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.
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: email@example.com.