South Carolina state budget

South Carolina's $6 billion state budget for FY2012 was passed on time and signed into law by the governor after she vetoed $213 million of spending in the budget.^[1]

The state operates on an annual budget cycle.^[2] The state's fiscal year begins July 1. Over 83% of South Carolina's General Fund revenue comes from income and retail sales taxes.^[3] The state constitution requires lawmakers to put 4 percent of the budget into the General Reserve Fund, a "rainy day" fund.^[4]

South Carolina has a total state debt of approximately $54,149,705,000 when calculated by adding the total of outstanding official debt, pension and other post-employment benefits (OPEB) liabilities, Unemployment Trust Fund loans, and the FY2013 state budget gap.^[5] The FY2013 state debt total is down from the FY2012 total of $56,539,512,000.^[6]

South Carolina's total state debt per capita is $11,572.35.^[7]

See also: The South Carolina State Budget on State Budget Solutions

Economic Freedom

A new Fraser Institute report on economic freedom ranks South Carolina 40th in economic Freedom. Delaware ranks 1st and New Mexico ranks 50th. The study examines the impact of economic freedom on both the level of economic activity and the growth of economic activity. According to the study, the freest economies operate with minimal government interference, relying upon personal choice and markets to answer basic economic questions. More governmental restrictions on those choices curbs economic freedom. The study looks at three major categories per state – size of government, taxes and regulations. ^[8]

Federal Aid to State Budget

The chart below represents how much of the state’s budget comes from the federal government. The number is the corresponding ranking in relation to the rest of the nation (if #1, the state receives the highest percentage of federal funding in the nation):

Figures are calculated by dividing each state’s intergovernmental revenue into its general revenue. Data is available at in U.S. Census.

FY2013 State Budget

The legislature passed the $6.7 billion FY2013 state budget on June 28, 2012, and it arrived on Gov. [[ballotpedia:Nikki Haley|Nikki Haley]'s desk on June 29, 2012. The governor used the full five days (not counting Sunday) to consider her vetoes, so the fiscal year started without a budget signed into law. The legislature passed a continuing resolution to keep government running until the bill became law.^[9]

Gov. Haley issued 81 budget vetoes, perhaps the most notable being her veto of sending $10 million of the state's $28.2 million mortgage settlement funds from banks to the Department of Commerce's "closing fund." She noted that the fund will have $15 million without the mortgage money, which is $5 million increase over what the fund had in FY2012..^[10] Her vetoes eliminated funding for the South Carolina Arts Commission and the South Carolina Sea Grants Consortium.^[11]

The legislature voted to override many Haley's vetoes, including those on funding for teacher pay, the Arts Commission and the rape crisis centers.^[12]

The budget as enacted following the legislative overrides can be found here.

The budget includes $1.3 billion in one time funds.^[13] Budget highlights include

• the first pay increase in four years for state workers: a 3 percent pay increase for most state employees, and a 5 percent increase for state law enforcement officers earning less than $50,000 per year. The budget provides $48 million to school districts to increase teachers' pay by 2 percent. The budget as passed also covers state employees' rising health insurance premiums.^[13]
• $153 million more for public schools;^[13]
• $300 million to dredge the Charleston harbor to a 50-foot depth to accommodate mega-size ships expected to call after the Panama Canal is widened in 2014;^[13]
• a 3 percent pay increase for most state employees, with a 5 percent pay increase for state law enforcement officers earning less than $50,000; ^[14]
• coverage of rising health insurance premiums for state employees; ^[14]
• $48 million to school districts specifically to increase teachers’ pay by 2 percent.^[14]

Legislative Proposed Budget

With the House and Senate $6.6 billion budgets not reconciled, the legislature adjourned on June 7, 2012. Lawmakers took up the budget again when they reconvene on June 19, 2012, for a special session.^[15]

The legislature approved a $6.7 billion final budget on June 28, 2012.^[13] The House passed the spending plan with a vote of 89-10 in favor and the Senate voted 26-8.^[13] The final budget includes a tax cut for small business owners.^[13]

The Senate approved a $6.6 billion FY2013 proposed budget on May 16, 2012. The budget adds additional judges, which lawmakers said was necessary because South Carolina's general court judges have the highest caseload nationwide. The budget bill was sent back to the House.^[16] but no action was taken before the session concluded.

