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ISSUE 11.44
Nov. 02, 2012

RECENT ISSUES:
12/12 | 12/05 | 11/28 | 11/21

Index

News :
Revenue agency may impact Haley’s future
Legislative Agenda :
Statewide elections to be Tuesday
Radar Screen :
Nikki Haley -- S.C. for life
Commentary :
16 days? Really Gov. Haley, really?
Spotlight :
Southeastern Institute of Manufacturing and Technology
My Turn :
Women (and men): Your vote really matters!
Feedback :
Upset about the Great Hacking of 2012?
Scorecard :
Not a good week for state government
Megaphone :
Pointing the finger
Tally Sheet :
Locate legislative bills
Encyclopedia :
S.C. Law Enforcement Division

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NUMBER OF THE WEEK

3.6 MILLION

What, have you been living under a rock? If you have, don’t worry -- a hacker already has private information for 3.6 million of us, virtually every adult in the state.

MEGAPHONE

Pointing the finger

“There is a trial lawyer with a hand out and a tissue ready at any crisis.”

-- Gov. Nikki Haley this week responding to a question about a former legislator filing a class-action lawsuit against her and the Department of Revenue over the cyber-hacking. More.

TALLY SHEET

Locate legislative bills

This year's legislative session may be over, but you can still find information about bills and new laws online through the links below.

EDITOR'S NOTE

Remember to vote Tuesday

As a loyal reader of Statehouse Report, it's probably not necessary to remind subscribers to vote Tuesday.  We figure 100 percent of our readers are registered voters.  But, hey, what the heck.  See sample ballots at your county board of elections Web sites. 

ENCYCLOPEDIA

S.C. Law Enforcement Division

The South Carolina Law Enforcement Division (SLED) is a highly visible investigative agency with origins that date back to 1947. Then governor Strom Thurmond issued an executive order creating the crime-fighting organization with statewide authority.

Although no attesting records apparently exist, the acronym “SLED” reportedly was coined by a police reporter for a Columbia newspaper. Thurmond’s decision to create SLED came at the behest of sheriffs and police chiefs seeking a centralized agency fashioned after the Federal Bureau of Investigation (FBI), whereby manpower, technical support, and expertise could be utilized. Thurmond’s order creating SLED replaced the South Carolina State Constabulary, a controversial quasi-police agency. From its fledgling beginnings of approximately fifteen employees, SLED grew into a state-of-the-art agency with more than five hundred sworn and civilian employees.

SLED’s first chief was Joel Townsend, who served for approximately two years (1947–1949) before being replaced by O. L. Brady in 1949. In 1954, veteran SLED agent J. P. “Pete” Strom began serving as interim chief until 1956, when he was named permanent chief, serving at the pleasure of the governor. Considered a national law enforcement pioneer, Strom served as SLED chief until his death in December 1987.

Appointed by Governor Carroll Campbell, Robert Stewart took over as SLED chief in 1988. SLED’s overall mission is to provide assistance to sheriffs and police departments statewide. SLED is nationally accredited by the Commission on Accreditation of Law Enforcement Agencies (CALEA) and the American Society of Crime Lab Directors / Laboratory Accreditation Board (ASCLD/LAB).

SLED provides investigative and technical assistance to law enforcement agencies on major felony crimes. The agency also provides support services in regulatory functions involving alcohol and gambling enforcement, concealed weapons permits, and private security registration. In addition, SLED maintains a seventy-thousand-square-foot crime lab and provides a centralized repository for criminal records.

-- Excerpted from the entry by former SLED spokesman Hugh Munn, who passed away in October. To read more about this or 2,000 other entries about South Carolina, check out The South Carolina Encyclopedia by USC Press. (Information used by permission.)

PALMETTO PRIORITIES

Palmetto Priorities Statehouse Report encourages state leaders to develop and implement Palmetto Priorities involving several issues to make the state better a better place. Click the link to learn more about our suggestions for bipartisan policy objectives.

Here is a summary of our Palmetto Priorities:

CORRECTIONS: Reduce the prison population by 25 percent by 2020.

EDUCATION: Cut the state's dropout rate in half by 2020.

ELECTIONS: Increase voter registration to 75 percent by 2015.

ENVIRONMENT: Adopt a state energy policy that requires energy producers to generate 20 percent of energy from renewable sources by 2020.

ETHICS: Overhaul state ethics laws.

HEALTH CARE: Ensure affordable and accessible health care.

