July 23, 2024

The Nerve Archive

Where Government Gets Exposed

When the state lobbies itself

From agency to chamber to General Assembly, the money goes round


The South Carolina Chamber of Commerce, along with various local chambers of commerce in the state, has been busy lately. The chambers, which periodically lobby state government for more spending, among other things, have been especially vocal about wanting the gas tax raised, as the Senate and House have recently done (those bills have not been reconciled yet).

They’ve held rallies and press conferences, promoted studies, and recently sent mailers asking recipients to call their state senators — the senator and phone number are boldly displayed, along with “No more excuses!” — to urge them to vote for the tax increase.

This is what chambers of commerce often do. Members, usually businesses, pay dues and the chamber lobbies for what it says are pro-business policies. As 501 (c) nonprofits, they also engage in what the IRS describes as “direct or indirect political campaign activities on behalf of or in opposition to candidates for public office.”

But the dues-paying members and contributors who support these activities are not just private for-profit enterprises. In South Carolina, state agencies are members as well.

The state Ports Authority estimates that it pays about $35,000 a year to chambers across the state, including about $6,000 to the state chamber, says Ports Manager of Corporate Communications Erin Dhand.

Santee Cooper, the state owned utility, says it paid the state chamber $29,500 in membership and sponsorship in 2016 and, like Ports, has several local chamber memberships as well. It also has two employees who serve as directors on the state chamber board.

It’s an open relationship: If you go to the state chamber’s website, Santee Cooper is prominently thanked on the front page as a “featured member” along with several private for-profit businesses such as Sonoco, the Hartsville-based packaging company.

The chambers may count on the relationships with state agencies, but in dollars it’s a relatively small part of what they take in. The state chamber, for example, according to its most recent federal tax filing, from 2014, had about $3.6 million in revenue. Yet $65,000 a year from just these two agencies is something, especially when you consider whose money that is.

South Carolina state agencies have been prohibited by law from lobbying in the past, such as by an annually-expiring budget proviso in 2012-2013, because it was thought to be wasteful — but such bans were only applied to agencies that used state appropriations.

Agencies such as Santee Cooper and Ports are state monopolies that generate revenue, typically from fees. They’re sometimes described as “quasi”-agencies, which means that once established by the General Assembly, they’re essentially free to operate like private businesses. They have CEOs, COOs, CFOs, and customers. They lobby like business interests (Santee Cooper and Ports are both listed with the state as lobbyist principals).

More importantly, they’re free to decide how to spend and invest the agency revenues. Yet it’s not much different, say, from the Department of Motor Vehicles contending that the millions of dollars in fees it collects are its alone to manage, even if it wished to lobby for a bump up in vehicle registration fees and send mailers targeting members of the General Assembly.

Santee Cooper Corporate Communications Manager Mollie Gore, who promptly provided information about chamber spending, sees this a little differently. “The state chamber promotes a pro-business environment in South Carolina that actually advances Santee Cooper’s mission, which is to be a leading resource for improving the quality of life for all South Carolinians,” she said in an email. “Additionally, state and local chambers of commerce offer a variety of programs that help Santee Cooper operate more efficiently, such as workforce development programs. We view chamber membership as an investment with a strong return for our customers and the state.”

Shane Massey, a Republican from Edgefield, was one of the state senators targeted in the chamber mailings (he also ultimately voted for the gas-tax hike). “I haven’t seen the mailer, and I don’t believe anyone contacted me as a result of receiving the mailer,” he said by email. “So, from that perspective, I guess I don’t care too much. Otherwise, I think it’s fine for the state chamber to advocate for its position.” Massey went on to say he thought that it’s “probably fine” for Ports and Santee Cooper to be chamber members “because those two entities are major players in South Carolina’s business climate and, to my knowledge, both entities derive their revenue from fees paid by customers.”

If we put aside for now the question of whether the state or its entities should be major business players, we can simply examine the nature of private businesses of this scale. Most times they’re publicly traded. They have shareholders and their boards have a fiduciary duty to put those interests first. That’s a market efficiency.
In the case of a state utility or ports authority, every South Carolinian holds a share. So we still might do well to ask whether, at least when it comes to lobbying, especially on one side of an issue as divisive as the gas tax, those shareholders are even getting proxy votes.
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