South Carolina state budget (2008-2009)

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South Carolina, like most states throughout the U.S., is facing a budget deficit for the current fiscal year and fiscal year 2010. For FY 2009 South Carolina is facing a $871 million deficit that the Center on Budget and Policy Priorities projects say will be at $725 million for FY 2010. ^{[1] [2]} Since July 2008, $1 billion has been cut from state spending and the budget has fallen to $6.1 billion. State revenue in January 2009 was estimated to be $80 million lower than 2008. ^[3] However, recent revenue reports forced officials to call for an addition $102 million in cuts to state agencies. ^[4] Despite some lawmakers hope that federal stimulus dollars might bring relief to the state Gov. Mark Sanford announced that he rejected $700 million in federal stimulus money because he believes that the stimulus money would destabilize South Carolina's economy. The Governor suggested that the funds be used to pay down state debt but the request was denied by White House officials. ^[5]

Impact of budget woes

Main article: State budget crisis, 2009-2010

• In early March 2009 education suffered another 2 percent cut totaling $43 million cut for K-12, upping the total reduction for the year to $387 million. ^[6] The South Carolina schools budget was cut $365 million for FY 2009. The South Carolina Department of Education surveyed district superintendents and found that more than 300 local educators will be laid off this year, most of them administrators. More than 1,100 positions have been left unfilled when they were vacated. ^[7]
• State agencies are trimming an additional $102 million from their budgets, bringing the amount cut from schools, colleges, health care and other services since July 2008 to more than $1.1 billion. Cuts include: $43 million from education; $16 million from the Department of Health and Human Services; $9 million from state colleges, whose budgets have been cut more than any other higher education system in the country; $3.6 million from the Department of Mental Health; and $3.2 million from the Department of Disabilities and Special Needs. ^[4]
• State agencies have laid off 121 workers and eliminated 275 jobs since July. ^[4]
• South Carolina's unemployment rate for January was its highest in nearly 26 years. A record 227,986 people were jobless and all but 11 of the state's 46 counties had double-digit unemployment, according to the state Employment Security Commission. South Carolina's unemployment rate rose to 10.4 percent in January. The employment commission reported South Carolina had 42,800 fewer jobs in January compared to December, when the rate was 8.8 percent - and 4,700 fewer people were in the work force. About 135,000 residents are collecting about $20 million weekly in unemployment benefits, officials said. The U.S. unemployment rate for February rose to 8.1 percent, the highest in more than 25 years. ^[8]
• The South Carolina House of Representatives is poised to raise the state’s cigarette tax by 50 cents a pack. Expected revenue is estimated at $147 million. ^[9]

Budget background

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. ^[10]

• From 2004 to 2008, the South Carolina legislature's spending increased by 40 percent.^[11]
• FY 2006-07 and FY 2007-08 combined, the General Assembly spent an additional $1.3 billion in surplus revenues. ^[12]

The South Carolina Policy Council recently hosted Governor Sanford and Sen. Tom Davis to reveal the Council's analysis of the Fiscal Year 2008-2009 budget.^[13] The Council's analysis broke the budget into three categories:

General Funds (from tax revenues)	Other Funds (from agencies' fines and fees)	Federal funds
$6.7 billion[13]	$7 billion[13]	$7.1 billion[13]

According SC Policy Council President Ashley Landess, "Taxpayers think we spend about $6 billion a year on state government, but the budget is more than three times that."^[13] The article reported that,

"'This report shows very concretely that our state spending picture goes far beyond the $6 billion that routinely gets reported,' Gov. Sanford said. 'This again highlights the need for more transparency in our budgeting process, so that citizens have a better handle on what is indeed being spent in our state, rather than keeping more than a third of our state budget on autopilot controlled by Washington.'"^[13]

• Total budget for FY 2008-2009 was $20,858,215,743 billion^[14]
• Over $3.3 billion went to K-12 and Higher education^[14]
• The state had over 62,000 employee positions^[14]
• The state has two rainy day funds^[14]

Budget figures

The following table provides a history of South Carolina's budgeted spending in recent years. Figures are based on the budgets as they were ratified by the legislature, and do not take budget cuts into account:

