The Palmetto Insider

The blog of the South Carolina Policy Council

Reform the Budget: Start with the Basics

with one comment

A new report from the Policy Council highlights how Other Funds transfers are being used to keep state spending high – in fact, at pre-recession levels. Consider the following four facts about the proposed FY10-2011 budget:

The proposed FY10-2011 House budget is $21.10 billion. This includes: $8.26 billion in Federal Funds; $7.77 billion in Other Funds; and $5.07 billion in General Funds.

The budget increases Federal Funds by $450 million (6 percent) and Other Funds by $600 million (8 percent). These increases are only partially offset by a General Fund cut of $640 million.

Other Funds, or fine and fee, revenue is the fastest growing funding source in the FY10-2011 budget.

Other Funds revenue and expenditures are consistently being underreported and then (via flexibility provisos) used to supplement General Fund spending. For the FY10-2011 budget, such transfers could exceed $1.6 billion.

The SCPC report includes five recommendations that would bring transparency to the budget debate and accountability to the use of Other Funds.

In addition to reforming the Other Funds budget, however, the state needs wholesale budget reform. According to a report by the National Association of State Budget Officers (NASBO), South Carolina lags behind other states in terms of budget transparency.

The report includes 30 tables listing each state’s status for things like the budget calendar, debt limits, and budget agency functions. While the report does not “rank” each state for each category, it indicates which states use specific good budget practices.

Here are the results:

49 states use multiple budget reporting formats – e.g., by lump sum or organizational unit or object classification – at various stage of the budget process. South Carolina is the only state that uses just one format at every stage.

44 states have a state-federal liaison to analyze federal legislation. South Carolina does not.

43 states include program description narratives in their state budgets. S.C. does not.

37 states appropriate all non-federal funds. S.C. does not.

34 states include all programs in revenue estimates. S.C. does not.

24 states formally review or edit performance measures on a regular basis. S.C. does not.

Most notable in this list is the “budget format” section. In short, budgets are generally formatted in four different ways: by lump sum appropriations; organizational unit; program budget; or object classification/line-item. South Carolina only uses two of these budgeting formats – program budget (agency request, governor’s budget) and object classification (appropriation bill, accounting records).

More formats = more data for taxpayers = greater transparency of government.

Not in South Carolina.

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Written by Geoff Pallay

April 19, 2010 at 12:55 pm

One Response

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  1. […] maneuvers explain why South Carolina so desperately needs budget reform. The General Assembly should be debating the true $21 billion budget – instead of pretending to […]


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