JOBS: Develop a Cabinet-level post to add, retain 10,000 small business jobs per year.

POLITICS: Have a vigorous two- or multi-party political system of governance.

ROADS: Strengthen all bridges and upgrade state roads by 2015.

SAFETY: Cut the state's violent crime rate by one-third by 2016.

TAX REFORM: Remove outdated special interest sales tax exemptions as part of an overall reform of the state's tax structure to be completed by 2014.

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News

Revenue agency may impact Haley’s future

Scandal in one cabinet agency could scuttle creation of another

By Bill Davis, senior editor

NOV. 2, 2012 -- One of the most hotly debated issues in the legislature in the last two years -- creation of a new Department of Administration – may be doomed in the wake of worsening revelations about the security of a state database.

According to Gov. Nikki Haley and other officials last week during a press conference just after publication of Statehouse Report, foreign hackers gained access this fall to a state Department of Revenue database apparently using a state employee’s credentials.

Once inside the state agency’s computer system, the hacker or hackers culled the Social Security numbers and credit card information of 3.6 million taxpayers and sensitive information from 657,000 state businesses. The data, though initially protected by a “firewall,” had not been encrypted, state officials admitted.

National experts are calling the incident the largest breach of state security ever in the nation. There was another attempt to access state records earlier in the year at state Department of Motor Vehicles.

The Revenue Department data intrusion could lead to lengthy and potentially expensive repairs, as citizens and businesses across the state scramble to protect themselves from costly identity theft crimes.

While state officials said the “hole” in the system has since been closed, they said they also were asked to keep mum for 16 days by law enforcement officials seeking to find the culprit and the full measure of what had been taken.

Big questions for the 2013 legislative session

Considering the magnitude of the security failure at Revenue, now a major question in and around the state is who should be minding the state’s electronic store in the future? And with the litany of problems that cabinet-level agencies have had since Haley took office just under two years ago, should she be given any more power?

For the past several legislative sessions, the General Assembly has debated creating a Department of Administration that would oversee all the other agencies, departments and programs in state government. In essence, it would replace the current state Budget and Control Board, which has legislative and executive representation.

One top proposal is to make Administration become a cabinet-level agency that reports directly to the governor to create a more streamlined and accountable system of state government. Another plan calls for a quasi-independent Administration department that would report to the legislature, which, like Congress, would provide oversight to agencies and programs through appropriate responsible committees.

Tough row to hoe

Greg Foster, communications director for House Speaker Bobby Harrell (R-Charleston), said the House has already passed four different versions of bills that would make Administration become a cabinet agency with one vote dating back to the Sanford Administration.

Each time, the measure stalled in the Senate, he said. But support for the governor to have control over another agency, especially such a powerful one, would likely hit mixed opposition in that chamber when the legislature reconvenes in January, observers agreed.

House Minority Leader Harry Ott (D-St. Matthews) said flatly that he would not be “in favor of giving Gov. Haley more power than she has right now,” and that it didn’t matter who was the state’s next governor because they shouldn’t have any more power than they would have under the current structure.

“This about good government, and I’ve not seen much coming from the last few governors,” Ott said, lumping Haley in with Mark Sanford and Jim Hodges. “At least in the General Assembly, voters get the chance to reshuffle the deck at least every once every two years.”

House Majority Leader Kenny Bingham (R-Cayce) said he didn’t expect the House to change its overall position on a new Department of Administration.

“I don’t make my policy decisions based on personalities, but on structure, on what’s best for the state,” Bingham said.

SNAFUs galore

Thrown into the mix about whether to extend more power are the headline-grabbing and sometimes embarrassing snafus among several  cabinet agencies since Haley took office:

Revenue. The hacking scandal seems to be continually unfolding in daily gubernatorial press conferences.

Transportation. Officials have been months and millions of dollars behind in paying contractors for road projects, some of which were already completed.

Health and Human Services. The agency triple dipped in scandal waters in the last two years. First, it made nearly a half-billion dollars in inaccurate payments to Medicare. Second, it took a $1 million federal grant to look into transitioning into federal health care reform, but the agency got a black eye when it was discovered Haley had sent an email to the transition committee chair to scuttle the effort. And third, a former employee was charged with transferring state records of close to a quarter-million Medicaid patients to his personal email account and sending a copy to another person.

Motor Vehicles. The state Election Commission’s nose got out of joint after DMV claimed during a hot debate over photo voter identification requirements that there was a significant number of "zombie voters” still on voter rolls after their deaths. An investigation showed otherwise.

