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Sarah Nuckles

By Sarah Nuckles || The modern-day Jesse James Gang is the S.C. State Transportation Infrastructure Bank (STIB).  Of course the STIB doesn’t use guns to commit “highway robbery” – it uses political prowess and unregulated authority.

What do most people consider a bank’s role to be?  First, we make a choice as to whether we’re going to deposit funds at a particular institution (in a particular amount).  Then, we allow the bank’s board of directors to make loans with our deposits.  If we don’t like the way the board of directors are lending our deposits, then we have a choice whether to keep our money in that bank or to remove it.

Not so with “the people’s bank.”  With the STIB, the people of South Carolina don’t have a choice – they must put their money in the bank whether they like it or not.  Nor do they have a say as to how this money is spent, unless they can convince the S.C. General Assembly to change the current law.

How do our “deposits” go into the STIB?  Easy:  They come from gas taxes, from vehicle and tag fees, from electric utility fees, and from local governments. The STIB then uses these funds to finance the sale of hundreds of millions in long-term bonds in order to build large highway and bridge projects – just like ordinary citizens get a mortgage to buy a house.

So, where does the “highway robbery” come into play?  As it stands now the STIB’s seven-member board of directors – which is comprised of powerful legislators and political appointees – decides which projects are “eligible” to be funded, and much of that decision has to do with who provides the biggest down payment.  Usually it’s the counties/cities who want to build a specific “mega” project.

As it stands now there is NO statewide ranking system to determine selected projects based on statewide need.  And by requiring additional downpayments, the STIB can eliminate dozens of counties that are incapable of coming up with money over and above what their citizens are already contributing to the bank.  Yet despite this, taxpayers all over the state are picking up the tab for those projects that are selected.

The “masks” worn by these “robbers” cover any attempt at transparency and accountability.   In fact most taxpayer-depositors don’t even know the STIB exists.  Its meetings are “advertised” by law, but they are rarely seen and votes are often made by telephone.

There is no open debate like you would see in the legislature or in local city and town halls, and there is little – if any – media presence.  The only accountability is whether the STIB board makes good financial decisions – which obviously has nothing to do with whether priority decisions are being made in accordance with the state’s infrastructure needs.  And of course the bank gets high marks and good audits in the finance area – it has a guaranteed stream of public fund deposits (something private banks don’t have) and no competition.

Because all money received by the STIB comes from public funds, it is by definition a public agency –  not a private bank – which means these public funds should be prioritized to benefit the entire state, and not weighted toward certain regions of the state because their municipalities have more tax money for a downpayment.  That’s not what is happening, though – which is why most of the STIB’s funds (around $5 billion) have been allocated or spent on projects in Horry and Charleston counties.

There are many other important projects all around the state, but these counties have not had the additional downpayment over and above their taxpayer deposits.

The “robbery” also relates to the law establishing the STIB:

The corporate purpose of the bank is to select and assist in financing major qualified projects by providing loans and other financial assistance to government units and private entities for constructing and improving highway and transportation facilities necessary for public purposes including economic development. The exercise by the bank of a power conferred in this chapter is an essential public function. (Title 11, Chapter 43, SC Law).

If taxpayer funding is to finance roads and bridges “necessary for public purposes”, then the bank distributing that funding should include “necessary” projects all over the state.  And yet the largest project dollars since the STIB’s inception in 1997 have gone to just two counties.

South Carolina taxpayers have already made the “downpayment” due to the mandatory nature of the taxes and fees “deposited” into the bank.  But the STIB board uses the additional “downpayment” requirement to select projects it prefers rather than strategically important projects.

How can we lawfully stop the “James Gang and highway robbery”?

1) All mega projects (over $100 million) should be strategically ranked in order of their statewide priority by the S.C. General Assembly in conjunction with the recommendations of the Secretary of Transportation – using fair and objective formula criteria (like those state law requires for smaller projects).  Once ranked, these projects would then be placed on the state’s long range transportation plan and would be built pending bond financing by the STIB and other public/ private sources.

2) The STIB board of directors should be eliminated and the agency used as a financing entity and not a project selection entity.  Additional “downpayments” for the ranked projects may still come from the legislature, local governments, and/or private partners, but they must not be used to compute the priority ranking of the projects.  Those projects with the most downpayment have “robbed” the STIB’s bonding capacity, leaving nothing for projects that may be more strategically important, such as the logistical infrastructure needed all over the state to support the greatest natural, economic, business building, jobs producing asset we have – the Charleston Port.

3) If the STIB is to retain its present form, then its directors should represent ALL areas of the state (by Congressional District), should have term limits imposed upon their service and should NOT be legislators or members of the S.C. Budget & Control Board (SCBCB).  Also, they should be subject to the same stringent vetting process as members of the S.C. Department of Transportation (SCDOT) and the S.C. Public Service Commission (SCPSC).

4) The STIB MUST set aside a reserve for maintenance of its mega-projects as part of the bond funding package. South Carolina has been chronically unable to maintain its roads and bridges for decades, and these “mega” projects are often the costliest to maintain.

Without question, the STIB runs a nationally recognized “bank,” but its financial operations must always remain secondary to the purpose of the institution: financing priority infrastructure needs across the state in a fair and objective manner.

Anything short of that is “highway robbery.”

Sarah Nuckles is a former member of the S.C. Department of Transportation Commission.