Latest News

S.C. Gov. Nikki Haley's administration reaches a crossroads

Gov. Nikki Haley is facing decisions over the next few months that will determine her future and legacy in South Carolina.

Two years after her election, any ambitions that Haley had of joining a Mitt Romney administration, which she denied, were quashed last week. Now, talk will start about the 2014 election for the South Carolina Governor’s Mansion.

Haley is expected to announce next summer that she will run for a second term in 2014 after a legislative session where she hopes to collect victories.Hacked Tax Returns

But her chief issues – cutting taxes and trimming government bureaucracy, as well as ethics reform even after facing allegations of using her office for personal gain – will be joined by another matter that already is testing her administration.

The theft of up to 4.5 million state tax records by an overseas hacker has upset South Carolinians and raised the ire of lawmakers, who appointed a special committee to investigate the theft last week.

The hacking attack also will form an argument for opponents to use to oppose Haley’s re-election in 2014.

“This breach cannot be Haley’s Benghazi,” said S.C. Republican consultant Chip Felkel, referring to the Libyan city where a U.S. ambassador was killed in September, a controversy that threatened President Obama’s re-election bid.

To build a successful resume in the legislative session that starts in January – and a case for her re-election, Haley will need to be more collaborative with lawmakers, continue to announce more jobs for the state and show leadership in dealing with the hacking attack and other issues, veteran S.C. political observers say.

“She is at a crossroads,” GOP consultant Richard Quinn said.

Haley’s office insists that the governor is not thinking about her re-election. However, in a clear signal that Haley likely will run again, her chief of staff resigned that post a month ago to run her political operation. Still, a spokesman says Haley has not decided whether she will seek a second term.

“That’s the furthest thing from the governor’s mind,” Haley spokesman Rob Godfrey said. “Her focus is on getting to the bottom of the international hacking case, making sure citizens are as protected as possible and preventing it from happening again.”

‘This is her Katrina, her Sandy’

Haley has tried for two weeks to calm fears about the theft of all state tax information dating back to 1998. The hacker used state-approved credentials to access Revenue Department records that include anything on a tax return, including Social Security numbers and bank account information. Much of the data was not encrypted.

The massive data breach is Haley’s biggest challenge as governor, Quinn said – even more significant than her being cleared of ethics charges last spring that she used her position as a state representative for personal gain.

“This is her (Hurricane) Katrina, her Sandy,” Quinn said. “It could well be that her first term is going to be judged on how well she handles this.”

Some political observers have used another hurricane comparison, closer to South Carolina, to describe the stakes for Haley. In 1999, then-Gov. Jim Hodges’ chose not to use all lanes of Interstate 26 to evacuate the Charleston area ahead of Hurricane Floyd. The resulting traffic tie-up was cited as a reason why the Democrat did not win a second term, losing to Republican Mark Sanford in 2002.

After announcing the hacking, Haley decided to stay in South Carolina during the final weekend before the presidential election to pay attention to breach updates. Haley canceled planned trips to swing states to campaign for GOP presidential nominee Romney and did not go out stumping for state Senate candidates she had endorsed.

“That is the best move she made while in office,” said Bob McAlister, a media consultant who was chief of staff for Republican Gov. Carroll Campbell. “She said she would concentrate on what was important to South Carolinians.”

Democrats said Haley may have learned from the negative reaction that some voters have had to her frequent out-of-state trips to campaign for Romney and attend fundraisers. Haley’s latest fundraiser came while she was attending a Republican governors’ conference in California, more than a week after she learned about the data breach but days before the public was informed.

But while Haley stayed in South Carolina, she cannot escape responsibility for the hacking, Democrats say.

“This happened (the hacking) because she was not doing her job and not being serious about being governor. She let people down,” Democratic consultant Lachlan McIntosh said. “This is not going to be the only issue in the election. She has been stepping in it right and left and right.”

‘Finding some wins’

Haley has spent two years promoting her jobs record – she has announced 29,000 jobs at economic-development events.

But she has yet to build a constructive relationship with the GOP-controlled Legislature. Haley angered some lawmakers by announcing her own set of ethics reforms without warning and issuing legislator report cards, grading them on their willingness to agree with her. Nonetheless, Haley plans to issue a second set of legislative report cards later this year.

