S.C. senator: Loan for hacking bills wrong approach
COLUMBIA — A Republican state senator criticized Tuesday how the Department of Revenue paid its cleanup bills following the massive hacking of taxpayers’ personal data.
Sen. Shane Massey called a $20 million loan approved by the Budget and Control Board, which Gov. Nikki Haley leads, a creative way to avoid the negative publicity of deficit spending. He successfully pushed for an amendment in the Senate’s 2013-14 budget plan barring the board from approving another such loan in the coming fiscal year.
“I think that’s a terrible practice,” said Massey, R-Edgefield. “It was an end-around to allowing a deficit.”
The five-member financial oversight board approved the loan from insurance reserves in December. The vote came days before the Cabinet agency owed half of the $12 million due to credit bureau Experian under a contract Haley negotiated. That bill for providing taxpayers a year of credit monitoring was the largest single cleanup contract.
Massey said such spending decisions should be up to legislators. He called the timing particularly appalling, noting that the Senate was in Columbia for a post-election organizational session the day the board voted.
“They did it without any notification to us. There was no ability for us to do anything differently,” Massey said.
He did not weigh into the specific contracts or amounts, saying, “The governor had to do something to give assurances to the public.”
The loan covered decisions by Haley and former Revenue Director Jim Etter after the U.S. Secret Service notified state officials Oct. 10 of the hacking weeks earlier into revenue’s computer servers.
Other bills paid by the loan included $1.2 million for mailing notices to affected taxpayers, $192,000 to a public relations firm, $260,000 to a legal firm and $750,000 to the computer forensic firm Mandiant. Its investigation determined the thief stole unencrypted Social Security and bank account numbers from 6.4 million residents and businesses.
The Revenue Department expects to spend $6 million on encrypting taxpayers’ personal data and other Mandiant recommendations.
The combined bills for those contracts are $2.2 million above December’s projections. Director Bill Blume, who took the agency’s helm in January, says the agency will absorb those costs.
The hacking’s total tab has topped $25 million so far, when including consultants hired by the Budget and Control Board. House and Senate budget plans would spend another $25 million in 2013-14 on extending credit services and enacting cybersecurity measures meant to better protect data across state agencies.
Haley spokesman Rob Godfrey did not comment on Massey’s approved amendment.