest asset manager overseeing $10 trillion in assets as of January – and State Street, which reported $4 trillion in assets under its management at the end of last year – make no secret of their support of the ESG movement, also known as “stakeholder capitalism.” Critics say ESG scores are being used by banks, investment and accounting firms, and credit rating agencies to grade companies on how well they have adopted certain liberal values or policies, such as reducing the effects of climate change, increasing diversity on their governing boards, and supporting social justice causes. When it comes to public pension plans, ESG critics contend that investment management companies could substitute ESG factors for traditional financial considerations, resulting in investments having lower rates of return and plans being underfunded. In his annual letter this year to CEOs, Larry Fink, who is the chairman and CEO of BlackRock, asked that businesses “demonstrate how they’re going to deliver on their responsibility to shareholders, including through sound environmental, social, and governance practices and policies.” “Most stakeholders – from shareholders, to employees, to customers, to communities, and regulators – now expect companies to play a role in decarbonizing the global economy,” Fink wrote, adding later. “Every company and every industry will be transformed by the transition to a net zero world. The question is, will you lead, or will you be led?” Still, Fink contended in his Jan. 17 letter that “stakeholder capitalism” is “not about politics” or a “social or ideological agenda,” adding, “It is not ‘woke.’” On its website, State Street Global Advisors, a division of State Street Corporation, says it believes that companies that “successfully integrate ESG into their business strategies and have effective independent board oversight are better positioned to generate value for our clients over the long term.” “At State Street Global Advisors our mission is to invest responsibly to enable economic prosperity and social progress,” the website says. As of last June 30 for South Carolina’s pension plan, State Street and BlackRock were managing publicly traded stocks totaling about $4.9 billion and $13.6 billion in market value, respectively, according to an annual report by the S.C. Retirement System Investment Commission (RSIC). The collective $18.49 billion market value of those stocks represented 47.2% of the total $39.15 billion market value, net of benefit payments, of the pension plan’s overall investments. BlackRock and State Street were the only investment management firms involved with the public equity portfolio of the pension plan for fiscal 2020-21, according to the RSIC report. Asked for the number of public pension plans in the U.S. that BlackRock is involved with, Keith Brainard, a spokesman for the Kentucky-based National Association of State Retirement Administrators, said in an email response to The Nerve, “It seems safe to say that as the world’s largest asset manager, BlackRock is likely under contract with a large number of public pension funds and public pension plan sponsors (states and cities), for both pension and defined contribution assets.” There are about 5,000 public retirement systems in the U.S., Brainard said, citing U.S. Census Bureau records. An average total of 171,298 retirees in South Carolina’s five retirement systems or their beneficiaries received pension benefits last fiscal year, according to an annual report by the S.C. Public Employee Benefit Authority. ‘Standing up and fighting back’ Some S.C. officials are concerned that ESG factors could become a consideration in state pension plan investments, the overall management of which is the responsibility of the RSIC. “My view would be very disapproving of basing investment decisions for investment portfolios on anything other than economic reasons,” state comptroller general Richard Eckstrom, a Republican, told The Nerve. “ESG considerations fall into the political category.” Said Republican state treasurer Curtis Loftis when contacted by The Nerve: “I think they’ve (the RSIC) done a fine job so far; they’ve resisted a lot of the pressure. However, they along with Treasurer’s Office, the attorney general and anybody else who can has got to start standing up and fighting back. If we don’t fight back, we’re going to have nothing left.” Under state law, Loftis and Eckstrom each appoints a member to the RSIC’s governing board, which has seven voting members. Loftis’ counterpart in West Virginia – Republican state treasurer Riley Moore – announced in January that the state Board of Treasury Investments, which manages the state’s approximately $8 billion in operating funds, would no longer use a BlackRock investment fund as part of its banking transactions. “The decision was based on recent reports that BlackRock has urged companies to embrace ‘net zero’ investment strategies that would harm the coal, oil and natural gas industries, while increasing investments in Chinese companies that subvert national interests and damage West Virginia’s manufacturing base and job market,” the written announcement said. In an April 19 letter to RSIC CEO Michael Hitchcock, Alan Wilson, who is the S.C. attorney general, said he and other state attorneys general recently sent letters to the Biden administration to “express concern over new federal rules regarding Environmental, Social, and Governance (‘ESG’) investment practices.” “As I have expressed in these letters to the Biden administration, I have grave concerns over ESG investment practices,” Wilson, a Republican, said in the letter, a copy of which was provided to The Nerve by the Attorney General’s Office. “I seriously question whether these investment practices are consistent with fiduciary obligations under federal and state law.” “Additionally,” continued Wilson, who by law is the state’s securities commissioner, “I am concerned that proponents of ESG investments frequently misrepresent and misstate both the nature and benefits of those investments.” In a recent interview with The Nerve, Hitchcock said while there are state pension plans “interested in pursuing ESG-related investment theses, that’s not us.” Hitchcock said neither BlackRock nor State Street makes “any investment decisions for us whatsoever,” explaining that the pension plan’s public-equity portfolio is “all passively invested” through an index, which is a way to measure the price performance of a group of securities over time. Generally, passive investing refers to a “buy-and-hold portfolio strategy for long-term investment horizons, with minimal trading in the market,” and unlike active trading, doesn’t seek to “profit from short-term price fluctuations or market timing,” according to Investopedia, a financial information website. “The reason we invest passively is that we’re 50-year investors,” Hitchcock said, noting the pension plan’s public-equity portfolio is “spread across the world.” Annual fees paid by the RSIC to BlackRock and State Street total about $3.5 million, he said. Asked if ESG factors play any role in BlackRock’s or State Street’s management of their part of the pension plan, Hitchcock replied, “No, it’s just an index. … Even if they didn’t like a company, they wouldn’t be able to exclude that company because for some reason they didn’t like them.” “The way we look at it, it’s our job to earn a return to help make the (pension) plan work,” he said. “What we’re trying to do is earn that 7% actuarial rate of return in the best risk-adjusted way possible.” Still, Hitchcock acknowledged that the ESG movement is “very much a trend in the institutional investor community,” and that he “completely understands” the concerns raised by the state attorney general. “I told the AG we don’t invest to promote progressive causes; we don’t invest to promote conservative causes,” Hitchcock said about a letter he wrote in response to Wilson’s letter last month. “We invest to benefit our beneficiaries, and that’s the end of the story.” “RSIC’s position is that promoting ESG initiatives, or any other type of non-pecuniary goal, must not be a primary investment consideration,” Hitchcock said in his April 26 letter to Wilson, a copy of which Hitchcock provided to The Nerve. Legislative proposals Longtime state Rep. Garry Smith, R-Greenville, who is retiring this year, told The Nerve he hopes an ESG bill will be introduced next year similar to a national model proposed by the Virginia-based American Legislative Exchange Council (ALEC), which on its website describes itself as “America’s largest nonpartisan organization of state legislators dedicated to the principles of limited government, free markets and federalism.” The proposed legislation by ALEC would strengthen fiduciary rules to “protect pensioners from politically driven investment strategies” that “reduce investment returns over the long term which leads to underfunding in state pension plans across the country,” according to a summary of the model, titled the “State Government Employee Retirement Protection Act.” Smith, who is ALEC’s state chairman for South Carolina, said he opposes injecting ESG factors into state pension plan investments. “What you’re doing is instilling politics, climate change and other things in the decision making, which is absurd,” he said. Smith said an ESG-related bill introduced in February by Rep. Anne Thayer, R-Anderson, and co-sponsored by more than 30 Republicans, including Smith, could be expanded next year to ban ESG factors in pension plan investments. The bill, which The Nerve reported about in April and didn’t pass during this year’s regular legislative session that ended last week, would have prohibited financial institutions doing business in the state from discriminatory practices based on ESG ratings or other “subjective or arbitrary standards.” “I say this all the time: Ideas have consequences, and bad ideas have victims,” Smith said. “These (ESG) ideas have victims – lots of victims.” Brundrett is the news editor of The Nerve (www.thenerve.org). Contact him at 803-394–8273 or [email protected]. Follow him on Twitter @RickBrundrett. Follow The Nerve on Facebook and Twitter @thenervesc. Nerve stories are free to reprint and repost with permission by and credit to The Nerve.

