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How SC lawmakers funnel tens of millions of dollars to pet projects

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COLUMBIA, S.C. – Half a million dollars for a Lancaster walking trail project run by a veteran senator’s wife.

Two million dollars to expand a 24-court tennis complex in Sumter.

Another $300,000 for upgrades to a county-owned golf course in Barnwell, and $150,000 to a Florence nonprofit founded by a state House member.

The list of expenses goes on and on, amounting to dozens of local projects – costing more than $20 million – that South Carolina taxpayers unwittingly paid for this year after legislative insiders secretly stashed them in the state’s $9 billion annual budget, an analysis by The State newspaper found.

For years, S.C. lawmakers have quietly routed tens of millions of dollars through out-of-sight pipelines in the state budget to bankroll pet projects in their home districts. This year’s money – checks ranging in amounts from $5,000 to $2 million – will pay to build or upgrade parks, YMCAs, local museums, equestrian centers, tennis courts, golf courses, fire and police departments and other projects.

Some lawmakers defend the practice, saying it helps cash-strapped cities and towns pay for their needs.

But the process conceals details of local project spending from the public, fellow lawmakers and South Carolina governors, including some who have labeled such spending as wasteful “pork” and vetoed it.

The process works like a quiet but well-oiled machine.

The powerful chairmen of the House and Senate budget committees bundle the projects under vague titles, such as “local law enforcement” or “sports marketing” grants, and temporarily assign the money to state agencies that didn’t request it.

Hiding the earmarks ensures there is little, if any, public debate about each project’s merits before the General Assembly approves the budget each year. Lawmakers then quickly override the governor’s inevitable veto of the hidden spending, again without much debate.

Once the budget is finalized, state budget staffers instruct the agencies on how to distribute the money to specific cities, counties and nonprofit groups, The State found in reviewing hundreds of pages of grant records obtained through South Carolina’s Freedom of Information Act.

Many projects appear worthwhile. But some invite questions. And there is scant, if any, state oversight of how the money is spent after the checks have been cashed, opening the door for potential waste and abuse, critics say.

The hidden earmarks have existed for years – going back at least to Republican Gov. Mark Sanford’s two terms in office, a time of intense hostility and distrust between the legislative and executive branches of government.

A fight over secret spending

Change could be on the way. Momentum is building to rethink the secret spending as the General Assembly prepares to reconvene next month to craft what’s projected to be the largest state budget ever, at $10 billion.

S.C. Gov. Henry McMaster told The State last week he will file a proposal in his executive budget to make such spending transparent and accountable. The Columbia Republican said he will push that plan in his State of the State address to lawmakers next month.

The current practice amounts to “government in the dark” and “reduces the confidence of the people in the process,” McMaster said. “I believe most of the citizens would say it is corrupt. It is subject to such misuse and it is not at all transparent.”

By “corrupt,” McMaster said he didn’t necessarily mean something is “criminal” – but that it is “subject to abuse and not transparent.” The governor then opened a Black’s Law Dictionary and read, “‘Corruption – an act done with an intent to give some advantage inconsistent with official duty and the rights of others.’ That would be the rights of taxpayers.

“The appearance of impropriety is often as bad – in terms of the confidence of the people – as impropriety itself,” said McMaster, who acknowledged that many of the secret projects may have merit.

A bipartisan group of lawmakers – including Senate Majority Leader Shane Massey, R-Edgefield, and Sen. Dick Harpootlian, D-Richland – has filed legislation to require budget writers to disclose a description of each project, the project’s cost and the legislator who requested it.

“You don’t know what you’re voting for. You don’t know what you’re voting against,” state Sen. Wes Climer, a York Republican and co-sponsor of the proposal, said of the current system. “There is no transparency about what is in the budget. When it goes to these third-party groups, there is little to no way of knowing how they spent the money.”

State Rep. Murrell Smith, a Sumter Republican who was promoted to chairman of the powerful House budget-writing committee last December, says he agrees the process could be more transparent and accountable and is on board with making changes.

Longtime Senate Finance Committee Chairman Hugh Leatherman, R-Florence, would not comment for this article, but an aide confirmed that Leatherman directs the spending for projects requested by fellow senators.

Neither would House Speaker Jay Lucas whose chief of staff, Patrick Dennis, said the Darlington Republican is “very busy in his private life, practice of law, family, holidays.”

Efforts to change the system could face resistance.

Legislators interviewed by The State last week said they are proud of winning local project funding, especially for cities and counties in their districts that don’t have the money for deferred maintenance and other projects.

“This is us doing our part,” said House Minority Leader Todd Rutherford, D-Richland. “I’m sure municipalities would say to us we’re not doing enough.”

The secret earmarks also grease the tracks for the budget’s passage, giving many lawmakers a reason to support the multi-billion-dollar spending plan every year.

