OCT. 23, 2009 -- Jimmy Breslin's famous novel, "The Gang That Couldn't Shoot Straight," showcased inept mobsters, not South Carolina politicians.
But when the General Assembly returns to Columbia for an unexpected session next week, South Carolina’s political "gangsters" will be back in town to clean up an unemployment benefits mess they could have dealt with during the regular session. Gov. Mark Sanford and the state Employment Security Commission, with its half billion-dollar deficit, will be waiting.
And just in time, too, as the state’s unemployment rate rose two-tenths of a point in September to 11.6 percent.
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A little background
This entire mess began to gain momentum 10 years ago when, flush with cash reserves and riding high on an artificially surging economy, the state legislature decided to change the formula on how much money to extract from businesses to fund the ESC-run state unemployment insurance trust fund.
It seemed like a good idea at the time, to some, according to Washington, who served in the Senate then. But dropping the amount collected also meant the state could be headed for a crisis in an economic downturn.
In January of 2008, it was an open secret in and around the Statehouse that the trust fund was in freefall and that it wouldn’t have enough money to cover its looming unemployment check demands. And, it seemed, nobody did anything to correct it. Who wanted to take more money out of people’s paychecks in a bad times? Nobody, especially if they wanted to get re-elected in South Carolina.
The ESC claimed it informed some members of the legislature and the executive branch. But, it wasn’t like commissioners yelled from the rafters about the foreseeable crash, legislative sources said.
In the fall of 2008 with the state and national economies tanking, and with criticism over his arguably poor record on job creation still ringing in his ears, Gov. Mark Sanford went on the warpath against the ESC.
Clamoring for the agency to be added to his cabinet, the governor took the grandstand and refused to sign off on a federal loan request to bolster the agency’s bottom line. It wasn’t until deep into the Christmas season that Sanford relented and signed off on the loan application, relieving many across the state that they would continue to get unemployment benefits in a tough season of giving.
-- Bill Davis
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The legislature is reconvening to clean up a state law blocking nearly 7,000 out-of-work South Carolinians from receiving extended federal unemployment benefits.
Under federal guidelines changed this year, the state needed to change how it handled a small part of its unemployment policy. If it had done so during the regular session, South Carolina could have received federal dollars to extend unemployment benefits by as much as an additional 20 weeks to allow some jobless residents to receive benefits for up to one and a half years.
Now if the General Assembly corrects the oversight and the governor doesn’t veto it, ESC officials said $1.6 million in extra weekly federal unemployment benefits would quickly flow again, but would not be paid retroactively.
Last week, close to 7,000 unemployed South Carolinians lost extended benefits because the legislature was unable to tweak the unemployment law in the final days of this year’s legislative session.
So, who is to blame for this mess? Apparently, the other guy.
ESC Chairman McKinley Washington Jr., one of three former state legislators overseeing the state’s unemployment office, blamed the governor, the legislature and the economy. The governor has faulted the ESC and the legislature. Legislators pointed the finger at the ESC and the governor. And, no surprise, Republicans zinged Democrats, and vice versus.
Back-biting harms chance for change
In late 2008, Sanford, then still considered a possible presidential candidate, started raising Cain over federal stimulus money and said he wouldn’t allow the state to take a much-needed loan to help fund unemployment benefits.
Had Sanford not grandstanded over the ESC loan application at holiday time, most believe everyone would have come to the table in January to fix historical problems at the commission. Today, they say the governor’s holdout ended up polarizing the situation. The ESC, tired of being treated like a political football and being blamed for unemployment, clammed up.
Several sources said the ESC was tired of getting picked on for the state’s rising unemployment rate, when they were just the guys writing the checks.
As a result, communication between the beleaguered agency, the Sanford administration and the cabinet-level Department of Commerce dried up, according to state Rep Kenny Bingham (R-Cayce). At the time, the Sanford Administration said the lack of information from the agency might have led to even more unemployment, a claim denied by the ESC.
Bingham had a unique perspective on the slow-moving train wreck. Not only had he been elected this year as majority leader in the House, but he’d also been handed the chairmanship of the Ways and Means subcommittee looking into the matter.