In what some saw as retaliation, legislators killed a Haley-backed proposal to create a Department of Administration, which would give the governor more control over agencies and a chance to cut bureaucracy, on the last day of this year’s legislative session.

Now, says GOP consultant Felkel, “Her emphasis needs to be finding some wins.”

Haley has not released her legislative agenda, though her office said improving cyber-security will be among her priorities.

The governor does not think that the cyber-attack, which happened on her watch at an agency that she directly controls, has damaged her ability to work with lawmakers, Haley’s office said.

But Haley must drop her office’s constant-campaign mode to win more legislative victories, Felkel said. The appointment of Bryan Stirling, a veteran from the state attorney general’s office, to succeed Tim Pearson as chief of staff could help in that area.

Haley needs to decide how she will work with the Legislature – confrontationally, like her mentor Sanford did, or collaboratively, like former Gov. Campbell, Quinn said.

“Up until now, she has been a hybrid of collaborative and confrontational,” Quinn said. “Confrontational works when the governor and (the majority of) lawmakers are with different parties.”

But confrontation does not work when the governor is a Republican and the Legislature is GOP-controlled, Quinn added. “This just hurts the whole Republican Party in the long run. Hopefully, she will be more of a consensus builder.”

Despite critiques to the contrary, Haley thinks she has good relationships with most lawmakers, spokesman Godfrey said, adding the absence of her chief nemesis in the next session will help more.

“A very small number of legislators have been the focal point of the majority of friction that has existed,” Godfrey said. “She is confident that the absence of Sen. (Jake) Knotts will go a long way toward a smoother relationship with the General Assembly, and she is really looking forward to that.”

Knotts, a Lexington Republican, was defeated Tuesday by petition candidate Katrina Shealy, a Haley ally.

While the data breach will be a leading topic when the Legislature convenes, Felkel said a larger issues still looms in a state grappling with lingering poor economy.

“People care most about jobs,” he said. “(I) think that’s what will matter most.”

Democratic pollster Carey Crantford agrees Haley will be judged on job creation, but thinks voters also will care about leadership – or the lack thereof.

“Haley has been up and down over the last two years,” he said. “There has not been a whole lot of consistency in how she’s handled things.”

Two fights in ’14?

If Haley runs again, the data breach will be featured in advertisements attacking her record.

“They will make a big deal with this,” Quinn said of Democrats.

But Haley’s calm handling of pointed questions shows she has matured since she was a House member representing Lexington County, Quinn said. That also could be a plus in her re-election campaign.

“She was very smart to get out in front of it,” he said.

Still, Haley could face two fights in 2014.

She could face a challenge in the GOP primary from state Treasurer Curtis Loftis or state Sen. Tom Davis, R-Beaufort. And Democratic state Sen. Vincent Sheheen, D-Kershaw, appears ready for a rematch with Haley, who beat him in 2010. Other Democrats – including state Reps. Harry Ott of St. Matthews, Leon Stavrinakis of Charleston to James Smith of Columbia – also could enter the race.

McAlister said Haley is positioned well for a re-election bid, having raised more than $1 million and enjoying the support of a nominally independent pro-Haley political group that has raised more than $500,000.

“She has the money and she has the organization to make a good run if she chooses,” McAlister said. “I don’t think the GOP has a deep bench (for a primary bid). And I don’t think a Democrat will win the governor’s seat.”

The national media continues its love affair with S.C. Gov. Nikki Haley.

The most recent edition of Time magazine, marking President Barack Obama’s re-election, includes 13 politicians to watch in the 2016 presidential race.

Among those to watch, Time says, are household names: Secretary of State Hillary Clinton, former Florida Gov. Jeb Bush, former Secretary of State Condoleezza Rice, Vice President Joe Biden, New York Gov. Andrew Cuomo, New Jersey Gov. Chris Christie, U.S. Sen. Marco Rubio of Florida, Louisiana Gov. Bobby Jindal and Chicago Mayor Rahm Emanuel. Then, there are the dark horses, including San Antonio Mayor Julian Castro, Maryland Gov. Martin O’Malley, U.S. Sen. Kirsten Gillibrand of New York and, last, Haley.

Time notes Haley has been dogged by some controversies, mentioning allegations of marital infidelity but not her much-questioned ethics. The magazine calls her a Tea Party favorite and, like the others listed, gives her a full-page photograph.