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Shrimp 'n Grits

Cracks widen in the foundation of Charleston’s Fiscal Accountability
Lee Walton

Readers doubting last week’s Shrimp ‘n Grits article asserting that Mayor Riley and Charleston City Council violated state law by granting an unprecedented bailout loan to the American College of the Building Arts, need look no further than last Friday’s Palter and Chatter article, “Local governments: Stocks best bet”, for factual confirmation. “The state constitution currently limits local governments to investments in government-insured debt.”

In an effort to avoid federal requirements to invest annual employment retirement benefit contributions in lower yielding, albeit federally backed, securities, Riley and his faithful SC Municipal Association sidekick, Howard Duvall, are now leading the charge to sell state voters the benefits of two SCMA sponsored constitutional amendment questions. If passed in November, they would allow local governments to invest public employee pension funds in higher risk open-market stocks and bonds managed by a SCMA sponsored investment trust fund.

Ever mindful of opportunities not to take the right, legal, and fiscally responsible action, Riley and his faithful CFO lackey, Dollar Blind Bedard, have seized upon this latest reckless financial wizardry as a way to avoid paying an additional $1 million a year into City employee retirement investment account which has a current benefits liability of approximately $32 million. As with the illegal $734,500 bailout loan to the private American College of the Building Arts, Riley’s defenseless reasons to under fund city employee pension benefits are anchored in his assertion that any higher open-market return is worth the increased risk and necessity to either flaunt or change state law. Riley’s same shortsighted financial logic resulted in decades of under funding of the Charleston Fire Department that culminated in the tragic loss of nine brave firefighters fifteen months ago. Likewise, Riley’s decades of under funding major drainage improvements needed within the Peninsula has made Charleston the Venice of the South during every thunderstorm and higher than normal tide.

With three of the nations top five investment firms left flopping like herring on a dry beach just this past week, what credibility could taxpayers possibly have in a fledgling investment trust fund managed by the likes of the SCMA? Need we also be reminded that the State’s Unemployment Compensation fund trustees announced this week that this fund would be insolvent by year’
s end and in need of a federal bailout to continue payments to state unemployed beneficiaries? This well-funded public agency blew through $400 million in less than two years. What strokes of investment brilliance makes Riley and the SCMA’s Howard Duvall think they could avoid the same fate in the extraordinary financial times our nation now faces?

Taxpayers across the nation are reacting quickly with anger and sharp distrust of our federal government that precipitated this past week’s financial meltdown on Wall Street. Demands for accountability and retribution for those who caused this $800 billion debacle likely to burden generations of future taxpayers will resound all the way to Charleston’s City Hall.

Riley has run to the bitter end of his rope of fiscal credibility. Audacious monuments to his financial blunders and squandered tax revenues line the shores of both the Ashley and Cooper Rivers. Now he has the elitist audacity to flaunt the very state constitution enacted to protect the City’s financial security. Riley is just one more management blunder, embezzlement scandal, or significant tax increase away from his personal banquet of consequences.