SC lawmakers disagree on how to recover from security breach

jmcfadden@heraldonline.comJanuary 3, 2013 

— Republican and Democratic leaders in the Legislature agree that state government failed to protect the 3.8 million South Carolinians whose Social Security numbers and tax information were compromised in a Department of Revenue security breach last fall.

What they don’t agree on is how to fix the problem in hopes of preventing further loss.

During a legislative workshop in Columbia Thursday, House Democrats and Republicans unveiled competing legislative agendas that – along with addressing ways to pay for health care, education and highways – aim to determine how the state will recover from the security breach.

In hindsight, securing the Department of Revenue with layers of protection should have been a “no-brainer,” said state Sen. Kevin Bryant, R-Anderson, chairman of a Senate panel investigating the breach.

House Minority Leader Harry Ott, D-Calhoun, said lawmakers’ requests for information about the breach have gone nowhere.

“I don’t believe you can fix a problem until you know how the current problem happened,” he said. “South Carolina is still exposed” until the state develops a protocol to deal with “bad emails” – which officials say gave hackers access to private information that wasn’t encrypted.

The state is paying $12 million to the Experian credit reporting agency to provide free daily credit monitoring to taxpayers for a year. If lawmakers want to extend that service for another year, the state will have to pay $10 million.

But paying Experian wastes money, since residents already have free access to credit protection services, said state Rep. Mandy Powers Norrell, D-Lancaster.

Taxpayers whose identities have been stolen can count on up to $1 million from Experian to help buffer the impact.

But that insurance coverage was already available under the federal Electronic Funds Transfer Act of 1978, giving states protection from unauthorized bank and credit transactions, Powers Norrell said.

“We’re already protected,” she said.

Powers Norrell also blasted the state’s rejection of the 2003 Fair and Accurate Credit Transactions Act, which gave states the option of providing free access to credit scores to residents more than once a year.

“We should see our credit reports once a month or once a quarter, at least,” she said. “It’s our information.”

Hiring Experian was an “immediate” response to news of the breach, said House Majority Leader Bruce Bannister, R-Greenville. Other options, he said, will be explored in the coming months.

If taxpayers already knew how to manage fraud, they wouldn’t need Experian, he said, “but a vast majority of South Carolinians have never had their identities stolen.”

Because of the breach, Ott said, it’s “improbable” Gov. Nikki Haley’s hopes for the creation of a Department of Administration to replace the State Budget and Control Board will ever reach fruition.

Senate Republican Leader Harvey Peeler of Gaffney, whose district includes much of western York County, disagreed, arguing that the governor should be responsible for executive functions of government, including having oversight into state agencies and prevent unnecessary spending.

“If the government requires you to give us your information, it’s the government’s responsibility to protect it,” he said.


Peeler said improving highways will be high on his list of priorities for the 2013 legislative session, which begins next week.

Taking jabs at a recent decision by the state Transportation Infrastructure Bank Board to pay for expanding the Mark Clark Expressway in Charleston and the completion of Interstate 73, scheduled to connect Myrtle Beach with Detroit, Mich., Peeler said taxes collected in the state’s 46 counties pay for road improvements in only a few cities.

More money should be spent in counties with roads in poor shape, including I-85 in the Upstate.

One road that has seen improvements is S.C. 5 leading from York County to the Cherokee County line, Peeler said. Years ago, he fielded concerns from the parents of Winthrop University students who “dreaded their children driving on S.C. 5,” he said.

The county’s Pennies for Progress one-cent sales tax initiative has made the difference, he said, and is a model for the rest of the state.

Ethics and education

Legislators will consider forming an ethics task force to investigate complaints of ethics violations, said state Sen. Wes Hayes, R-Rock Hill, chairman of the Senate’s ethics reform panel.

Such a “public integrity unit” would include investigators from the State Law Enforcement Division, the Department of Revenue and the Attorney General’s office. Lawmakers on Thursday promised that details of investigations after which probable cause is found would be made public.

Punishment for violators, Hayes said, still would rest with the Senate and the House.

Hayes said he will continue to lobby for changes to education, including making the now-elected state Superintendent of Education an appointed position in the governor’s cabinet and meeting the demand of “rapidly growing school districts” by spending more state dollars to hire teachers and other staff.

The target of an unidentified political group’s mailers in October, Hayes also wants lawmakers to consider changes to the law that allows such anonymous attacks.

“Many of us have been victims of the shadows,” he said.

Jonathan McFadden 803-329-4082

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