By RICK BRUNDRETT In a letter last year to Cromer Food Services, one of the Anderson-based company’s hundreds of customers – a foreign-headquartered corporation – said it was drafting a “Business Partner Code of Conduct that expresses all our essential requirements for sustainable cooperation.” The letter asked the company to complete a questionnaire as “one of the methods of ensuring compliance with the standards” – which included broad categories of “social responsibility” and “environmental protection and resource conservation.” “We have started to get feelers – nothing required as of yet – questionnaires sent to us from companies asking us what our demographics are, what our environmental impact is, what we are doing to lower our environmental impact – all the things you find in an ESG score,” Cromer president Brent Cromer said in a recent interview with The Nerve. “ESG” stands for “environmental, social and governance,” though there’s no single accepted national standard for determining ESG scores. Critics contend the scoring is being used by banks, investment and accounting firms, and credit rating agencies to grade companies on how well they have adopted certain liberal values or policies, such as reducing the effects of climate change, increasing diversity on their governing boards, and supporting social justice causes. Cromer Food Services has 115 employees and around 500 customers, providing a variety of food and vending services to companies ranging in size from 100 to 10,000 employees, according to Cromer and the company’s website. There were 445,804 small businesses in South Carolina last year, representing 99.4% of businesses in the state, according to the U.S. Small Business Administration. Diane Hardy, who owns an Upstate bakery with 38 employees and founded a grassroots organization, called the Mom and Pop Alliance of South Carolina, to educate and advocate for small businesses statewide, worries that the ESG movement will hurt small businesses and residents. “It’s something that has not been transparent to the citizenry,” Hardy told The Nerve. “It’s been around for two decades, but it’s purposely been hidden. People are not aware of this, and it could easily be turned into a social credit score on individuals, yet we know very little about ESGs.” If compliance with ESG standards becomes a requirement for South Carolina companies, Hardy said the “amount of red tape and paperwork to attempt to do it for ESG clients could be catastrophic to a small business, not to mention invasive from a privacy standpoint.” Cromer said small businesses such as his ultimately could be forced to hire compliance officers to deal with ESG mandates. Hiring an ESG compliance consultant likely would cost at least $25,000, according to a business source who spoke this week to The Nerve on the condition of anonymity, noting the cost information was provided by a representative of a prominent ESG rating company. The ESG movement, also referred to as “stakeholder capitalism” or “sustainable investment,” has been gaining momentum in recent years in the U.S. and abroad. A 2020 survey by accounting giant KPMG, for example, found that 82% of large U.S. corporations include “sustainability information” in their annual reports. Fitch Ratings – one of the three main credit rating agencies – in a report last year noted it maintains more than 140,000 individual ESG scores for 10,000-plus “entities and transactions worldwide.” The Nerve last month reported about two S.C. bills, of which was aimed at improving transparency of ESG scores in financial transactions, while the other would prevent discriminatory practices by financial institutions based on ESG ratings. ‘Writing on the wall’ Cromer provided The Nerve with copies of ESG-related inquiries sent to his company by two corporate customers, which he asked The Nerve not to identify. One of the customers provided a survey asking, among other things, for the “Ethnicity of primary business owner” and “Type of diversity certification(s) obtained.” Cromer said his firm hasn’t responded to any of the surveys. “We have refused to do that simply because we think it’s intrusive,” he said. “Also, we see the writing on the wall that eventually this is going to be a requirement for doing business with those companies, and we’re just not going to participate.” Cromer added the ESG message was no secret to the business community when he attended last month’s nationally televised Heritage golf tournament on Hilton Head Island. He provided The Nerve with a copy of an event guide advertisement for the Royal Bank of Canada (RBC), the tournament’s general sponsor, promoting the bank’s ESG “integration in our investment process.” Asked about ESG diversity goals, Cromer told The Nerve while he believes in diversity in the workplace, “If I get a certain diversity based on the best employees, that’s great, but I don’t want to be forced to take a lesser employee if they’re not qualified.” As for adopting environmental priorities that would be included in an ESG rating, Cromer replied, “We’re all for doing the best for the environment, but costs have to be weighed.” When it comes to his business, Cromer said he doesn’t care about his customers’ political views. “I treat them all equally,” he said. “They all make purchases from me, and they’re all valued the same,” adding, “It’s a two-way street: If you deliver the service that’s expected of you and you do the job you’re supposed to do, that’s all that should be looked at.” Discrimination fears Hardy said she first heard about ESG two years ago. “I knew it would impact large corporations, but I didn’t think it would impact smaller businesses,” she said. “Then I started seeing that it really would impact small businesses, and so we needed to educate the legislators and citizens about this critical topic.” She acknowledged, though, the general public doesn’t know much about it. “I speak to groups – 125 people – and I’ll ask the room how many are familiar with this topic, and maybe I’ll have one person who’s heard of it and knows about it,” she said. Hardy said her Greenville-based Mom and Pop Alliance persuaded state Rep. Anne Thayer, R-Anderson, to introduce a bill in February that would prohibit financial institutions doing business in the state from discriminatory practices based on ESG ratings or other “subjective or arbitrary standards.” The bill garnered 30 co-sponsors “within weeks,” she noted. She said her organization also had input on another state bill introduced in March and co-sponsored by Sens. Josh Kimbrell, R-Spartanburg, and Sean Bennett, R-Dorchester, which would require financial institutions to disclose if they use ESG scores or “diversity, equity, and inclusion practices” when doing business in the state. Both bills, which were highlighted in last month’s Nerve story, didn’t pass during this year’s regular legislative session but can be reintroduced next year. “I want to give the Legislature credit for moving on it,” Hardy said. For individual South Carolinians, Hardy said she fears those with bad ESG scores will be “treated as second-class citizens when it comes to financial services and insurance,” adding those companies also are “being graded, not on just their behavior, but also on the customers they take on.” In the end, Hardy said, “We need to do everything we can legislatively and through education to block the discrimination from ESGs that’s happening in South Carolina.” Brundrett is the news editor of The Nerve (www.thenerve.org). Contact him at 803-394–8273 or [email protected]. Follow him on Twitter @RickBrundrett. Follow The Nerve on Facebook and Twitter @thenervesc. Nerve stories are free to reprint and repost with permission by and credit to The Nerve.