Both chambers' budget proposals cut the income tax rate that small business owners pay on their profits, with the Senate plan phasing in the approach over multiple years, while the House plan immediately reduces the rate from 5 percent to 3 percent, meaning $65 million less in revenue in 2012-13.^[15]

The House unanimously approved its FY2013 spending plan in March 2012.^[17] Highlights of the House budget included:^[17]

• a 2 percent raise for state employees and teachers;^[17]
• additional education funding, increasing the base student cost from $1,880 to $2,012;^[17]
• $180 million to deepen the Charleston port;^[17]
• $77 million to pay down the state's debt to the federal government for what it borrowed for unemployment benefits^[17]
• 5 percent into the state's rainy day fund, more than the constitutionally requires 4%, which is an additional $58 million.^[17]

Pensions

The Senate Finance Committee to increase state workers’ contributions to the state workers’ retirement system to 8 percent of their pay from 6.5 percent.^[18]

FY2012 State Budget

The South Carolina Budget Control Board voted on Aug. 8, 2011, to increase insurance premiums for both employees and the state by 4.5%, saying that the had to do so to ensure that the system is sound and has the money required to meet employees' health care needs. ^[19]

The state budget for FY2012 as detailed in the passed appropriations bill can be found here.

South Carolina is spending $199 million on principal and interest payments for the state debt of $1.86 billion.^[20]

Legislative Budget

The legislature approved a $6 billion state budget on June 22, 2011. The Senate passed the plan by a vote of 24-17 vote after the House approved it with a vote of 57-54 vote. In the House both Democrats and Tea Party-leaning Republicans voting against the plan.^[21]

On June 28, 2011, Gov. Nikki Haley vetoed $213 million in proposed state spending, including $106 million in the state’s proposed $6 billion general fund budget and 107 million in spending from a separate state reserve fund.^[1] The vetoes included^[1]:

• The entire $1.9 million budget for the state Arts Commission
• $6 million for the Educational Television network
• State money to pay for the 2012 Republican presidential primary
• $5.5 million for tourism advertising
• $38 million for maintenance at state colleges
• $13 million for the state’s technical schools to train workers for Boeing’s new North Charleston aircraft plan

Gov. Haley pointed out that with her vetoes, she said, classroom funding would increase by more than $100 million over FY2011.^[22]

Education

The approved spending plan raises the state’s per-student spending to $1,880 from its current $1,615, but does not meet the $2,720 required by a state school funding formula.^[21]

Medicaid

The budget the legislature passed makes permanent Medicaid program cuts at the Department of Health and Human Services, which in early 2011 eliminated or reduced a variety of Medicaid services, including adult dental and vision services and the home health care visits. The budget additionally cuts $125 million from reimbursements to doctors, hospitals and other caregivers. Although some hospitals have cautioned the reductions will force some to cut staff, although the state Medicaid agency is dubious of that claim.^[21]

Negotiations

A conference committee comprised of three Senators and three Representatives met on June 8, 2011, and adopted portions of the budget that were the same in both chambers' version of the budget. The biggest issues still to be resolved are how much state revenue should go to schools and how much to lower unemployment taxes for businesses with records of firing people.^[23]

The Senate's proposed budget could social safety net programs but saves more teaching jobs than once expected and also offers businesses a $100 million tax break. The proposed budget cuts $125 million from reimbursements to doctors and hospitals. Other cuts include $9.5 million less in general taxpayer funds on public schools. That's after budget writers cut $19 million from a national teacher certification program and nearly $4 million from physical education programs. The budget does add $25 million in general taxpayer funds for public charter schools. Legislators used surpluses and reserves to pay for school operations, including $97 million to cover per-student classroom spending and $20 million to help wealthier school district avoid losing money under state's school funding formula.^[24] The Senate budget puts an additional $105 million into schools, increasing per-student spending to $1,959 from the current $1,617, less than the $2,720 a state school funding formula says is required.^[23]

