The group preserving the Confederate Hunley submarine has not turned over more than $1.3 million to the state of South Carolina, despite a 1996 deal saying the money belongs to the state.

The 1996 agreement — binding the state Hunley Commission, the U.S. Navy and federal General Services Administration — calls for all Hunley revenue to go to the state. It and the federal government have put $8 million in taxpayer money into the Hunley.

However, the group preserving the Hunley says it is not bound by the 1996 agreement.

That’s because, 14 months after signing the 1996 agreement, state Senate President Pro Tem Glenn McConnell formed a group, named by the Hunley Commission, to oversee the sub’s preservation.

That group, the Friends of the Hunley, has brought in more than $1.3 million in sales of Hunley merchandise and tickets, according to tax records. None of that money has gone to the state.

Richard Quinn, whose marketing firm works for the Friends of the Hunley, said it is an “incorrect interpretation” to say the 1996 agreement requires all revenue from the Hunley to go to the state.

“The idea that the funds raised for the Hunley should go to the state’s general treasury rather than to support the Hunley is an incorrect interpretation of the intent of the operational agreement,” a fact sheet prepared by Quinn says. “Nothing in the document prohibits the (Hunley) Commission from assigning all receipts to a supporting organization.”

But critics say the money belongs to the state.

“The taxpayers helped pay to raise the Hunley,’’ said Charleston lawyer Justin Kahn, who is running against McConnell for the District 41 Senate seat this fall. “(Hunley revenue) ought to go back into the state coffers. And then the Hunley Commission should get in line to spend the taxpayers’ money like any other state agency.’’

‘STATE ... WILL RECEIVE’

The 1996 agreement lays out how the Hunley project was to be managed. Section 12 says: “The State of South Carolina will receive all receipts, royalties, and all other revenue generated by the exhibition, display, curation, and all other activities related to the Hunley unless otherwise regulated or prohibited by the laws of the United States.”

McConnell, head of the state Senate, said he wanted the clause added to ensure the federal government, which owns the sub, did not try to claim income from the Hunley.

The Charleston Republican, a Confederate memorabilia shop owner and ardent Hunley supporter, said the Friends of the Hunley group has given money to the state by putting its revenue back into the Hunley project.

He characterized as “goofy’’ questions as to whether the Friends’ Hunley revenue should go directly to the state.

McConnell said the Hunley Commission formed the Friends to raise money for the project and ease any potential burden on the state’s taxpayers.

“The Hunley is paying its own way,’’ McConnell said.

Tax documents filed by the Friends show the group received more than $8 million in taxpayer money from 1998 through 2002. State and federal appropriations have accounted for 48 percent of the Hunley project’s budget, according to Quinn’s fact sheet.

“Generating over half of the funds needed to pay for the Hunley Project to date has been a tremendous service to federal and state taxpayers, who otherwise would have faced the entire burden of the cost,’’ the fact sheet says.

Others say the Hunley project should be examined more closely than it has been.

“It certainly bears closer scrutiny,” said state House Minority Leader James E. Smith Jr., D-Columbia.

‘WITHIN THE LAW’

McConnell said the Hunley has been a tourist boon to South Carolina.

More than 200,000 people have visited the Warren Lasch Conservation Center in North Charleston, where the Hunley is housed in a protective tank, Quinn said.

The center is named for Warren Lasch, chairman of the Friends board. He would not comment for this story.

Marion Edmonds, communications director of the state Department of Parks, Recreation and Tourism, said the Hunley will be an even bigger draw once a museum is built in Charleston to house the sub.

McConnell said “detractors’’ are raising questions about the Hunley simply because of its tie to the Confederacy.

He and Quinn argue the 1996 agreement gives the Hunley Commission the “final say’’ on how the project is to be managed.

Will Folks, spokesman for Republican Gov. Mark Sanford, said the governor’s legal staff is not familiar enough with the 10-page 1996 agreement to comment.

That comment was echoed by Trey Walker, a spokesman for the state attorney general’s office.

State Rep. Robert Harrell Jr., R-Charleston, chairman of the House Ways and Means Commission, said his recollection is that the statute that created the Hunley Commission also gave it broad authority to oversee the project.

“It’s my view that they are perfectly within the law in how they’re operating,’’ Harrell said.

The law creating the Hunley Commission empowered it to “ensure that the submarine and any human remains located therein remain in South Carolina in perpetuity and are displayed in an appropriate manner for the benefit of future generations.’’

The legislation does not mention the creation of a separate group like the Friends, but Quinn said that authority is implicit.

“Clearly, the broad mandate the Legislature gave the Hunley Commission assumes that the commission was empowered by the statute to take reasonable steps to achieve its mission,’’ he said. “Also, since the commission itself had no staff and no budget, the decision to create a nonprofit ... was necessary, prudent and wise.’’

‘A COMPLETE PASS’

The Friends group has been the subject of controversy, including a lawsuit over whether it is a state agency.

While it receives state money, the Friends has argued it is a private charity that is not subject to the Freedom of Information Act. That act requires public agencies to disclose information about their operations.

McConnell and Harrell said they believe the Friends is subject to the act. But McConnell said the act has been used to harass the group.

Walker would not comment specifically on the Friends. But he said Republican state Attorney General Henry McMaster’s position is clear: Any group supported in part or in whole by public dollars is subject to the law.

While maintaining it is not subject to the act, the Friends did provide The State with each document requested.

For Charleston attorney Kahn, however, having a group that has received millions in taxpayer money decide whether it will comply with requests for information is not enough.

Democrat Kahn said the state, not McConnell, should decide how the Hunley project should be funded.

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

Reach Washington at (803) 771-8385 or wwashington@thestate.com.