In a rare off-season public hearing held Thursday, the Senators of the Transportation Committee sought urgently to determine why the Department of Transportation could not pay certain private contractors multi-million dollars owed for highway projects already completed. Numerous contractors were forced to lay off employees and some were facing bankruptcy because for the first time DOT was apparently unable to pay tens of millions of dollars of obligations to these contractors, and was also in arrears with the State Infrastructure Bank. This is certainly an urgent and shocking revelation.
However, in spite of certain committee members’ strident efforts to limit the committee’s inquiry to DOT cash flow problems, an elephant was soon released into the committee room in the Gressette Building in Columbia by the name of Interstate 73. The true overriding question for the committee soon became apparent. Since we are deeply in debt, and we cannot afford to maintain our existing road and bridge system, can we claim to be moral and responsible stewards of taxpayer dollars that were extracted from the populace with great pain and suffering while at the same time adding extravagant new projects? So what is the source of the problem? Let’s review some facts and opinions that were revealed for the first time during a full afternoon of testimony from DOT officials and questions from the Senators.
State Treasurer Curtis Loftis accused the DOT of refusing to give up requested information. He said “The only reason we are here is because of a leak. The DOT does not need restructuring again. We need transparency and accountability. Transparency is an honest man’s friend.” The Treasurer continued: “Transparency can be ordered in ten seconds.” Senator Peeler, along with the Treasurer, set their bureaucratic lingo aside and were the most direct with their questioning of the DOT head, Robert St. Onge. Senator Peeler asked, “Who made the decision to slow-walk the Treasurer?” St. Onge, stated that the information requested by the Treasurer required a lot of staff work and responded to the Treasurer’s frequent and urgent request for information with “I will get to details when it is prudent.” Loftis stated that responsible and reliable persons within the DOT admitted to him that “The agency’s financial problems are more severe” ... than stated by DOT leadership. Loftis said he believes DOT officials did what other agency officials have done when faced with an embarrassing problem—they hide it. St. Onge first responded that there was no cash flow problem, but failure to make payments to contractors and the Infrastructure Bank were due to staff “inattentiveness.” Later, the head of DOT admitted the true and contradictory reason for unpaid bills: “We don’t have enough money.”
After a grueling four hour contest between fact finders and fact hiders, Chairman Larry Grooms admitted he was “dissatisfied.” His solution?—establish a subcommittee to investigate. We can all sleep better now. The legislative stewards of our money are on the job.
The following “sunlit” facts confirm again that the present assemblage South Carolina legislators will never protect the besieged tax payers.
• The DOT owes $560 million to future taxpayers in the form of bonds.
• The DOT has borrowed an additional $428 million from the State Infrastructure Bank to make bond payments.
• The present new bond proposal from the DOT is $344 million, which, if approved, would consume 85% of the agency’s borrowing capacity. Furthermore, to service the entire DOT debt would then require extracting $30 million dollars annually from funds needed for road maintenance and construction.
• $1.4 billion worth of contracts has been let, $875 million is unpaid.
• Two thirds of DOT revenue is derived from federal funds.
• The feds pay 90% of the cost of interstate highway construction.
• According to the DOT, 49% of the state’s secondary roads are in poor or very poor condition; also, 44% of the state’s primary roads are in similar conditions of disrepair. I-85 is rated by the agency as “functionally obsolete.”
Most revenue for Highways comes from state and federal gas tax at the pump. North Carolina gas tax is increased almost every year because the tax is “indexed” to inflation, which means those that pay the taxes are powerless to prevent gas tax increases. In North Carolina the politicians don’t have to ask for more money, it comes automatically.
There has not been a gas tax increase in South Carolina in many years. One of the main reasons that the gas tax has remained steady is that the Feds have been providing an increasing percentage of SCDOT revenue. The amount of Fed money is both large and unpredictable. That is why The DOT chairman warned that the elephant in the room is fed reauthorization. One can never be sure when and how much will flow into the state’s empty tank.
So, the question remains: Why do our intelligent and experienced lawmakers and bureaucrats so often fail to make good moral and responsible decisions on behalf of those that provide all the revenue for state government? The answer, and the biggest elephant in the room, is——they don’t want to. Sadly, those in power, too often, prefer to attend to their personal agendas while feigning their heart-felt concern for their uninformed constituents.