Insurance. The agency has been without a permanent executive director for nearly a year.

Two other cabinet agencies have had some problems, although they were smaller in scale:

  • Commerce. Despite a rising tide of new jobs, the state is still stuck with the eighth-worst unemployment rate in the country. Also, the agency’s reputation suffered over a squabble last year over how much a gubernatorial trade trip oversees cost and who was paying for it.

  • Social Services. Cash-strapped DSS has been criticized for not asking for more state funding when more money was made available in the budget-writing process after increased state tax collections.

A major non-cabinet agency, the Department Health and Environmental Control, also nabbed the glare of the legislative spotlight after members of the Haley-appointed board voted to approve Georgia’s plan to dredge the Savannah River, which could directly compete and damage South Carolina’s plans to expand and enhance its port facilities.

Haley has had other non-cabinet missteps, including a fight to have the legislature return to session to deal with her unfinished agenda items, an attempt to scuttle the legislature's SCETV funding structure and criticism that she sat on the sidelines during a contentious debate over extending a state sales tax-break deal to Amazon.

Critics line up

Despite phone calls, texts and email requests for comment, Haley’s office failed to respond for this story.

Additionally, Haley’s accomplishments as governor should not be overlooked. They include state pension reform, growth in new jobs and the uncovering by DHEC of 500 out-of-date environmental permits. Also, the state Department of Corrections is on budget after a few tough years and the state’s parks system is about to become self-sufficient.

But criticism of the job Haley has done overseeing state government has been fierce this week.

Phil Bailey, spokesman for the S.C. Senate Democratic Caucus, quipped, “It’s an alphabet soup of incompetence.”

Sen. Vincent Sheheen (D-Camden) has been the primary author and supporter for the creation of Administration in the legislature for the past few years. He was also Haley’s opponent in the last gubernatorial election.

Sheheen said the ongoing cabinet agency scandals make it difficult to convince voters and legislators about restructuring state oversight so a governor is in charge of an Administration department.

GOP Sen. Kevin Bryant of Anderson, pictured at right, is normally a staunch supporter of Haley.  But he softened his approach this week, saying he was still in favor of a streamlined and executive-branch friendly form of government “in theory.”

Bryant said that if Haley can make the necessary “repairs” in the ongoing Revenue scandal -- and quickly -- then she would be making a strong case for a Department of Administration belonging in her cabinet.

“If the agency was a quasi-legislative agency, then everyone would be pointing fingers at everyone else (in the legislature) right now, which is worse,” Bryant said. “Haley has taken ownership of Revenue … and if we see how fast she can fix the problems, then the DOA bill is still alive” when the session opens in January.

Crystal ball:  With the problems at the Revenue Department looking like they are going to get worse soon and better later, it’s hard to think that new Department of Administration has any chance ending up as a cabinet agency. Additionally, the legislature has shown an obvious preference for staying the dominant third of state government. So expect a new agency, if it has a future, to be legislatively-controlled.

Bill Davis is editor of Statehouse Report.  He can be reached at:  bill@statehousereport.com.

Legislative Agenda

Statewide elections to be Tuesday

The General Election will be held this Tuesday. Check with your local election commissions to find out where your polling place is.

Don’t forget that electing the next president, state and local officials aren’t the only issues on the ballot on Tuesday. Voters in South Carolina will get a chance to decide if they want gubernatorial candidates to share a ticket with lieutenant governor candidates.
Radar Screen

Nikki Haley -- S.C. for life

Thanks to the unfolding hacking scandal at the Department Revenue, South Carolinians better get used to Nikki Haley because she ain’t going nowhere!

It has been rumored that Haley was a possible candidate for a position in the Romney Administration, should he win the presidency. Now Haley, with one of the biggest public information security scandals in the nation’s history on her resume, is probably radioactive.

What agency or ambassadorship could she be handed that doesn’t deal with sensitive information? Exactly. Welcome home, Nikki. Your national profile just shrunk by 49 states.
Palmetto Politics

Hacked off

In a week when Superstorm Sandy battered the northeast corner of America, taxpayers learned more and more about a cyber hacker who battered South Carolina’s computer records. Security experts are calling it the worst intrusion into public information in the nation’s history.