Fiscal Year	Total Expenditures	Change from Previous Year
2008	20,858,585,100[15]	2.9%
2007	20,266,849,917[16]	5.3%
2006	19,242,459,434[17]	6.7%
2005	18,033,783,808[17]	7.2%
2004	16,818,721,431[17]	9.0%
2003	15,424,866,119[17]	2.4%
2002	15,060,995,600[17]	2.2%
2001	14,730,477,146[17]	6.1%
2000	13,889,209,525[17]	n/a

Ideas about why the crisis exists

• In 2007 lawmakers approved a state budget of $7.4 billion. In 2009 the state budget shrunk to $5.5 billion. Although most blame the general economy for South Carolina's shrinking revenue, others argue that the state's unstable tax system is a large part of the state's revenue problem. Some have called for a spending limit that keeps state spending from growing out of control during times of economic growth. Others noted that creating a more stable tax system will provide stable funding for education, local governments and state programs. South Carolina's tax codes have been described as "complex and unfair due to the decades of legislative manipulation."^[18]
• In February 2009 home sales continued to fall throughout South Carolina, falling a total of 35 percent. In South Carolina, home sales dropped to 2,448, and median price was down 8 percent to $146,000. The city of Columbia’s median price hit $128,000. ^{[19] [20]}
• The statewide property tax reforms of 2006, which exempted homeowners from most school taxes, were supposed to be paid for with a penny increase in the statewide sales tax. Resulting in a shortfall of more than $143 million over the past two years, which made the state's budget problems worse. ^[21]
• South Carolina port exports in 2008 grew 19.65 percent over 2007 to $19.8 billion, according the Department of Commerce and Ports Authority. The top exports were vehicles, machinery, rubber, plastics, electrical machinery, paper and paperboard, organic chemicals, optics and medical equipment, iron and steel and wood pulp. The sector with the most growth among the top 20 sectors was aircraft and spacecraft exports, which increased 153 percent to $143 million. ^[22]

Proposed actions

Governor Mark Sanford

Not only has the Governor called for immediate budget cuts to government agencies in light of the state's widening budget gap but he has also called for a series of reforms for the FY 2009-2010 budget. In Gov. Sanford's budget recommendations he suggests limiting annualizations to no more than one percent of the total budget, a reformed tax code in order to make the state more competitive with regard to economic development, a reformed education system that provides more choices to parents and puts more dollars into the classroom, a restructured state government that is more efficient and accountable to the taxpayer and a reformed retirement system that helps repay $20 billion in outstanding liabilities. ^[12]
Gov. Mark Sanford said that in order to attract more jobs and investments he believes that the state needs to have a flatter, simpler and lower income tax rate. This, he said, can be done by first, using the current economic development incentives that relate to corporate income tax to eliminate that tax on all businesses and second, by giving South Carolina taxpayers the option of paying a 3.65 percent flat income tax. And to balance the lost income tax revenue the Governor suggests a cigarette tax increase to 37 cents, implementing a $3 per ton tipping fee and eliminating state’s three sales tax holidays. ^[12]
In total the Governor's recommended budget increases expenditures to $20.8 billion as compared to $19.9 billion for FY 2008-2009. ^[12]

Republicans

In an effort to raise revenue and reduce the state's budget deficit South Carolina Republicans suggested modeling an increase in cigarette tax after an Oklahoma program that uses cigarette tax revenue to secure matching federal money. The federal money, Republicans said, would be used provide a subsidy to buy health insurance for low-income residents or small businesses that could not afford insurance. “It looked like Oklahoma found a way to include the federal match,” said House Speaker Bobby Harrell. “That is critical to making sure there is enough money in the fund to cover a large number of uninsured people.” The increase would mean a 50 cent tax increase resulting in an estimated $147 million. Lawmakers said that part of the plan should lower insurance costs for non-smokers, who pay higher premiums to offset care provided to the uninsured. “This is a compromise between people who want something tax-neutral and those folks who want to expand Medicaid,” Harrell said. Some Democrat legislators have already announced their support for the tax proposal. ^[23]