The House approved a FY2012 state budget bill which includes General Fund appropriations of $5.2 billion.^[25][26] It reduces aid to public schools by at least $74 million and colleges will lose more than $16 million.^[27] Colleges and universities will see reserve cash to pay for overdue maintenance projects.^[24] Overall, the House budget increases spending by 3.5% and general fund spending will rise over 7%.^[26]

Governor's Proposed Budget

Eight days prior to leaving office, Gov. Sanford released the FY2012 state budget.^[28] How much influence the outgoing governor's budget will have is unknown.^[28] His budget included measures such as a 5% salary reduction for any state worker making more than $35,000 a year, saving the state $98 million; having state workers take two unpaid holidays to save nearly $13 million; and reducing overhead at state colleges by $68 million.^[28]

House Ways and Means Committee Chairman Dan Cooper said that he worked with Governor-elect Nikki Haley's fiscal crisis panel. He also said that the committee write the first legislative draft of the budget and Haley's proposals to trim a shortfall that could top $800 million would be incorporated there or later on the House floor.^[29]

Haley's cuts include^[25]:

• $1 million for the 2012 presidential primary
• $16 million from state worker health care spending
• nearly $2 million from the state Arts Commission
• $5 million from a University of South Carolina aviation and research program
• $1 million from pay to lobbyists who work for state agencies.

Various committees in the state house are exploring the state's budget options. The Tax Realignment Commission is "a temporary and independent commission comprised entirely of non‐legislators, was created to assess the effectiveness of the state’s current tax structure and, in doing so, make recommendations to the General Assembly regarding necessary changes, if any, to that structure."^[30] the State Agency Restructuring Study Committee is considering government efficiency.^[31] The House Ways and Means Committee is considering eliminating 10 days from the school year, which would save $210 million.^[32]

Haley is also urging new limits on what the state can spend, in a proposal that would refund any extra revenue back to the public. She has also proposed eliminating the state's corporate income tax.^[33]

Budget transparency

• See sample transparency legislation at the Sunshine Standard

South Carolina Spending Transparency is the publicly available website created by the South Carolina government. It discloses information about South Carolina's spending, and is managed by the Comptroller General. South Carolina's current Comptroller, Richard Eckstrom, has written extensively on the importance of state and local transparency.^[34] He wrote in December, 2008, that:

"Earlier this year, I worked with Gov. Mark Sanford to create an easy-to-use spending transparency Web site. It contains detailed spending information for more than 80 state agencies, giving the public more access than ever to information about how state government spends its hard-earned tax dollars. This Web site, which is available through my office’s site (www.cg.sc.gov), is serving as a national model for other states attempting their own transparency initiatives. Several states have contacted me hoping to duplicate our open-government ideas."^[35]

Government tools

The South Carolina Spending Transparency database provides a searchable expenditures database.

The following table is helpful in evaluating the accessibility and scope of the information provided by the South Carolina Spending Transparency page.

Criteria for evaluating spending databases

State Database	Searchability	Grants	Contracts	Line Item Expenditures	Dept/Agency Budgets	Public Employee Salary
SC Spending Transparency]	Y	N	Y	Y	N	N

See also: Evaluation of South Carolina state website

Support for creation of the database

Governor Mark Sanford signed South Carolina Executive Order 2007-14 on August 30, 2007. The order required the comptroller to compile and disclose information concerning how the state agencies of South Carolina allocate revenues.^[36]

Exempted accounts

In 2012, 13 state agencies pushed to make 65 separate accounts exempt from oversight, meaning that the money in those accounts could only be reviewed by people inside the agency. Agencies are allowed to apply for the status with the Budget and Control Board if "release of the information would be detrimental to the state or agency."^[37]

Multi-Measure Budget Transparency Profile

The Institute of Government and Public Affairs at the University of Illinois has created a multi-measure transparency profile for South Carolina, which measures state transparency as of September 2011 using indicators from a range of organizations, including Sunshine Review. These indicators measure both website transparency and other recognized facets of governmental transparency. In addition, IGPA presents four unique indicators of non-transparency based on the observation that transfers or reassignments between general and special funds can obscure the true fiscal condition of a state.