By RICK BRUNDRETT Imagine a small business applying for a bank loan and being rejected despite having an excellent credit rating and strong revenues. The reason? Its “ESG” score was too low. If you’ve never heard of ESG, you’re probably not alone. But the corporate and financial worlds are well-acquainted with it. ESG stands for “environmental, social and governance.” Although there’s no single accepted national standard for determining ESG scores, critics contend the scoring routinely is used to rate companies on whether they have adopted certain liberal values or policies, such as reducing the effects of climate change, increasing diversity on their governing boards, and supporting social justice causes. A company with low ESG scores might not get bank loans – or would be offered only higher interest-rate loans – or couldn’t go public because investment firms refuse to do business with them, critics say. And critics also worry that the rating system eventually will be used against individuals seeking loans from their local bank or credit union. “It’s the Left’s political agenda manifesting itself into a set of financial rules, and it’s tyranny,” said Curtis Loftis, the Republican state treasurer, in an interview last week with The Nerve. “It’s allowing these large, woke corporations – mainly financial corporations – to look at us and say … ‘Are they with us or are they against us? We have trillions of dollars.’” “There’s no doubt it’s going to go to the individual (customer),” he added. “It’s only a matter of time.” Loftis, whose office handles the sale of state bonds, said he hasn’t seen evidence that large investment firms that typically buy those bonds are using ESG scores in their purchasing decision making. But at The Nerve’s request, he provided a March 31 report from New York-based S&P Global, a financial information and analytics firm, showing that South Carolina received “neutral” ratings in the three ESG categories, which were the highest rankings given to any state. The “neutral” rating was one step below the top “positive” rating. The worst of the five ratings was “very negative.” Loftis, who is chairman of the State Board of Financial Institutions, spoke last week at an S.C. Senate Banking and Insurance Subcommittee hearing on a Senate bill that would require banks, credit unions and insurers to disclose if they use ESG scores or “diversity, equity, and inclusion practices” when doing business in the state. Banks and credit unions that consider any of those factors in denying loans or charging different interest rates for similar transactions must provide “conspicuous disclosure” statements, under the bill. “Based on implanting ESG scoring matrixes into how they do loan approvals, that’s going to seriously affect how capital flows to businesses that may be owned by conservatives or have conservative values,” Sen. Josh Kimbrell, R-Spartanburg, who co-sponsored the bill with Sen. Sean Bennett, R-Dorchester, said when contacted this week by The Nerve. Bennett and Kimbrell are Banking and Insurance Committee members. “I’m deeply worried,” Kimbrell continued, “about the notion of any type of banking entity that’s going to be using environmental, social, governance scores to be making a determination as to whether you’re credit worthy or whether you get a government contract.” Kimbrell, who noted he previously worked as a commercial banker for more than 10 years, acknowledged that the bill, which was introduced on March 31, likely won’t pass this year, though he added he is working on “more far-reaching legislation” for next year to “prohibit the inclusion of an ESG matrix into the credit approval process for any bank headquartered or which operates in South Carolina.” South Carolina Bankers Association president and CEO Fred Green, who spoke at last week’s subcommittee hearing, doesn’t believe the legislation is necessary. “When I first saw the bill, my first thought was, ‘Banks, No. 1, don’t do it (use ESG scores); and No. 2, can’t do it,’” he said when contacted this week by The Nerve. Green, who noted he was in the banking business for “40-some” years, most of it “in the senior ranks of running a bank,” said his organization polled approximately 70 banks that do business in the state – about 40 of which are headquartered in South Carolina and the remainder based out of state – asking them whether they currently are using ESG scores and whether they intend to do so in the future. “There was 100% response, and the response was ‘no’ and ‘no,’” he said. Kimbrell said, though, “essentially some whistleblowers at other banks” have told him that “our banks are talking about how they are into it (ESG scores),” adding, “So it’s not theoretical; it’s happening.” Based on an example given by The Nerve, Green said if a person with excellent credit and a steady job is denied a bank loan solely because he held very conservative political views, the bank likely would be violating the federal fair lending law and Community Reinvestment Act, noting he cited the laws at last week’s subcommittee hearing. “Those two things alone keep everything fair,” he said. But Kimbrell doesn’t believe there is a level financial playing field in South Carolina. “They all know this is on our radar screen,” he said. “I think it has a deterrent effect just to have a hearing.” Other ESG legislation The Senate bill wasn’t the only ESG-related legislation introduced this year. Under a House bill sponsored by Rep. Anne Thayer, R-Anderson, and co-sponsored by 31 other Republicans, banks and other financial institutions doing business in the state couldn’t discriminate against individuals or businesses based on “subjective or arbitrary standards such as social media posts; participation or membership in any clubs, associations, or unions; political affiliation; employer; or other social credit, environmental, social, and governance, or similar values-based or impact criteria.” Banks or credit unions that violated the new law would be subject to a $50,000 fine for a first offense and a $250,000 fine for a second and subsequent offense, with fines doubling for subsequent offenses after five violations. The bill also generally would ban “all private businesses” in the state from discriminating against individuals and other businesses based on the same factors in the section dealing with banks and other financial institutions, unless the “practice is fully disclosed to the potential consumer before the consumer and business enter into any business transaction.” “It’s definitely an ESG bill, if you will,” Thayer told The Nerve when contacted Thursday. In researching her bill, Thayer said she was surprised to learn how prevalent ESG scoring is in the business world, citing Duke Energy as an example. In a “sustainability” report posted on its website, Duke listed ESG scores from several rating companies, noting, for example, that the “Bloomberg ESG Disclosure Score” last year was 61.89 out of a possible best 100, which was the “highest score for our peer U.S. utilities.” “To drive continuous improvement, Duke Energy benchmarks its environmental, social and governance (ESG) practices against best-in-class and peer companies,” the report said. As with the Senate bill, Thayer acknowledged that her bill, which was introduced on Feb. 15, has little chance of passing this year, noting no hearing has been held yet. But she added it could be used as an “educational tool” before being resubmitted next year. Thayer said she hopes other states will adopt similar legislation, and that the ESG issue “needs to be addressed nationally as well.” “As woke as we’re becoming as a country, I feel it’s going to be used against us if we don’t do something about it,” she said. Brundrett is the news editor of The Nerve (www.thenerve.org). Contact him at 803-394–8273 or [email protected]. Follow him on Twitter @RickBrundrett. Follow The Nerve on Facebook and Twitter @thenervesc. Nerve stories are free to reprint and repost with permission by and credit to The Nerve.

