COLUMBIA, S.C. - Critics say a 1996 agreement requires $1.3 million raised by Friends of the Hunley to help preserve a Confederate submarine be sent to the state general fund.

But those overseeing preservation of the first sub in history to sink an enemy warship say the group's fund-raising is helping taxpayers by helping the state pay for the work.

Charleston lawyer Justin Kahn is running against state Sen. Glenn McConnell, R-Charleston and chairman of the South Carolina Hunley Commission this fall. He said Hunley revenue should go back to the state.

"The taxpayers helped pay to raise the Hunley," he said.

A 1996 agreement between commission, the U.S. Navy and federal General Services Administration requires Hunley revenue to go to the state. The state and the federal government have spent $8 million on the Hunley.

A year later, Friends of the Hunley was created and has brought in more than $1.3 million by selling merchandise and giving tours of the lab where the Hunley is being preserved, according to tax records provided to The (Columbia) State.

It's incorrect to think the funds should go to the treasury rather than support the Hunley, said a fact sheet by Richard Quinn, whose marketing firm works for the Friends of the Hunley. It said nothing in the agreement prohibited the commission from assigning receipts to a supporting group.

McConnell said the 1996 agreement was to insure the federal government, which owns the sub, did not try to claim revenue.

"The Hunley is paying its own way," McConnell said.

Friends of the Hunley said it has generated more than half the money needed for the project.

But House Minority Leader James E. Smith Jr., D-Columbia, said the Hunley financial arrangements "certainly bears closer scrutiny."

State Rep. Robert Harrell Jr., R-Charleston, chairman of the House Ways and Means Committee, said the statute gave the Hunley Commission broad authority.

"It's my view that they are perfectly within the law," Harrell said.

Spokesmen for both Gov. Mark Sanford's office and the state attorney general's office said their legal staffs were not familiar enough with the agreement to comment.

But Kahn, a Democrat, said the state should decide how the project is funded.

"That's not happening," Kahn said. "You've given one man a complete pass on how to spend taxpayer money."

The sub made history when it rammed a spar with a black powder charge into the Union blockade ship Housatonic.

The Hunley never returned from its Feb. 17, 1864, mission. It was found nine years ago off Sullivans Island. In 2000, the sub was raised from the ocean floor and brought to a lab at the old Charleston Naval Base.

Its eight-man crew was buried earlier this year in what was called the last Confederate funeral.

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Information from: The State, http://www.thestate.com/