Beginning in late September, a hacker was able to infiltrate the state Department of Revenue computer system, apparently using a state official’s credentials, according to state officials. In roughly a two-week span, the hacker made off with the Social Security numbers of 3.6 million residents who had filed taxes in South Carolina since 1998, according to Gov. Nikki Haley.  Additionally, more than 387,000 credit card numbers were also siphoned. It came to light later this week that information on 657,000 private businesses was also stolen, she reported.

Haley has been holding near-daily press conference to update the public on the situation and progress toward repairing the problems. The governor has received stiff criticism for waiting 16 days before informing the public on Oct. 26. During those 16 days, Haley said she had been asked by law enforcement not to go public with the information, but was also able to take a three-day trip to Napa in California.

As the week and the scandal unfolded, state officials informed the public that once the hacker was able to pierce Revenue’s security, her or she or they were able to feast on information that had not been encrypted. It also came to light later in the week that Revenue had not been employing a layer of security to their system that the state provides to other agencies and programs.

Haley also told citizens that if they had paid their taxes with checks, to consider their checking information to be “compromised.” She has also assembled her cabinet in a special meeting this week to assess what each of those 16 agencies are doing to protect their computer systems and records.

Haley has encouraged residents to check on their possible identity theft by calling 1-866-578-5422, and by visiting the website protectmyid.com/scdor. Once on the website, citizens should be able to access the information by using the code “scdor123.”

Haley is encouraging business owners to make a similar effort by calling 1-800-279-9981, or by visiting www.dnb.com/sc.

Commentary

16 days? Really Gov. Haley, really?

By Andy Brack, editor and publisher

NOV. 2, 2012 -- South Carolina GOP Gov. Nikki Haley could learn a thing or two about leadership from Batman.

“When the average citizen on the street is in peril, something must be done, and quickly,” Batman said in 1967 in episode 109 of the classic television show.

But when the private information of South Carolinians -- some 3.6 million Social Security numbers, almost 400,000 credit card numbers and business information on 657,000 businesses -- was in peril this fall thanks to a hacker who invaded the state’s surprisingly vulnerable Department of Revenue computer system, what did Haley and company do? Wait.

Not one day. Not two. Not a week. Not even two weeks. They waited 16 days to let people know their private information was at risk. That’s longer than the entire Cuban Missile Crisis!

If you want to get some perspective about what went on from when Haley, pictured at left, was notified on Oct. 10 that the Revenue computer system had been hacked until Oct. 26 when she and law enforcement officials came clean, take a look at a timeline that marries the chronology of what officials did after discovering the hack to Haley’s public schedule.

From Oct. 10 to Oct. 26, the hyper-ambitious governor had ample opportunities to let people know they were victims of identity theft:

  • Haley had nine media interactions in the 16-day period -- from press conferences to interviews to scheduled media availabilities. At no point did she warn people that something was awry with their private information. Instead, she said “It’s a great day in South Carolina” time and again.

  • Haley made 54 posts to her Facebook account, including lots of political posts about the presidential debates and one open 50-minute chat in which she interacted with dozens of people. Again: No word about the hack.

  • Haley attended four political events, including a three-day weekend in Napa, Calif., with fellow Republican governors. Instead of staying at home to warn people about identity theft, she left the state to politick.

Bottom line: The hacking episode that has left 3.6 million South Carolinians vulnerable to identity thieves was a crucial test of Haley’s leadership. Quite simply, she failed. She left the whole situation up to the law enforcement community instead of taking control. Had the media not finally caught on that something was up, we still might not know. More disturbing: When Haley’s abysmal response to the Great Hacking of 2012 was questioned, she blamed the media, a pot-calling-the-kettle-black response if there ever were one.

U.S. Sen. Fritz Hollings, D-S.C., taught a long time ago how public officials work for the public, not for law enforcement who are investigating a problem or other government officials looking for more time.

Think back to February 1993. At that time, Hollings discovered that the Base Realignment and Closure Commission quietly had targeted his hometown of Charleston’s naval facilities for closure. The official report wasn’t due for about six weeks. 

What did Hollings do -- wait for the report to come out? No, he got on a plane to Charleston, held a press conference and warned Charlestonians of the impending economic blow. He got criticized for letting the cat out of the bag early and lots of local officials didn’t believe him.

But he was right on the money. And he let people know quickly because he knew his duty was to the citizens of South Carolina. He let them know because it was the right thing to do. As a result, a couple of things happened. First, Hollings’ early warning forced Charleston to start dealing with the situation more quickly than other communities and they were better prepared to fight. Also, the early warning forced the Navy to back down a little, which resulted in Charleston keeping the Naval Electronic Systems Engineering Center, the highly-technological complex of engineers today are known as SPAWAR. 

