Who's getting a majority of gas tax dollars? A watchdog says it's contractors tied to one group

Published: Sep. 21, 2017 at 2:34 AM EDT|Updated: Sep. 21, 2017 at 11:39 PM EDT
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COLUMBIA, SC (WIS) - Contractors who are members of the lobbying group, South Carolina Alliance to Fix Our Roads are the biggest winners in securing the bids associated with the new roads funding bill, passed July 1, according to SCDOT records.

SCFOR pushed for the Roads Bill, which includes a gas tax increase, prior to its passage. Now, records appear to show the lobbying is paying off for SCFOR contractors.

In the first projects, totaling $26.5 million worth of new road work, SCDOT records show contractors affiliated with the SCFOR, were awarded bids adding up to nearly $20 million worth of business, or 75 percent of the work.

Here is the first round of bids:

In the second round of projects, that percentage goes even higher. Records show SCFOR companies won $34.7 million worth of business out of a total of nearly $39 million awarded, or 89 percent of the work.

WATCH Part 1 here:

Ashley Landess of the South Carolina Policy Council says she is not surprised.

"[SCFOR's] members are industry lobbyists, companies that benefit, and this whole tax increase from the beginning - was pushed and promoted by insiders who profit from the Department of Transportation," Landess said.

Landess goes even further saying she is convinced many of the repairs promised in the Roads Bill passed July 1, will not happen, simply because she says the money is heading into a broken system absent of accountability and much-needed reforms.

"The revenue is being funneled into the least accountable places," Landess said.

Gov. Henry McMaster vetoed the Roads Bill, which includes a 2 cent gas tax hike that will eventually increase to 12 cents over the period of the next few years. Lawmakers overrode Gov. McMaster's veto and passed the bill.

Jordan Marsh, Associate Director of SCFOR, supports the legislation and says the gas tax money is desperately needed for the state's roadways.

"We have over 30 years of inadequate funding, our needs are enormous. To question whether money is being used appropriately for certain projects? You can look at any area in the entire state of South Carolina and say that area deserves some sort of infrastructure funding or some type of road improvement because it's had 30 years of decay, " Marsh said.

Marsh points to the Legislative Audit Council's 2016 audit of the SCDOT, which identified the SCDOT's need for additional road funding.

"What's the underlying reason we have crumbling roads?" Marsh asked. "Why do we have the deadliest roads in the entire country? And the conclusion we came back to every time was a lack of funding. We have the second-lowest gas tax in the entire country. We have the lowest per mile budget in the entire country, and we have one of the worst highway systems in the entire country."

WATCH Part 2 here:

The audit, however, also raised concerns about SCDOT's operations, including in the way the agency awards bids for road work.

The audit, done at the request of the Legislature, found the lack of competition in road project bids as problematic, noting SCDOT needed to "implement a system to analyzing detect collusion, bid rigging, and other activities that undermine the bidding process."

Auditors also concluded the SCDOT was under-utilizing computer software designed to analyze the bids cost effectiveness - calling the SCDOT's ability to detect bid rigging and collusion "impaired" as a result.

The audit also revealed SCDOT needed "to expand its efforts to broaden participation in its settings so as to increase the level of competition in the marketplace," as better competition - would mean lower project costs.

Based on the latest SCDOT records and the awarding of projects as part of the new Roads bill, there is still no indication anything has changed.

One project in Berkeley County, outside Charleston, details 17.9 miles of road work, awarded to Banks Construction, a SCFOR member, for $9.6 million.  Records show the only other bid came from Sanders Construction, another SCFOR member - at $9.7 million.

In a review of the first 45 projects awarded as part of the Roads bill, 13 received just 2 bids - 13 others received only one bid.

"We really don't get into the weeds with the individual bidding of contracts, we just want the projects to happen," Marsh said. "We obviously want them to happen in an efficient and effective manner and we would hope there would not be wasted."

Meanwhile, Landess says those numbers show the current system offers ample opportunity for waste.

"That is not what you would call a robust, competitive process ensuring the best deal for taxpayers," Landess says.

In addition to concerns with competitive bidding, Landess says some of the connections SCFOR members have with state lawmakers also raise red flags. One company the Policy Council identified is Banks Construction of Charleston.

The Policy Council reports the company has received millions of dollars of SCDOT work since 2007, including a $69 million contract in 2015 for a project at the Interstate 26, 275 interchanges.

Records show Banks Construction CEO Reid Banks sat on the influential Joint Transportation Review Committee alongside some of the most powerful legislators in our state from 2007 to 2015.

"That committee was abolished. That doesn't mean there is any more real accountability in the system," Landess said. "There isn't."

Until recently, the Joint Transportation Review Committee approved SCDOT commissioners, who in turn, award the bids for road work. It was an arrangement which critics said represented a clear conflict of interest.

While the new Roads Bill changes the structure of how SCDOT commissioners are nominated, it hasn't stopped Banks Construction from cashing in.

In the first two rounds of projects as part of the Roads Bill,  Reid Banks' company was awarded over 18 million dollars worth of work.

Watch Part 3 here:

"So he sat on the board. He was part of the lobbying effort to pass the gas tax. And he is one of the first recipients of the money," Landess said. "This speaks to the whole problem...When you have control over the process. When you have control over the dollars and the projects that are funded. And you have some control even over whose making those decisions...And you're also benefiting from the bids...How can that possibly be in the best interest of citizens?"

Marsh insists there's nothing unusual about the lack of bids, and the activity of SCFOR members. He says in many cases, SCFOR contractors are the only ones left to do the work, after years of inadequate funding.

"South Carolina's highway industry has been starved for the past decade and a half," Marsh said. "Therefore you have companies that have been sold or gone bankrupt and have even moved away to neighboring states like North Carolina and Georgia. So the highway industry has not been at the point as it has been in the past."

But Landess doesn't buy it and says the latest DOT records show how the politically connected, stand to benefit the most, from all this new money, and all this new work, putting them on the fast track to profits.

"These people are the very ones who are going to benefit from this tax hike. That's who was behind the push from the beginning and all the way throughout. And now - you see why."

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