Democrats

In early March 2009 following the Governor's announcement that he would be rejecting some of the federal stimulus funds, the Democratic National Committee launched an ad critical of the Gov. Sanford's plans. “His political posturing is hurting real people in South Carolina,” South Carolina Democratic Party Chairwoman Carol Fowler said. “We cannot wait for another failed economics lesson from Gov. Mark Sanford.” Senate Minority Leader John Land said the governor is trying to stake his turf as a far-right conservative with an eye toward a bid for the presidency. He called Sanford’s governorship “a total failure and a disaster.” ^[24] However, in response to the Governor's call for reforms in education Sen. Robert Ford is hawking a bill that would give students a publicly paid scholarship or tuition grant to go to a private school. Ford has been unable to gather additional support from the Democratic party however Ford said that the state of public education is hurting the children. “All of us have been defending the system,” Ford said. “It’s time to stop. I’m not pussyfooting with this anymore.” Sen. John Scott said, "We already have school choice. Public school is free to all. If you want your children to go to a private school, you pay.” ^[25]

Economic Stimulus Package

South Carolina is expected to receive approximately $2.8 billion from the $787 billion economic stimulus package. ^[26] According to White House officials the stimulus bill is estimated to create or save 50,000 jobs. ^[27] However, believing the state's budget deficit resulted from irresponsible spending, not actual need, Governor Sanford vocally opposed the American Recovery and Reinvestment Act of 2009. In taking this stance, Sanford conflicted with members of the state legislature. Despite the opposition of Sanford and others to a federal stimulus, some assert that opposition to stimulus funds will not be acted upon.^[28] However, on March 11,2009 Gov. Mark Sanford became the first governor to announce that he rejected $700 million in federal stimulus money. The Governor said that he believes that the stimulus money would destabilize South Carolina's economy. ^[29] Sanford was quoted in The New York Times saying:

"We simply cannot afford to base 10 percent of our state budget on money that will disappear in two years’ time."^[30]

Of the American Recovery and Reinvestment Act as a whole, Sanford said:

"What you're doing is buying into the notion that if we just print some more money that we don't have and send it to different states, we'll create jobs. If that's the case, why isn't Zimbabwe a rich place?" ^[31]

According to preliminary reports South Carolina is expected to receive:^[26]

• $445.5 million to offset its budget deficit and education shortfalls
• $1 billion in tax relief for South Carolinians
• $882 million in extra Medicaid payments
• $566 million in increased unemployment benefits
• $482 million to build and repair roads and bridges
• $335 million for low-income health insurance
• $260 million for food stamps
• $59 million for weatherization ^[32]

Budget transparency

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.^[33] 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."^[34]

Legislation

• South Carolina Executive Order 2007-14

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
South Carolina Spending Transparency	Y	N	Y	N	N	Y

Economic Stimulus Transparency

• The Economic Recovery and Reinvestment Act of 2009 designated $787 billion to be spent throughout the U.S. Of that $787 billion stimulus package, it is estimated that 69%, or over $541 billion, will be administered by state governments.^[35]

• South Carolina will receive an estimated $2,105,359,474.^[36]

• South Carolina Comptroller General Richard Eckstrom has been choosen by the governor to lead a stimulus transparency group. Eckstrom plans a unique coding system to match up and track the stimulus money to ensure it is used for its intended purpose. The oversight group is also developing a website to let citizens monitor these funds

Limitations and Suggestions

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.^[37]

Public employee salary information

On South Carolina's state homepage, citizens can find a searchable state employee database.

The State publishes a database of South Carolina government employee salary information. Users can search by a partial name, a partial agency name, or all employees in an agency. It also has handy lists of employees earning more than $150,000 and $100,000, along with the top 5 highest-paid employees by agency.

The Sun News provides a state salaries database including the names, positions and salaries of state and local government employees making $50,000 or more a year in base salary.

See Also

South Carolina government sector lobbying

External links

Additional reading

• State of South Carolina, "Executive budget: fiscal year 2009-2010," Jan. 9, 2009
• Governor Mark Sanford, "2009 State of the State Address"
• The New York Times, "South Carolina Governor Rejects Stimulus Money," March 20, 2009
• South Carolina Policy Council, "The S.C. General Assembly: Best & Worst of 2009," Sept. 25, 2009

References

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