Statesmen, such as Senator Jim DeMint, need and seek out patriots to stand against government intrusion. Politicians, such as RINOs, are able to obtain personal gain when their constituents are needful. The politician’s source of power is always his ability to provide rewards; he provides political jobs and privileges to favored business leaders and other power brokers. The elected official is then repaid financially and with political support from his clients. So the political machine lives off of patronage.
But, this elitist’s world of privilege collapses if the little people don’t pull the lever on behalf of their own patronage in the form of unearned government entitlements. Those that feel insecure will vote for security; that is why politicians create and thrive on the people’s impoverishment. The axiom holds that as political power grows, corruption increases, and the people’s wealth decreases. The only effective brake on power and corruption is engaged and informed voters.
The politician’s favorite give-a-way today is government sponsored “economic development.” In private negotiations with chosen businesses the elitist lawmakers deal away taxpayer money in the form of land or infrastructure, subsidies, loans, and tax exemptions. The favored get paid and the non-favored pay. The favored take any profit; the taxpayer takes the risk. Such incentives are immoral, unfair, expensive, and do not work. Only the free market can provide jobs.
The widely acclaimed Boeing deal cost over $130,000 per “new” job. So far, we have paid $2 billion in government incentives for an unemployment rate in South Carolina of over 10%. For politicians, the “gift that keeps on giving is “economic development”—It’s a lie.
If our legislators truly want South Carolina to flourish, they would begin by removing barriers to prosperity by reducing the business property tax, which is the highest in the nation. They would eliminate corporate income tax. They would reduce crippling regulations on business. They would empower our children to compete by providing school choice. They would drop the state mandate on insurance companies. All of the above would reduce the politician’s power over the citizens. If they did not want these obstacles to prosperity in place, they would not have created them.
The public hearing on Thursday exposed the typical relationship between the legislature and agencies that it oversees. It provided a surgeon’s clear view of the rotten heart of state government. By an examination of the evidence, a reasonable mind, I believe, will conclude that the above severe criticism is well founded. Let’s consider if it is beneficial to tax payers for the DOT Commission to ignore the law that prevents political interference in assigning projects by requiring that only the highest ranked projects can receive funding.
Here is the big picture. Over 40% of the state’s roads and bridges are in either fair or poor condition. While our present roads crumble, the DOT Commission continues to succumb to political pressure and authorize more debt for both present and future taxpayers in order to build expensive new roads and bridges.
One of the two unranked projects is the infamous 1-73, which is a real estate developer’s dream. You see, maintaining existing infrastructure offers less opportunity to exploit the system. But a new road that crosses the virgin land of the tax producing private property owners allows government to create value for their high-rolling buddies. The loss of opportunity for big profits for the developers and well-connected is the reason that the advocates for the new interstate refuse to consider an alternate plan that will save one billion by widening and renovating existing highways. What will the extravaganza cost? No one knows. Some DOT commissioners insist that the $2.4 billion estimate is vastly understated. Well, can we really expect the proponents of the deal to reveal the true estimate of the cost?
The extraordinary push for this I-73 project is a model for how bad political ideas get passed into law. One of the Senate transportation members asked, “How did these unranked projects get to the top”? We might ask who along the way could have stopped the most egregious of them, the I-73 project.
Perhaps head of DOT St. Onge could stop the I-73 project if he placed his job on the line. St. Onge testified that when the DOT Commission asked him if his agency could take on the un-ranked I-73 project, he told them, “You can do this but you must help me to get funds—to increase revenue—so I can maintain present roads.” In other words, no, we cannot build the road unless you go to the taxpayers for more money. So evidently, the head of DOT said “no” to the Commission by saying “yes,” thereby assuring his job and cover for himself when the bills come due. That is rather skillful positioning—and is perhaps one reason he gets paid well.
So, by now the Senate Transportation Committee hearing room is full of elephants on the loose, as well as hungry RINO lawmakers along with a couple of monkeys thrown into the mix. It’s a real jungle down there in the State Capitol.