By RICK BRUNDRETT Under state court rules, judges must avoid even the “appearance of impropriety” in all of their activities, and “minimize the risk of conflict” with their official duties. Citizens, however, typically have no easy way of determining whether the income sources of many South Carolina judges or their immediate family members pose potential conflicts of interest when those judges are hearing court cases. That’s partly because unlike for other public officials, state law exempts most judges from filing annual income-disclosure statements with the State Ethics Commission. And judges also are exempted from having their annual taxpayer-funded incomes listed in the online salary database for state employees making at least $50,000 yearly. After initially ignoring a request in October under the state’s open-records law for the current salaries of higher-level judges and well-paid court staff, the Judicial Department eventually released its staff salary list, though only after being contacted by a law firm hired by The Nerve and its parent organization, the South Carolina Policy Council. Supreme Court chief justice Donald Beatty, for example, makes a base annual salary of $217,464 – the top amount on the provided list – while the other four justices’ base salary is $207,108, records show. For judges elected by the 170-member Legislature, which includes Supreme Court, Court of Appeals, circuit and family court judges, state law requires that candidates file an income-disclosure report, known as a statement of economic interests (SEI), with the House and Senate Ethics committees when they run for judicial seats. But that generally occurs every 10 years for Supreme Court justices, and every six years for Court of Appeals, circuit and family court judges. State law requires that SEIs include officials’ and their immediate family members’ public incomes, and the sources, though not amounts, of their private income. In comparison, income-disclosure reports for federal judges require details of investment income. South Carolina and Virginia are the only states where their legislatures play primary roles in electing judges. In the federal system, judges are nominated by the president and confirmed by the U.S. Senate. The S.C. Legislature in February filled 37 full-time judicial seats, including re-electing Supreme Court justice Kaye Hearn to another 10-year term, and electing Bruce Williams as the chief judge of the Court of Appeals, which is the state’s second-highest court. The Nerve earlier this month submitted state Freedom of Information Act requests to the House and Senate Ethics committees for the SEIs of all candidates in the Feb. 2 judicial elections. In a written response last week, Richard Pearce, legal counsel with the House Clerk’s Office and Office of Research and Constituent Services, said the clerk’s office has “no documents in response to your request,” adding, “Thank you for your interest in the South Carolina House of Representatives.” Senate clerk Jeff Gossett in his written response last week declined to release any SEIs, citing a state law requiring that records provided to a legislatively controlled judicial screening committee, known as the Judicial Merit Selection Commission (JMSC), be kept “strictly confidential” unless presented during a public screening hearing – and destroyed after the commission reports its findings of fact. “In accordance with these statutes, all statements of economic interests filed by judicial candidates who were voted upon by the General Assembly in a joint session on February 2, 2022, are confidential and exempt from disclosure,” Gossett said. The Nerve in January reported that the JMSC wouldn’t say why it found longtime Horry County circuit court judge Steven John unqualified. The JMSC’s chief lawyer attorney, Erin Crawford, noted that under state law, when candidates withdraw – as John did after he was found unqualified – any records submitted to the commission must be kept “confidential and destroyed as soon as possible” after the candidate’s written notification of withdrawal. The Nerve over the years repeatedly has pointed out the secrecy in the judicial screening process. Judges in the “unified” court system who are elected by legislators are exempted from the state law requiring other elected officials to annually file SEIs with the State Ethics Commission. In contrast, county probate judges, who are popularly elected, and state Administrative Law Court judges, who are elected by the Legislature but are not part of the judicial branch, submit annual SEIs to the Ethics Commission. The Nerve on Tuesday submitted an open-records request to the Judicial Department for the latest income-disclosure records for Supreme Court, Court of Appeals, circuit and family court judges. Brundrett is the news editor of The Nerve (www.thenerve.org). Contact him at 803-394–8273 or [email protected]. Follow him on Twitter @RickBrundrett. Follow The Nerve on Facebook and Twitter @thenervesc. Nerve stories are free to reprint and repost with permission by and credit to The Nerve.