Data from this year’s budget show the projects disproportionately favor Democrats, who make up just 38% of the General Assembly and for years have slammed the budget for underfunding education and social services.

“It’s easier to pass a budget if everybody’s got something to benefit their district, as opposed to the big counties getting everything because they have a 30-member delegation,” said state Sen. Greg Gregory, R-Lancaster.

Former House budget committee chairman Brian White also defended the spending.

“Members’ pet projects? No, it’s not,” he said. “The community has asked them to ask on their behalf.”

Behind the curtain

Harpootlian, a Columbia Democrat and first-term senator, says he discovered the subterranean spending process while hunting for local money himself earlier this year.

Last spring, Harpootlian says, he met with Leatherman and officials from the Norfolk Southern Corp., a railroad company whose trains blow their horns at all hours of the night in Harpootlian’s downtown Columbia district.

Harpootlian wanted money to improve railroad crossings so trains wouldn’t need to blow their horns at night. But Norfolk Southern wouldn’t pitch in, he said.

When Leatherman learned that the city of Columbia would put $400,000 toward the costly “quiet zones,” he “indicated he would get me money to match what the city was doing,” Harpootlian said.

Harpootlian said he couldn’t find the money in the budget as it moved toward passage this spring. But Senate staffers assured him it was there, he said.

In September, months after the budget passed, Harpootlian said he got a call from one of Leatherman’s aides asking where to send the check. Harpootlian had them make it out to the city of Columbia. He then hand-delivered the check to Mayor Steve Benjamin and tweeted a celebratory picture of it.

“I was very proud of myself until I actually looked at the check and found it came from the Department of Public Safety, which is the Highway Patrol,” Harpootlian said. “I began to wonder why I am getting a check from the Highway Patrol for railroad crossings in Columbia.”

As it turned out, the money came from a $2 million “local law enforcement” grant program that legislators inserted into the budget of the Department of Public Safety – one of several agencies that are routinely targeted for pass-through grants, documents show.

Harpootlian sought hundreds of records from similar grant programs in the state budget and turned them over to The State, which analyzed them this month.

John Crangle, government relations director for the S.C. Progressive Network and a longtime State House ethics watchdog, says Harpootlian’s experience is an illustration of Leatherman’s vast power as chairman of the Senate’s budget committee.

“Leatherman’s like Santa Claus in this situation – he decides what toys are handed out,” said Crangle.

Budget committee chairmen also can retaliate against lawmakers who vex them by refusing to fund their local projects, Crangle said. “Harpootlian will likely get a lump of coal in his sock.”

Spreading the bounty

Tracking the money through budget documents posted online is impossible.

That’s because names, costs and details of the secret earmarks are not listed in the state budget. State agencies that receive the money don’t know what it is for until they receive specific instruction from legislative aides for the House and Senate budget chairmen, agency emails show.

The State found nearly 70 projects in which almost $14 million was secretly routed through four state agencies that are regular targets for such earmarks: the S.C. Arts Commission, Department of Public Safety; Department of Archives and History; and Department of Parks, Recreation and Tourism.

The State also used public budget documents and past veto messages to identify another $6 million in secret spending that was routed through several state agencies, including the Department of Health and Human Services and the Department of Labor, Licensing and Regulation. However, The State has not yet obtained records detailing that spending.

Many of the projects analyzed by The State appear to meet public needs. Some came complete with matching funds from private, local and federal sources.

Still, critics have argued such earmarks are an inappropriate use of state money.

In 2015, former Republican Gov. Nikki Haley argued legislators shouldn’t pick winners among cities and counties as she vetoed a $500,000 grant to revitalize downtown Hartsville. Lawmakers listed that project publicly in the budget instead of hiding it in a bundle.

Earmarks bundled into the Department of Archives and History’s historic preservation grant this year will help fund improvements at historic sites, courthouse and museums.

A $250,000 grant routed through the S.C. Arts Commission will renovate a former movie theater in the town of Pamplico.

The Beaufort County Sheriff’s Department is getting a $250,000 crime lab through the Department of Public Safety. The Town of Andrews will receive $150,000 from the same grant for a building to house its fire and police departments.

Other projects invite questions of legislative favoritism.

This year, Sen. Greg Gregory, a Lancaster Republican and one of the most respected legislators in the State House, directed $500,000 to a nonprofit run by his wife, Sherri Gregory.

Gregory defended requesting the money from Leatherman. He said his wife isn’t paid by the volunteer group, which has raised more than $5 million to build the Lindsay Pettus Greenway, a biking and walking trail in Lancaster.

“She gets zero compensation and pays all of her own expenses,” Gregory said. “She devotes 40 hours a week with no compensation or reimbursement.”

The largest grant The State identified this year – $2 million – was earmarked to expand the Palmetto Tennis Center in Sumter, in the hometown of the House budget committee chairman Murrell Smith.