In addition to the individual state profile, IGPA offers a 50-state comparison and profiles for other states.

Budget Background

The South Carolina Budget and Control Board (BCB) plays a key role in the general management of state government. This institution is unique to South Carolina and provides a broad array of services to other parts of the public sector as well as administrative and regulatory functions. The Board is made up of the Governor, the Treasurer, the Comptroller General, the Chairman of the Senate Finance Committee, and the Chairman of the House Ways & Means Committee. Created in 1978, the Executive Director is the chief administrative officer for the Board and serves at the pleasure of the five members of the Budget and Control Board. His office is responsible for administration, operation of the Board divisions, and legal matters. Frank Fusco was named the Board's Executive Director on August 15, 2007.^[38]

The General Reserve Fund balance must equal 3% of General Fund revenue and may be withdrawn only for the purpose of covering operating deficits. If amounts are withdrawn from the Reserve Fund, the South Carolina Constitution provides a schedule for restoring the Reserve within three years. For Fiscal Year 2008-2009, the General Reserve had a balance of $108.1 million; however, this balance was eliminated to help offset a year-end deficit. The FY 2009-10 contribution to the General Reserve Fund was $63.9 million, which is the current balance.^[39]

South Carolina's fiscal year begins July 1 and ends June 30 of the following year. Agency budget requests are submitted to the Governor by October, after which the Governor compiles his recommendation for the new fiscal year. Every January the Governor is required to submit an Executive budget to the Legislature containing an itemized plan of proposed expenditures, the amount appropriated for the last preceding appropriating year and for the current year. Following a series of meetings the House and the Senate pass a version of the budget. If both versions do not match a six member conference consisting of both House and Senate members is assembled to sort through the differences. The Governor has final say on the budget and has the power to veto sections. In 1998 the state Supreme Court ruled that the Governor cannot strike individual sentences. A two-thirds majority is needed in both Houses to override the Governor's veto. ^[40]

• From 2004 to 2008, the South Carolina legislature's spending increased by 40 percent.^[41]
• FY 2006-07 and FY 2007-08 combined, the General Assembly spent an additional $1.3 billion in surplus revenues. ^[42]

Accounting Principles

The South Carolina Office of the State Auditor performs financial audits of state agencies, the annual financial audit of the State's General Purpose Financial Statements, and the annual Single Audit of the State's Schedule of Expenditures of Federal Funds. The audit reports are published online. Richard H. Gilbert, Jr. is Interim State Auditor.^[43]

The Institute for Truth in Accounting (IFTA) rates South Carolina “Timely” in filing the state’s Comprehensive Annual Financial Report (CAFR) – The annual report of state and local governmental entities. IFTA rated 22 states timely, 22 states tardy, and 6 states as worst. IFTA does not consider South Carolina's CAFRs, and those of the other states, to be accurate representations of the state’s financial condition because the Generally Accepted Accounting Principles (GAAP) basis does not include significant liabilities for the pension plans and for other post employment benefits, such as health care.^[44] South Carolina's CAFRs are annual publications of the South Carolina Comptroller General, the state's top accountant supervising state spending, keeping the state's books and maintaining accounting controls over state agencies. Richard Eckstrom has served as South Carolina's Comptroller General since 2002.^[45]

Stimulus

South Carolina has received $2.9 billion in federal funding.^[47]

Public Employees

According to 2008 Census data, the state of South Carolina and local governments in the state employed a total of 290,248 people.^[48] Of those employees, 241,725 were full-time employees receiving a net pay of $826,764,431 per month and 48,703 were part-time employees paid $48,338,796 per month.^[48] More than 54% of those employees, or 159,155 employees, were in education or higher education.^[48]

As of 2010, 15,224 employees in South Carolina make over $50,000/year. Their combined salaries equal $1,133,969,806.00.^[49]

External links

See Also

South Carolina government sector lobbying

South Carolina public pensions

References

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