By RICK BRUNDRETT More than three months after ignoring The Nerve’s written requests, the S.C. Judicial Department has released an updated salary list of state judges and other higher-paid court staff, which shows 141 employees making at least $100,000. The third branch of state government responded to The Nerve only after the South Carolina Policy Council – The Nerve’s parent organization – hired a law firm to press for the release of the records. Under the S.C. Freedom of Information Act (FOIA), the exact compensation of a public employee earning $50,000 or more year is a matter of public record. But unlike most other state agencies, the Judicial Department doesn’t provide salary information for its $50,000-plus workers to the online state salary database maintained by the S.C. Department of Administration. The Judicial Department is among 17 state entities that specifically are exempted from the database, as The Nerve has pointed out. And, unlike other public officials, judges elected by the Legislature don’t have to provide annual income-disclosure statements to the State Ethics Commission, which are posted on the commission’s website. South Carolina and Virginia are the only two states where their legislatures play primary roles in electing judges. In an email response last March to an unrelated FOIA request, Ginny Jones, the Judicial Department’s public information director, informed The Nerve that “we take the position that (the) FOIA does not apply to the Judicial Branch.” Although she said then that court staff would “make reasonable efforts to accommodate your requests,” the department ignored an Oct. 25 FOIA request for an updated salary list of all agency employees making at least $50,000 annually. Neither she nor Supreme Court chief justice Donald Beatty, who heads the department, responded to follow-up emails and a written letter requesting the records, as The Nerve reported. In contrast, less than three hours after The Nerve revealed in a November 2020 story that the department had denied an FOIA request for staff salaries, the agency without explanation released those records. Beatty, a former state House member who was first elected by lawmakers to the Supreme Court in 2007, makes a base annual salary of $217,464 – the top-paid department employee, according to the latest staff salary list. The department finally agreed on Feb. 9 to release the list, a day after Taylor Smith, an attorney-partner in the Columbia law firm of Harrison, Radeker & Smith, notified the agency in writing that his firm was representing the South Carolina Policy Council and The Nerve in the matter. Another partner in the firm initially contacted the department the previous week. Smith also represents the South Carolina Press Association. The Nerve, through the Policy Council, is an associate member of the press association. “As an attorney who has tried Freedom of Information Act cases before the judges who work for the Judicial Department of the state of South Carolina,” Smith said in a statement Thursday, “I have many times heard them cite the codified purpose of the FOIA, such that the FOIA must be construed so as to make it possible for citizens or their representatives to learn and report fully the activities of public officials at a minimum cost or delay to the person seeking access to public documents or meetings. Yet, in this case, that very purpose was frustrated by the Judicial Department.” Smith continued: “Often, the gray area in the definition of what is a public body comes down to the receipt of public funds, in whole or in part, or the expenditure of those public funds. It is rare for me, as a practitioner, to hear an entity that describes itself as a department of the state say it is not a public body for purposes of the FOIA. The bottom line is my firm shouldn’t have to be hired to assist individuals making open-records requests to departments of this state.” Smith also said he wasn’t aware of a “trial court order, (S.C.) Court of Appeals opinion or (S.C.) Supreme Court opinion which addresses the Judicial Department’s legal status as being one of a public body for purposes of the FOIA.” Six-figure club grows The Nerve in 2018 revealed that Beatty, who was elected in 2016 by lawmakers as the chief justice, was seeking a 33-percent pay hike for himself and other appellate and lower court judges, which lawmakers later approved. With the raise, Beatty’s base annual salary jumped from $156,234 to $208,000 – what a U.S. District Court judge made at the time. Under state law, the Legislature sets the salary of the chief justice; the base pay of the four Supreme Court associate justices is based on a percentage of the chief justice’s salary. Salaries of lower court judges are based on percentages of the pay of associate justices. Following a breakdown of the current salaries of judges, based on the records released to The Nerve, with the number of listed judges in parentheses: *Supreme Court chief justice: $217,464 (1) *Supreme Court associate justices: $207,108 (4) *Court of Appeals associate judges: $201,930 (8) *Circuit court judges: $196,752 (49) *Family court judges: $191,574 (56) Outside judges, the top-paid department staffers are Tonnya Kohn, the state court administrator, and John Nichols, who heads the Office of Disciplinary Counsel, an arm of the Supreme Court that investigates ethics complaints against lawyers and judges. The base annual salary for Kohn and Nichols is $142,805. A total of 319 department employees earn at least $50,000, with 141 making at least $100,000, salary records show, though the list didn’t include the position of the Court of Appeals chief judge, which was vacant at the time. In comparison, 300 staffers were making $50,000 or more in November 2020, 130 of whom were in the six-figure club, according to the salary list released at the time to The Nerve. As The Nerve reported last December, Beatty wants nearly $9 million more in general funds for next fiscal year, which starts July 1, to cover 76 full-time equivalent (FTE) administrative support positions that have been funded with court fines and fees, according to the agency’s annual budget request submitted to the Department of Administration. If approved, that amount would be in addition to $7 million in general funds that lawmakers approved for this fiscal year to cover 92 other FTE administrative support positions that had been funded with fines and fees. The House Ways and Means Committee’s budget version for fiscal 2022-23, which was released last week, designates an additional $5 million for court administrative positions. SC Judicial Dept Salary list Feb 2022Download Brundrett is the news editor of The Nerve (www.thenerve.org). Contact him at 803-394–8273 or [email protected]. Follow him on Twitter @RickBrundrett. Follow The Nerve on Facebook and Twitter @thenervesc. Nerve stories are free to reprint and repost with permission by and credit to The Nerve.