Smith and other local legislators say the money will enhance a tennis complex that already attracts marquee tournaments and fuels the Sumter economy.

“It brings in untold dollars,” said state Sen. Thomas McElveen, D-Sumter. “Projects like this help the people I represent.”

Smith, a Republican, was listed as a project sponsor on the city’s grant application, but he said the money was actually requested by a colleague, state Rep. David Weeks, D-Sumter. Weeks did not respond to a request for comment.

Smith said he recused himself on any votes on that grant because his law firm represents the City of Sumter.

“When I saw that, I knew that was going to be an issue,” Smith said. “I’m all for more transparency and accountability.”

‘Lo and behold’

Before a local government or nonprofit can receive earmarked funds, state law requires them to explain how the money will be spent. But in practice, such controls aren’t widely enforced.

Application records show some groups submit detailed plans that lay out a project’s total cost, fundraising efforts and spending plans. Others, not so much.

Records turned over by the Department of Public Safety list only “capital needs” as the justification for more than $1 million in “local law enforcement grants” to seven nonprofits this year.

One $150,000 grant went to a Florence-based nonprofit founded by the same state legislator who requested the grant money this year.

State Rep. Robert Williams, D-Darlington, founded Fatherhood and Families Engagement Program in 1998. The group doesn’t appear to be active online or on Facebook, where its third-most recent post was in March 2018, congratulating Williams on announcing his run for Congress.

Williams told The State the grant money is paying to train young families about the importance of road safety. Reached this week, the group’s volunteer executive director, Roger Gore, said the money would pay for a mentorship program. But he refused to answer any further questions over the phone.

Other projects don’t align with the apparent mission of the grants.

For example, state Rep. Jackie Hayes, D-Dillon, won $180,000 in upgrades to the Dillon County airport through Public Safety’s local law enforcement grant.

Hayes, a member of the House budget committee, said the money will pay for new gas tanks and an office building with restrooms but acknowledged it has nothing to do with law enforcement.

“If we weren’t able to do those upgrades, we were going to have to completely shut the airport down,” Hayes said, adding corporate executives need the airport to fly into Dillon’s new inland port.

Sweetwater Country Club, a county-owned golf course and swimming pool in Barnwell, got $300,000 in clubhouse and golf course upgrades through a Department of Archives and History grant.

Rivers Johnson, the club’s general manager, told The State the club was started in 1933, during the Great Depression, and urgently needed repairs. He said state Rep. Lonnie Hosey, D-Barnwell, got the money in the state budget.

Hosey, a 20-year House veteran, told The State that the Sweetwater Country Club is open to the public, used for numerous events and one of treasures of his outlying rural county that makes life worth living there.

“This (getting grant money) is a way to look out for the little guy,” Hosey said. “There is so much going on for the big guy.”

A $15,000 grant for the Town of Jamestown in Berkeley County was routed through the Department of Archives and History. But records show the money, requested by state Rep. Joe Jefferson, D-Berkeley, was used to purchase police bulletproof vests, new police uniforms, new courtroom video equipment and park playground equipment.

In an interview with The State, Jefferson was asked how the money came to be routed through Archives and History.

“That’s a really good question – the only thing I can tell you, it was really deserving,” he said.

Jefferson also said, “The most important thing is, we want to serve those communities that are in need, and we try to find funds wherever we can, and we discovered this was an appropriate avenue to pursue, so that’s what we did – whatever we can do to protect our officers on the front lines.”

Asked how he got the money added to the budget, Jefferson mentioned the House budget committee and said, “I didn’t speak with anybody in particular. We just went ahead and made some requests and – lo and behold – we were able to accomplish what our requests asked for.”

Lax oversight

State money spent on local projects has scant, if any, oversight.

In interviews, as well as emails obtained by The State, agency officials indicated they don’t regularly check to ensure grant recipients have spent the money appropriately after the checks have been delivered and cashed.

State law empowers the Office of the State Auditor to investigate how nonprofits are spending taxpayer money.

But the office opens an investigation only if an issue is brought to its attention, and State Auditor George Kennedy told The State he couldn’t recall in recent years his office being asked to investigate the spending of earmarked money.

“We do not monitor those funds or how they were used,” Kennedy said.

While lawmakers have kept the spending hidden during budget debates, they don’t shy from publicity once the checks are written.

Harpootlian acknowledges he took his $400,000 check to Columbia city hall so he could have a photo made with Mayor Benjamin.

The city of Barnwell’s website this week features a photo of Rep. Hosey presenting an oversized $350,000 check from the state for a new fire station. The caption reads: “THANK YOU REP. HOSEY!!!!!”

State employees who handle the money are aware of the photo ops.

In an internal email, the supervisor of Archives and History’s grants, Brad Sauls, reminded his colleagues that the checks for local projects “are NOT to be mailed directly to the recipients.”

“The legislators involved want to hand-deliver to the recipients.”


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