Nikki Haley talks a lot about transparency. But the 16 days of secrecy involving private information of hundreds of thousands of businesses and 3.6 million people is about as transparent as a blindfold. She should be held accountable -- now, not just at the ballot box two years from now.

Andy Brack is publisher of Statehouse Report.  This column is an updated version of commentary published earlier this week at Charleston Currents and Huffington Post.  You can reach Brack at: brack@statehousereport.com.

Spotlight

Southeastern Institute of Manufacturing and Technology

The public spiritedness of our underwriters allows us to bring Statehouse Report to you at no cost.  In today's issue, we heartily welcome a new underwriter, the Southeastern Institute of Manufacturing and Technology, which is the Southeast’s premier technical service provider and training facility for industry. SiMT’s mission is to provide customers with strategic training and manufacturing technology solutions that maximize workforce productivity in advanced manufacturing environments. SiMT’s state-of-the-art facilities are located in Florence, S.C., on a 146-acre campus adjacent to Florence-Darlington Technical College.

My Turn

Women (and men): Your vote really matters!

By Joanne Day
Special to Statehouse Report

NOV. 2, 2012 -- “Your vote is your voice” is a familiar saying but too many feel politicians don’t listen, so they tell themselves, “Why bother.”  Well, it matters and it matters big time for millions of women whose health care is under attack.

On the national level we see efforts to roll back expanded access to contraception and the means to pay for it via health insurance. On the state level, misguided legislators attempt year after year to limit a woman’s right to make decisions about her own health care. 

Politicians should not be practicing medicine nor making decisions that belong to a woman, in consultation with her physician, her family and -- if she chooses -- her spiritual advisor. A woman’s private life should be off limits to individual legislative agendas. In this election, women -- and the men who care about the women in their lives -- need to be concerned. 

The candidates tell us they get it that Americans care about the economy. Affordability and availability of family planning services, including contraception, are very much economic issues. Countless studies show that the ability of individuals to plan when and how many children they will have leads to healthier and more stable families.  

Access to comprehensive health care services via affordable insurance or through government sponsored programs such as Title X -- which provides a broad range of family planning and preventive health services for millions of uninsured and low income individuals -- are at enormous risk in this election. 

Larger issues of health care, such as the care of elderly family members and the disabled, fall more heavily on women. Changes to Medicare and Medicaid funding will definitely affect those depending on these programs, but will also affect the families and the women who care for elderly and disabled family members.

These are family issues, not just women’s issues. From reproductive health to caregiving for family members in need, we should all be well-informed and involved. The federal and state representatives that you elect will vote on legislation that can determine the fate of health care services and programs that individuals and families depend upon. 

Your vote matters – it really does.   On November 6, make sure your voice is heard.

JoAnne Day of Columbia is a member of the S.C. Coalition for Healthy Families.

Feedback

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Scorecard

Not a good week for state government

Pensions. State pension funds’ earnings are up, but probably not enough to meet long-term goals. More.

Election. According to state officials, state absentee voting is up roughly 50 percent compared to past years.

Haley. The governor blamed the media for causing “somewhat of a panic,” claiming that call centers for the state’s contracted credit monitoring being overwhelmed. Riiiiiight. More.

Lottery. An accounting discrepancy has been discovered at the state lottery, and SLED is investigating. More.

Revenue. Turns out, the Department of Revenue wasn’t even using the state’s cyber monitoring system, even though it was available to them. More.

Stegelin

Safe?


Also from Stegelin: 10/26 | 10/19 | 10/12 | 10/5
credits

Statehouse Report

Editor and Publisher: Andy Brack
Senior Editor: Bill Davis
Contributing Photographer: Michael Kaynard

Phone: 843.670.3996

© 2002 - 2014 , Statehouse Report LLC. Statehouse Report is published every Friday by Statehouse Report LLC, PO Box 22261, Charleston, SC 29413.
Excerpts from The South Carolina Encyclopedia are published with permission and copyrighted 2006 by the Humanities Council SC. Excerpts were edited by Walter Edgar and published by the University of South Carolina Press. Statehouse Report has partnered with USC Press to provide readers with this interesting weekly historical excerpt about the state. Republication is not allowed. For additional information about Statehouse Report, including information on underwriting, go to http://www.statehousereport.com/.