The Palmetto Insider

The blog of the South Carolina Policy Council

Budget Priorities Come into Focus as Session Ends

with one comment

The Nerve is running an excellent piece that explains the significance of the governor’s veto of Part IV of the budget – which uses $213.5 million in federal funding to balance the state budget. Except Congress has not – and may not – approve this funding.

Currently, the federal money is only available until the end of calendar year 2010. Absent Congressional approval, the budget will become unbalanced for the second part of the fiscal year – that is, the first six months of 2011.

As the governor’s veto notes, several states have balanced their budgets without using this money. Other states, such as Mississippi, plan to place some of the money (if it materializes) in a reserve fund; or, in the case of Vermont, use it on non-core functions.

Here in South Carolina, lawmakers did the opposite, using the federal (FMAP) dollars to fund health services and agency operating expenses. “It seems this budget’s priorities are reversed,” wrote the governor. “It funds core requirements of government with speculative money, while it funds supplementary or speculative programs with money that is certain.”

Some of the programs the governor might have in mind here are:

The governor has vetoed all three of these items.

The larger problem is that spending is too high in South Carolina.

If we compare the Legislature’s spending habits to the average household, it’s like running through your monthly paycheck to throw a big party for your friends (and the Legislature seems to have a lot of “friends”); and then using your federal tax refund to pay your rent. But suppose the refund is late? Or doesn’t come at all?

We can talk about how the Legislature needs to change its attitude toward budgeting, reset its priorities and be more fiscally disciplined. But, in reality, only one thing is going to cure South Carolina lawmakers from their spend-and-tax (via hidden fines and fees) ways. And that’s an effective spending cap.

Yet, legislation (H 4232) that would limit spending increases to population, plus inflation, died in committee this session.

Indeed, in spite of having apparently made passing a spending cap a top priority for 2010, Senator Glenn McConnell seems unable to persuade his fellow senators to take a concurring vote on S 2 – a much weaker reform that would limit General Fund spending to a 6 percent annual increase. (Recall that General Fund appropriations currently account for less than ¼ of the total budget.)

The bill passed the Senate in March; and then an amended version passed the House in late May.

Only when limiting spending becomes a priority will legislators find the will to actually prioritize their spending.

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Written by Jameson Taylor

June 16, 2010 at 8:00 am

One Response

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  1. […] have purposely crafted the budget so as to prevent making such cuts – for instance, using federal FMAP dollars to fund health services and agency operating expenses. It’s the old strategy of complaining about […]


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