By RICK BRUNDRETT As expected, the Horry County legislative delegation last week nominated former House member Alan Clemmons as the county’s master-in-equity judge. But House and Senate members who make up the delegation didn’t  nominate Clemmons –  who had been a longtime delegation member – during a public meeting in Horry County as initially scheduled. Instead, they did it secretly while in session in Columbia, with most of them signing a circulated letter that was sent to Gov. Henry McMaster, who will decide whether to appoint Clemmons to the six-year, six-figure seat. Clemmons’ predecessor made $188,873 annually. Whether Clemmons’ nomination letter complied with state law is questionable. The S.C. Supreme Court in a 1996 ruling indicated that a county legislative delegation is a public body under the state’s Freedom of Information Act, which requires that votes on official business be done in open meetings. The state’s top court said then that voting by circulating a nomination letter among delegation members could be done only during an open meeting, with the public “able to glean the results and how each member voted.” Besides that, according to a 2007 written opinion when McMaster was the state attorney general, the Attorney General’s Office in a different  delegation matter said the state law that applied in the case didn’t permit the “circulation of a letter or petition as a ‘vote’ (and) as a substitute for a physical meeting.” A McMaster spokesman didn’t respond to The Nerve’s questions this week about whether the governor would appoint Clemmons to the MIE seat, given the attorney general opinion and Supreme Court ruling. The Nerve in 2019 first revealed the practice by some delegations to make nominations only with a letter signed by delegation members. As The Nerve has pointed out, county legislative delegations exercise considerable control over local matters, including the selection of county master-in-equity (MIE) judges. MIE judges typically hear foreclosure and other real estate cases. They have the same authority as circuit court judges in non-jury civil matters but are chosen through a different process compared to other types of judges. Clemmons, a Myrtle Beach attorney, was one of three candidates found qualified for the Horry County MIE seat by the legislatively controlled state Judicial Merit Selection Commission (JMSC). Under state law, the JMSC first screens and decides which MIE candidates to qualify; county delegations recommend a qualified candidate from their county to the governor, who decides whether to appoint the candidate – typically approved after routine background checks. The full Legislature usually confirms MIE candidates appointed by the governor. South Carolina and Virginia are the only states where their legislatures play primary roles in selecting judges. Contacted this week by The Nerve, Sen. Greg Hembree, R-Horry, who is the Horry County delegation chairman, said he canceled the public delegation meeting to vote on the county MIE nomination, which was scheduled for last Friday morning at the county courthouse. He said he did so after learning Clemmons had secured at least 51% of the total weighted vote of the delegation, and that the other two qualified candidates – Charles Jordan Jr. and Douglas Zayicek – notified him they were dropping out of the race. “Do I need to make all these people come to the Horry County courthouse on a busy Friday morning when we’re not going to have anything to do because the election is over?” Hembree said, adding Clemmons had “all the votes he needed” before the meeting was canceled. To comply with a 1999 U.S. Fourth Circuit Court of Appeals ruling, votes by county legislative delegation members on delegation matters are weighted, based on the percentage of the county’s population that the lawmaker represents, to fulfill the “one person, one vote” requirement. But in Clemmons’ case, was the public best served by allowing the delegation to vote privately by letter to nominate him, given his legislative ties and that he is seeking a well-paid public position? In answering that question, Hembree, a former solicitor who served on the JMSC, replied: “We did it like we do every other judicial appointment, so we didn’t show him any favoritism. … We treated it like we treat every other non-contested appointment.” Still, Hembree, who is the Senate Education Committee chairman, acknowledged that voting by letter is “sort of just a matter of convenience.” Insider edge State law allows qualified judicial candidates to seek commitments from lawmakers in advance of an election after the final JMSC screening report is released to the Legislature. As The Nerve has reported, incumbent judges usually face no challengers when seeking re-election; and even if there are several qualified candidates for an open seat, typically only one is left for a final vote because the others drop out after doing preliminary vote counts. Clemmons, a Republican who was first elected to the House in 2002 and served until his unexpected resignation in July 2020, was among more than 50 judicial candidates statewide found qualified by the six-legislator, 10-member JMSC following screening hearings in November and December. Clemmons, who served on the JMSC, including a stint as its chairman, did not reply this week to written messages from The Nerve seeking comment. At The Nerve’s request, Hembree released Clemmons’ Feb. 2 nomination letter to McMaster, which included a breakdown of the votes by the 15-member delegation. The dozen members who cast votes for Clemmons – two by proxy –included Republican Sen. Luke Rankin, who has the highest percentage of the weighted vote (19.44%). Rankin, an attorney who is the Senate Judiciary Committee chairman and vice chairman of the JMSC, did not return a written message this week from The Nerve seeking comment. Two other lawmakers who serve in the Horry County delegation and on the JMSC – Democratic Sen. Ronnie Sabb and Republican Rep. Jeff Johnson, both of whom are lawyers – also voted for Clemmons, according to the nomination letter. Clemmons received 68.33% of the total weighted vote. Other delegation members who voted for him included Republican Sen. Stephen Goldfinch and Democratic Sen. Kent Williams; GOP Reps. Case Brittain, Heather Crawford, Russell Fry and Tim McGinnis; and Democratic Reps. Carl Anderson, Lucas Atkinson and Jackie Hayes, according to the nomination letter. Hembree, who has the second-highest percentage (17.83%) of the weighted vote among delegation members, did not sign the letter. Asked whether he supported Clemmons, he replied: “The fact that I didn’t sign this letter answers that question. The answer is ‘no.’” Hembree didn’t respond to a follow-up question about his reasons for not supporting Clemmons. The Nerve in July detailed Clemmons’ decision to resign his longtime House seat slightly more than a year before formally becoming a candidate for the MIE position. He had won the Republican primary election for his House seat just several weeks before his July 2020 resignation, though he said in an affidavit to the State Election Commission that he was withdrawing from the general election because he was representing new legal clients who would “require a large involvement of my time and focus.” State law requires that former lawmakers wait at least a year before being elected by the Legislature to judgeships. If Clemmons if appointed by McMaster and confirmed by the full Legislature, he would become the second ex-House member in recent years to become a judge after resigning his legislative seat. In 2019, former Rep. Mike Pitts was quietly confirmed by the Senate as a Laurens County magistrate – an appointment pushed by Sen. Danny Verdin, R-Laurens, as The Nerve reported. The Nerve also revealed then that in 12 counties, one senator controls the appointments of that county’s magistrates. Brundrett is the news editor of The Nerve (www.thenerve.org). Contact him at 803-254-4411 or [email protected]. Follow him on Twitter @RickBrundrett. Follow The Nerve on Facebook and Twitter @thenervesc. Nerve stories are free to reprint and repost with permission by and credit to The Nerve.

