South Carolina state senators have approved legislation that would borrow money to pay for the federal portion of the Charleston Harbor deepening if the government does not keep its end of a cost-sharing agreement. The bill passed 40-3 late Wednesday.
The Army Corps of Engineers is supposed to put forward $120 million to match South Carolina’s $180 million for the harbor dredging project. But fears about federal budget cutbacks leave many South Carolina lawmakers concerned that Congress may not come through with the money five years from now. As a solution, Sen. Hugh Leatherman (R-Florence) proposed issuing bonds as an emergency backup.
Leatherman says the project is too critical for any uncertainty over funding. He says the bonds are also a good marketing move, helping State Ports Authority president Jim Newsome recruit businesses to use the Port of Charleston.
“If he’s got this, he can go to the shipping lines and companies and say South Carolina is serious,” Leatherman said.
The bill received second reading after Sen. Kevin Bryant (R-Anderson) dropped his objection. Bryant said he was worried the state would be taking on too much debt, but agreed to work with Leatherman and other Senate leaders on a compromise that could set aside $120 million pay off some of the state’s existing debt.
“My issue is simply… the ever-growing unfunded liability and debt,” Bryant said, “We’re in the neighborhood of $32 billion and we simply can’t borrow any more.” Most of that $32 million is unfunded liabilities in the state’s pension system and debt from local governments.
Bryant and Leatherman said they were scheduled to meet Wednesday night to hammer out the details. The bill likely needs to receive third reading before Monday’s “crossover deadline” to be considered by the House this year.
For his part, Leatherman said he will work on a compromise, but added he believes Bryant and others are exaggerating the state’s overall debt.
“We’re actually paying about $11 to 14 million less (in) debt service than we paid last year,” he said, “Our debt service is coming down.”
South Carolina has not issued capital improvement bonds since 2000. Leatherman said he hoped any increase in debt payments from new bonds could be offset by recent refinancing on existing bonds that was announced by State Treasurer Curtis Loftis.