South Carolina’s Legislature is quick to act whenever local governments do something (or threaten to do something) lawmakers don't like, such as banning plastic bags or limiting short-term rentals, but the same lawmakers are surprisingly slow to act when our local government officials are in over their head and need help. That should change.
As reporter Tony Bartelme chronicled last Sunday in TownFall, the latest in The Post and Courier's long-running Uncovered investigative series, our state has a growing problem with financially struggling cities and towns, many of which lack the local newspapers or other watchdogs that once sounded alarms when corruption, cronyism and dysfunction flared up.
The problems are many and include:
• Almost a quarter of the state's municipalities have failed to do financial audits as required under state law. Such audits often sound an early warning that something's afoul with the books, and possibly taxpayers' money as well.
• The number of municipalities failing to file timely audits is increasing significantly, a sure sign that this problem is getting worse, not better, even as the state treasurer withholds state money from audit scofflaws.
• Many officials running local governments have faced charges of corruption, waste and dubious conduct, and while the problem seems most acute in rural areas, big governments are not immune, as is clear with former Spartanburg County Sheriff Chuck Wright and three North Charleston City Council members who resigned after pleading guilty to federal corruption charges.
The newspaper has chronicled many problems, including Lake City's flirtation with bankruptcy, Calhoun Falls' closing its City Hall after struggling to make payroll, allegations of financial problems in Swansea, Hampton County’s struggle to track its spending to ensure it's complying with laws governing how certain pots of money can be spent — and more.
We've long worried because South Carolina has no process in place to identify financial problems in counties and municipalities, much less help address such problems. At least 23 states have their own system to monitor and address local governments' finances, but not us. And it's not because we don't need it. It's because lawmakers haven't acted.
The best solution we’ve seen involves creating our own version of North Carolina’s Local Government Commission, a nine-member board that includes the state's treasurer, auditor and secretaries of state and revenue. Commissioners and their staff monitor municipal finances and can block a city's borrowing plan if something seems wrong. It requires audits be submitted six months after a fiscal year ends, and while its “Unit Assistance List” is a sort of public shaming, it also comes with accounting and planning assistance, such as a needed nudge to make hard decisions like cutting staff or raising taxes. In the very worst cases, the commission can take over a municipality.
The N.C. commission recently helped Rocky Mount cut spending to get the city's finances in order; it gave Littleton a needed nudge to conduct a long-overdue audit; and it dissolved the tiny town of Speed, a decision that none of its 63 remaining residents objected to. As importantly, its work gives borrowers of municipal debt more confidence: North Carolina has more local governments with two or more AAA bond ratings than any other state, and those higher ratings often mean lower interest rates for cities.
Given the evidence that a growing number of South Carolina's local governments are under stress, our Legislature should provide them with more oversight and assistance.
North Carolina created its support system almost a century ago during the national financial crisis that became known as the Great Depression; by 1933, more than 400 of its governments had gone broke. We shouldn't wait for a similar catastrophe to help make our governments more accountable, efficient and successful.