By RICK BRUNDRETT A legislatively controlled committee isn’t saying publicly why it found a longtime circuit court judge unqualified – and state law requires the secrecy. The six-legislator, 10-member Judicial Merit Selection Commission (JMSC) on Dec. 1 voted 9-0 not to qualify Horry County circuit judge Steven John, who has been on the bench since 2001, for another six-year term – a rare action involving a sitting, veteran judge. In a December Nerve story, Erin Crawford, the JMSC’s chief lawyer, wouldn’t say why John was found unqualified for the 15th Circuit Court seat, though she said a formal screening report to be released by the commission would “state forth the findings of the Commission on each of the 9 evaluative criteria and will set forth any areas of concern as well as commission comments.” But that report, which was issued on Jan. 13, contained no mention of John’s screening, nor was there any public transcript of his screening hearing scheduled for last November. The Nerve in the December story cited two sources with knowledge of the situation but who did not want to be identified as saying that the JMSC had concerns about John’s temperament as a judge. In subsequent email responses to The Nerve, Crawford confirmed that John withdrew his candidacy after he was found unqualified, noting that under state law, if a candidate withdraws, “then that candidate is not included in the (screening) report or transcripts.” “It is my understanding that once a candidate has withdrawn, I cannot discuss any reasons or findings concerning that candidate,” she added. Under the state law that Crawford cited, if a candidate withdraws “at any stage of the proceedings,” the screening report, transcript, application and “other information gathered during the commission’s investigation” must be kept “confidential and destroyed as soon as possible after the candidate’s written notification of his withdrawal.” The Nerve repeatedly over the years has pointed out the secrecy in the judicial screening process. South Carolina and Virginia are the only states where their legislatures play primary roles in selecting judges. S.C. lawmakers have scheduled a joint session for next Wednesday to fill 37 full-time judicial seats. John isn’t the only candidate who withdrew from the latest round of judicial elections. For example, former state Rep. Jenny Horne of Summerville, a Republican who served in the House from 2008-2016, was among three candidates who initially applied for a family court seat in the 1st Circuit, as The Nerve reported in July. But Horne and the other two candidates – Deanne Gray and Margie Pizarro, both of Summerville – withdrew from their race, Crawford confirmed this week, noting they dropped out at “different times” and adding that “as I read the statute, I am unable to comment on their candidacy.” None of the three candidates was included in the JMSC’s screening report or hearing transcripts. Neither Horne, who was a candidate for another family court seat in 2019 but later withdrew from that race, as The Nerve reported then, nor Pizarro responded for comment by publication of this story. In an email response today to The Nerve, Gray said, “All I can say at this time is that for personal reasons I felt it was in my interest to withdraw from the race.” Judge John, whose term expires June 30, didn’t respond to a written request for comment for this story. Rep. Murrell Smith, R-Sumter, and Sen. Luke Rankin, R-Horry, who are the JMSC’s chairman and vice chairman, respectively, also didn’t reply to The Nerve’s written questions. New screening hearings for John’s circuit court seat and the family court seat sought by Horne likely will be held in the fall, with elections in the Legislature to occur early next year, according to Crawford. Circuit and family court judges statewide were making base salaries of $191,954 and $186,902, respectively, as of November 2020, according to state Judicial Department records released then to The Nerve, though court officials have ignored The Nerve’s recent request for an updated staff salary list. For family, circuit, Administrative Law Court, Court of Appeals and Supreme Court judges, only candidates qualified and nominated by the JMSC can be elected by the Legislature, under state law. The total number of nominees per judicial seat is capped at three. The House speaker – currently Rep. Jay Lucas, R-Darlington – appoints five members of the 10-member JMSC, while the Senate Judiciary Committee chairman – currently Rankin – and the Senate president – currently Sen. Thomas Alexander, R-Oconee, have three and two appointments, respectively. By law, six members must by legislators. As The Nerve has pointed out over the years, incumbent judges usually face no challengers when seeking re-election. And even with open judicial seats, if there are several nominated candidates for a seat, typically only one is left for election by the Legislature because the others dropped out after doing preliminary vote counts among lawmakers. Inside track Given the Legislature’s control over judicial elections, it’s not surprising that candidates with ties to current or former lawmakers – or ex-legislators themselves – get selected to the bench. For example, unopposed incumbents scheduled for re-election in the General Assembly next Wednesday include, according to JMSC records: Supreme Court Justice Kaye Hearn of Conway, wife of former Rep. George Hearn; 1st Circuit Court judge Diane Goodstein of Summerville, wife of former House member and senator Arnold Goodstein; 2nd Circuit Court judge Courtney Pope of Aiken, daughter of current Rep. Bill Clyburn, D-Aiken; and Administrative Law Court judge Milton Kimpson of Columbia, brother of current Sen. Marlon Kimpson, D-Charleston. In 2020, The Nerve revealed that Sen. Scott Talley, R-Spartanburg, was appointed to the JMSC just two months before the commission qualified Shannon Phillips, who worked in Talley’s law firm, for the Spartanburg County master-in-equity (MIE) judge’s seat. The Legislature last May confirmed Phillips for the seat. In addition, as The Nerve examined in-depth last week, former Rep. Alan Clemmons, a Myrtle Beach Republican who unexpectedly resigned from the Legislature in 2020 and also served on the JMSC, is one of three qualified candidates for the Horry County MIE seat. Under state law, the process of selecting MIE judges is different compared to other types of judges. The county legislative delegation, made up of House and Senate members representing that county, nominates a candidate qualified by the JMSC to the governor for appointment – typically approved after routine background checks. The Legislature usually confirms the governor’s appointments. In Clemmons’ case, the 15-member Horry County delegation is scheduled to meet Feb. 4 to recommend one of the three qualified candidates to Gov. Henry McMaster for appointment. If Clemmons, an attorney, is eventually confirmed, he would be the second ex-House member in recent years to become a judge after resigning his legislative seat. Former Rep. Mike Pitts, R-Laurens, who is not a lawyer, was quietly confirmed by the Senate in 2019 as a Laurens County magistrate – an appointment pushed by Sen. Danny Verdin, R-Laurens, as The Nerve reported then. The Nerve in 2019 also revealed that one senator in 12 counties controls the appointments of that county’s magistrates. Brundrett is the news editor of The Nerve (www.thenerve.org). Contact him at 803-254-4411 or [email protected]. Follow him on Twitter @RickBrundrett. Follow The Nerve on Facebook and Twitter @thenervesc. Nerve stories are free to reprint and repost with permission by and credit to The Nerve.