Late in the 2009 session, Bingham offered an amendment that, if it had been passed, would have altered state law so that the General Assembly wouldn’t have to return this coming week.
Bingham complained the ESC brass did little to educate the public about the problem, which would have helped him and House Speaker Bobby Harrell (R-Charleston), whose name was second on the amendment, gin up enough political will to get the amendment through.
But Bingham was playing politics too, according to the ESC’s Washington, who pointed out that he attached the amendment to a controversial ESC restructuring bill. That bill, which failed 52-54 in the House, included a major provision that would move the agency into Sanford’s cabinet, and have the brass working at the pleasure of the governor, instead of being an independent commission. Attaching the amendment to a less controversial bill might have allowed it to go through, many say.
Back-stabbing scuttles change
Giving Sanford the bone of having another cabinet-level agency was the last thing the House was interested in doing at the time -- and this was well before his trips to Argentina and impeachment talk became the rage. House Minority Leader Harry Ott (D-St. Matthews), told the press then that he saw no reason to reward what he saw as Sanford’s actions with a restructuring gift.
With the amendment dead, Rep. Gilda Cobb-Hunter (D-Orangeburg) put forward a stand-alone bill that would have corrected the problem. And what did the House do with that bill? It referred it to committee, a move that, so late in the session, doomed it.
So it was the legislature’s fault, right?
Ah … no.
Bingham, House Speaker Bobby Harrell’s office, and even state Sen. Greg Ryberg (R-Aiken), chair of the Labor, Commerce and Industry Committee, and Sanford’s right-hand man in the Senate, all agreed on one point:
They all first heard of the needed change from a lobbyist at the S.C. Appleseed Legal Justice Center, and not from anyone at ESC.
“In that way, I believe the ESC failed utterly in its mission,” said Bingham. He blamed Washington and others at the ESC for wanting to maintain the status quo, commissioners’ jobs, and for not having been forthcoming on the matter.
One Statehouse insider said this week that his office still hadn’t heard directly on the matter from the agency.
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ESC’s Washington remained unrepentant, saying he had e-mails proving his agency had informed who it needed to inform
“And after Gilda’s bill and Bingham’s amendment, who else did we need to tell?” said Washington.
Regardless, ESC executive director Ted Halley accelerated his announced retirement timetable from the end of the year, to sometime this fall, to this week, and stepped down.
Washington said that because of the state of ailing economy, nothing different would have happened if anyone else had been in Halley’s office at the time.
Not seeing the forest for the trees
Ironically, about the only person, or body, willing to point the finger of blame at themselves this week was the Appleseed Center.
Director Sue Berkowitz, whose lobbyist first informed the legislature about the need for the small alteration to keep the extended benefits flowing, said Friday she regretted her office “not having done enough” to educate the legislature and the public about the small, initial alteration needed.
Berkowitz said the extended benefits bungle was the classic situation where everyone didn’t see the forest for the trees.
But she said, the General Assembly returning on Tuesday was only a small part of the solution. Berkowitz said the governor was right -- something has to be done at or to the ESC, but not at the expense of the unemployed.
Next week and beyond
Sanford spokesman Ben Fox this week said Sanford looked forward to all parties coming together to solve the dilemma, but that the governor would continue to press for restructuring.
Ryberg, whose chamber approved a bill during the session that would have slowly altered the status quo at the agency, agreed.
Ryberg said how much gets paid out, to whom and under what circumstances would be scrutinized closely when the legislature returned in January.
“Three percent of those paying into unemployment consume 30 percent of the benefits,” said Ryberg, critical of the current policies that allow larger companies, like manufacturing concerns, to basically take advantage of the state’s unemployment fund while they temporarily lay off workers to respond to seasonal demands or re-tooling machines.
Crystal ball: After the legislature makes the quickie alteration next week, the ESC will certainly be restructured next year. And “taxes” -- in the form of increased amounts subtracted from businesses and paychecks -- will go up to cover the mounting debt at the agency. The bigger question will become whether the legislature will take on the sticky problem of scrapping the oversight of the ESC altogether, or if enmity toward the governor will hamstring efforts to put it in the governor’s cabinet.
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