The Palmetto Insider

The blog of the South Carolina Policy Council

Posts Tagged ‘comptroller general

S.C. State Budget: $182.188 Billion and Counting

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South Carolina’s FY10-2011 state budget is the largest in state history. At more than $21.149 billion, the state’s budget has increased about 44 percent over the last 10 fiscal years. Spending has been growing rapidly and has also consistently increased 9 out of the last 10 fiscal years.

Cumulatively, the state has spent $182.188 billion since FY2001. Here is the breakdown:

  • $57.087 billion in General Funds (31.34 percent)
  • $62.318 billion from Federal Funds (34.21 percent)
  • $62.782 billion in Other Funds (34.46 percent)

These numbers are fascinating for us budget geeks – in particular, the fact that offline fines/fees revenue that makes up Other Funds spending is the largest revenue source in the state budget. (For more on that, read this report.)

This year’s huge budget comes with a price: a $1 billion deficit for this upcoming year.

These cuts are going to have to be made, owing to a constitutional requirement (article 10, §7(a)) to balance the budget. But what is really needed is long-term reform.

Some of the necessary changes are not novel – such as implementing a budgetary cap (also known as a tax and expenditure limitation or TAL), redesigning the budget process through zero-based budgeting, scrutinizing governmental waste and abuse, and identifying governmental activities that could be outsourced to the private sector. We discuss many of these reforms in both the 2009 and 2010 Best/Worst guides.

Federal stimulus spending arising from the American Recovery and Reinvestment Act of 2009 (ARRA) is another concern – especially insofar as these federal dollars were used to balance a budget bloated by too much spending.

According to the S.C. Comptroller General ‘s Office, the state has an obligated total of $2.319 billion in stimulus funding, of which it has received $1.160 billion as of September 2010.

This means there is an additional $1.159 billion in obligated stimulus funding for the rest of 2010 and 2011. But with the majority of ARRA funds expected to end on Dec. 31st of 2010, much of the awarded, but as of yet unobligated, funding might not be realized coming into FY2011. (Funds that are awarded to states do not become obligated until they can provide a contract or promise to perform.) We’ll look more at this issue in a future blog.

The stimulus spending mentioned above also excludes money for local entities and direct funding to private sector firms. Build America Bonds (BABs), a federal subsidized loan program, is also part of the stimulus. As of September 30th 2010, 26 South Carolina local governmental entities and private companies had issued $753 million of bonds through BABs.   This program is also expected to end on December 31st of 2010.

No doubt, losing billions in federal stimulus funding is going to fuel a lot of complaints from lawmakers fearful of making targeted budget cuts. We’ll likely hear calls for tax increases as well. But amidst all this handwringing, remember that lawmakers have been overspending for the last decade. Cutting a billion from next year’s total budget won’t reverse this trend, but it’s a first step toward addressing the real problem of systemic high spending.

Written by Simon Wong

November 30, 2010 at 10:56 am

Posted in Budget

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