By RICK BRUNDRETT Next month, the Horry County legislative delegation could recommend one of three master-in-equity judicial candidates to the governor for appointment to the six-figure seat. One of the candidates is former state Rep. Alan Clemmons, a Myrtle Beach attorney who was a longtime member of the Horry County delegation before his unexpected resignation from the Legislature in 2020, and also served for years on the legislatively controlled judicial screening committee – including a stint as its chairman – which qualifies master-in-equity candidates. That would seem to give him a distinct advantage for the Horry County judicial seat. Clemmons, a Republican House member who was first elected in 2002 and served until mid-July 2020, was among more than 50 judicial candidates statewide found qualified by the six-legislator, 10-member Judicial Merit Selection Commission (JMSC) following screening hearings in November and December, records show. Master-in-equity (MIE) judges, who serve six-year terms, typically hear foreclosure and other real estate cases. They have the same authority as circuit judges in non-jury civil cases but are chosen through a different process compared to other types of judges. The JMSC first screens and decides which candidates to qualify. County legislative delegations, made up of senators and House members representing a particular county, recommend a qualified candidate from their county to the governor, who decides whether to accept a delegation’s nomination – typically approved after routine background checks. The full Legislature usually confirms candidates appointed by the governor. South Carolina and Virginia are the only states where their legislatures play primary roles in selecting judges. The JMSC qualified Clemmons and two other candidates – Charles Jordan Jr. and Douglas Zayicek – for the Horry County MIE seat. Former MIE Cynthia Graham Howe decided not to run for another six-year term; her annual salary when her term expired last July 31 was $188,873, according to a county spokeswoman and legislative records. The Nerve on Tuesday asked Clemmons, a former House Rules Committee chairman, if he believes he holds an edge over his two challengers because he is an ex-lawmaker and former delegation member, though he didn’t respond to the written inquiry. Before he was a House member, he was an unsuccessful candidate in 1998 for a circuit court seat, according to records he submitted to the JMSC. The Nerve in July detailed Clemmons’ decision to resign his longtime House seat slightly more than a year before formally becoming a candidate for the Horry County MIE position. He had won the Republican primary election for his House seat just several weeks before his July 17, 2020, resignation, though he said in an affidavit to the State Election Commission that he was withdrawing from the general election because he was representing new legal clients who will “require a large investment of my time and focus.” State law requires that former lawmakers wait at least a year before being elected by the Legislature to judgeships. Contacted Tuesday, Republican Sen. Greg Hembree, a former solicitor who is the Horry County delegation chairman and also served on the JMSC, said a delegation meeting is scheduled for Feb. 4 to recommend one of the three qualified MIE candidates to Gov. Henry McMaster for appointment. Hembree, who is the Senate Education Committee chairman, didn’t respond by publication of this story to follow-up questions about which candidate he supports, or if he believes Clemmons has an advantage given his legislative ties. As The Nerve has pointed out, county legislative delegations exercise considerable control over local matters, including the selection of county MIE judges. The Nerve, for example, in December 2020, revealed that Sen. Scott Talley, R-Spartanburg, was appointed to the JMSC just two months before the commission qualified Shannon Phillips, who worked in Talley’s law firm, for a Spartanburg County MIE seat. The Legislature last May confirmed Phillips for the seat, less than three months after the Spartanburg County delegation, of which Talley is a member, quietly nominated her, as The Nerve reported. In 2019, The Nerve revealed that one senator in 12 counties controls the appointments of that county’s magistrates. ‘Excellent’ reputation In the latest round of judicial elections, the JMSC publicly released its 286-page screening report last week for most candidates. The Legislature is scheduled to fill those seats in a joint session on Feb. 2. But screening report didn’t include individual evaluations of Clemmons and eight other qualified candidates for seven mostly uncontested MIE seats statewide. That’s because state law requires the commission to forward those candidate reports to the “appropriate county legislative delegations.” At The Nerve’s request on Tuesday, Erin Crawford, the JMSC’s chief lawyer, provided screening reports for the contested Horry County seat and other uncontested MIE seats. The Horry County report noted that the JMSC believes that “Mr. Clemmons’s temperament would be excellent,” though at his Dec. 1 screening hearing, several concerns were raised in a standard survey sent by the commission to S.C. licensed attorneys that he was sexist and vindictive against his political enemies – allegations that he denied. His screening report didn’t mention those accusations. The report also said JMSC members “commented that Mr. Clemmons has a longstanding history and excellent reputation for public service and has extensive legal experience before the Master-in-Equity.” In addition, the report included separate findings issued by the Judicial Qualifications Committee of the South Carolina Bar – the professional organization for lawyers in the state. In that analysis, which was based on surveys of Bar members, one of Clemmons’ challengers – Jordan – received an overall “well-qualified” rating, compared to overall “qualified” ratings for Clemmons and the other challenger, Zayicek. Three of the JMSC’s 10 members serve in the 15-member Horry County legislative delegation: Republican Sen. Luke Rankin, Democratic Sen. Ronnie Sabb, and GOP Rep. Jeff Johnson, all of whom are attorneys. Under state law, the Senate Judiciary Committee chairman – currently Rankin – appoints three members of the JMSC. The House speaker – currently Rep. Jay Lucas, R-Darlington – gets five appointments, while the Senate president – currently Sen. Thomas Alexander, R-Oconee – has two. Rankin and Rep. Murrell Smith, R-Sumter, who is the House Ways and Means Committee chairman, are the current vice chairman and chairman, respectively, of the JMSC. As part of the latest JMSC screening report on Horry County MIE candidates, Clemmons said he had “appeared in many cases before the Master in Equity in assorted types of matters, including foreclosure, construction, contract and collection cases.” “That desire to serve that I recognized at a young age has driven me in many ways,” Clemmons said in the report. “But for that drive to serve others, I doubt that I would have entered the legal profession or that I would have ever offered for elected office. It is a driving force now as I offer to serve as the Master in Equity for Horry County.” At the very least, while a House member, Clemmons for years serviced the wardrobes of the 124-member House and its staff, spending thousands of dollars of his campaign funds to buy men’s neck ties and women’s scarves from a Taiwan-based company to present to House members and staff, as well as to “various dignitaries,” as The Nerve revealed in 2014. In a written response then to The Nerve, Clemmons said the clothing items “prominently feature the seal of the South Carolina House of Representatives and have a tag sewn to the back stating, ‘Presented by Rep Alan Clemmons.’” He also said the expenditures were “permissible” under a House Ethics Committee opinion. If Clemmons is nominated by the Horry County legislative delegation and subsequently appointed by the governor and confirmed by the Legislature, he would be the second ex-House member in recent years to become a judge after resigning his legislative seat. In 2019, former Rep. Mike Pitts was quietly confirmed by the Senate as a Laurens County magistrate – an appointment pushed by Sen. Danny Verdin, R-Laurens, as The Nerve reported then. Brundrett is the news editor of The Nerve (www.thenerve.org). Contact him at 803-254-4411 or [email protected]. Follow him on Twitter @RickBrundrett. Follow The Nerve on Facebook and Twitter @thenervesc. Nerve stories are free to reprint and repost with permission by and credit to The Nerve.