ATLANTA -- The two South Carolina legislators with the most say over the state's finances called yesterday for increased oversight of state-level bond issuance.
In separate telephone interviews, Rep. William D. Boan, D-Heath Springs, chairman of the state's House ways and means committee and Sen. John Drummond, D-Columbia, chairman of the Senate finance committee, each voiced the need for reform of South Carolina's borrowing programs. The lawmakers' comments followed the release last month of a scathing report on the South Carolina Resources Authority from the legislative auditor.
The auditor's report said the authority failed to properly monitor its water infrastructure funding program, for which it issued $50.7 million of bonds between 1989 and 1991 to buy revenue debt sold by 34 local governments. The study also held the authority at least partly accountable for the default of $5 million of bonds sold by New Ellenton, S.C., a participant in the program.
"I don't think anybody is directly to blame for the [resource] authority's problems, because everybody did their job, as it had been defined," Boan said.
"The bottom line, though, was that nobody was in charge, and that was the problem," he said. "What we now need is some legislation and maybe also some administrative tightening of how our state authorities issue bonds."
Boan said that the recent establishment of the South Carolina Infrastructure Facilities Authority to succeed the resources authority was a good first step, but will not solve all problems relating to state water bond issuance. He said that for these programs, there must at least be in place "better coordination and a master plan" before decisions can be made on who should participate.
Other state borrowing programs also need a master plan, Boan said. The lawmaker added that he "intends to review" all state-level bond programs to see if there is "duplication that needs to be eliminated."
Drummond said "several bills" are currently being prepared to tighten bond oversight. The proposals will probably be presented at the upcoming regular session of the state's legislature, which begins in January, he said.
"Whatever needs to be done to prevent what happened in New Ellenton, we will do," he said.
However, both Boan and Drummond stopped short of advocating a state-level bond monitoring agency -- such as the North Carolina Local Government Commission -- to oversee debt issues sold by all state issuers, including local governments.
"I'm not aware of local bonds being a problem, and I don't see the need for the state to get involved here," Boan said.
Boan and Drummond are the two legislative members of South Carolina's five-member budget and control board, which prepares the state's budget and has final oversight over state-level bond issuance. The other members are: Gov. Carroll Campbell, state Treasurer Grady Patterson, and state Comptroller General Earle Morris.
In a recent telephone interview, Morris said the resources authority's problems should prompt the legislature to at least consider the need for a unit to oversee all bond activity in the state.
But Morris said that he would also support more limited legislation to tighten state-level issuance.
"I think we need to start looking real hard at the whole range of bond issues in the state," he said. "I would strongly support tougher, more stringent requirements on both the state and local levels."
In a brief interview last Friday, Patterson said that he felt the establishment of the infrastructure authority would cure the problems at the resources authority.
Patterson said he is not inclined to favor an agency that would oversee all debt in South Carolina, and noted steep hurdles would have to be passed before it could become a reality.
"Because South Carolina is a homerule state, it would require a constitutional amendment to set it up," he said.
A spokesman for Gov. Campbell, the final member of the budget board, said he had "no information" on Campbell's opinion of the legislative auditer's report and need for further legislation on debt issuance.
Campbell, who will conclude a second term as governor in early January, will be succeeded by either Lieut. Gov. Nick Theodore, a Democrat, or Republican David Beasley, a former state senator. The two gubernatorial candidates are locked in a tight race, with Beasley leading slightly in recent polls.
So far, bonds have not been an issue in the campaign.