Lawmakers Continue to Raid Victims’ Funds


In a little remarked upon move, South Carolina House members scrambled last month to insert line items from a failed bond package into the Capital Reserve Fund and Part 1B (provisos) of the state budget. To do that, members had to make minor cuts and come up with $67.5 million that wasn’t previously included in the budget. On the increased funding side, lawmakers scraped together the funds from a couple of sources, including $49.5 from the FY 15-16 unclaimed property fund and – notably – an additional $18 million from the litigation recovery account.

The litigation recovery account consists of money paid to the state as a result of lawsuits in which the state was a plaintiff; legislative budget-writers are proposing to use the money in ways totally unrelated to the lawsuits, and in ways that don’t benefit the victims at all.

Earlier this year, the House Ways and Means budget appropriated funds – $9.8 million – from the litigation recovery account for use on various pet projects. The full House budget ended up taking $27.8 million.

Nor is this the first year this has happened. In crafting the FY 2014 budget, lawmakers used tens of millions of dollars from the national mortgage settlement fund (money intended to aid those whose mortgages had been improperly foreclosed on) to increase appropriations for the deal closing fund – monies used by the governor to lure out-of-state companies to South Carolina and in-state companies to expand.

The recurrent raiding of the litigation proceeds points to legislative hypocrisy in two ways.

First, many, perhaps most, lawmakers insist that the state doesn’t have sufficient resources to remedy our decrepit road system without tax or fee hikes. But lawmakers haven’t even attempted to make necessary reforms to transportation authorities, or to shift existing resources in order to make any significant funding increases to the Department of Transportation (DOT). The House budget only increases DOT funding by around $600,000 over the current year’s budget, and it actually cut roughly $1 million appropriated to DOT in the Ways and Means budget.

Second, for all lawmakers’ talk about working for “the people,” the state budget frequently favors flush agencies and programs over fraud victims. The 2014 budget favored an already cash-laden economic development fund over victims of housing scams. The FY 16 House budget, similarly, favors wealthy higher education institutions – where most of the new money in the House budget is going – over the victims of improper drug marketing. The litigation proceeds the House drew from for the upcoming budget are from lawsuits accusing a Johnson and Johnson subsidiary of improperly marketing an anti-psychotic drug and downplaying its negative side effects.

The strangest part in all this? With only one or two exceptions, no lawmaker from either party has objected to it.

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