Special Legislative Report

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Business as Usual in South Carolina

The General Assembly has just completed this year’s South Carolina legislative session—one it seemed would never end. With it, some things have changed, and some things are—just as expected—exactly the same.

It’s business as usual in South Carolina. Out-of-control spending, over-regulation, and an out-of-touch Legislature determined to govern behind closed doors. And while we’ve cringed at political gaffs and ugly politics that made national news, it’s what goes on behind the scenes that threatens our liberty and free market prosperity. This Special Legislative Report summarizes some of the most important actions taken by the General Assembly in the 2010 session. It’s also important to note what lawmakers did not do this year:

  • They didn’t cut taxes or overall spending.
  • They didn’t implement education reform.
  • They didn’t implement free market health care reform.
  • They didn’t help small, independent businesses.
  • They didn’t record the vast majority of votes, and they didn’t increase government transparency.

 

Transparency and Roll Call Voting

Roll Call Voting

It’s  no  surprise that transparency—particularly with regard to roll call voting—was a casualty of  this year’s legislative session. As economic pressure increased, so did the Legislature’s determination to preserve its power in the state—as well as its ability to make decisions with minimal “interference” from voters. As they nixed a legislative proposal to require more on-the-record voting, lawmakers pushed through legislation making it easier for the General Assembly to hand out taxpayer funded economic incentives to special interests.

For those of us who expect lawmakers in South Carolina to be accountable to those who elect them, Tuesday, May 11 was quite

an eye-opener. Senators called it “Roll Call Day”—a day of “wasted time” where they deliberately made unnecessary motions, then demanded recorded votes. Roll call voting was even called a “fad.”

What seemed to be a political stunt to thwart passage of a law requiring roll call voting, instead became a confirmation of the need for it.

Further Reading

Policy Council: Roll Call Voting in South Carolina Fact Sheet
The Nerve: Senators Seek Alternatives to Roll Call Voting
Policy Council: Policy Council Testimony on Roll Call Voting Legislation
The Nerve: Lawmakers Turning Their Backs on Roll Call Voting
Policy Council: The Bottom Line on Roll Call Voting
The Nerve: Roll-Call Voting Bill Fizzles in Senate

The Government’s Economic Incentives Game

Economic Incentives Spending

There is perhaps no more sacred piece of political business than the Legislature’s taxpayer-funded economic incentives for special interests. As publicly funded economic incentives rose from less than $50,000 in 1999 to more than a half billion dollars in 2009, more taxpayers are joining the Policy Council in  asking “What are we getting for our money?”

The Legislature’s response was the “Economic Development Competitiveness Act of 2010,” H 4478 sponsored by House Speaker Bobby Harrell.
Governor Mark Sanford signed the bill, and in doing so joined Harrell and other lawmakers in caving in to special interests. But the law is more than a payday for narrowly drawn corporate special interests. It’s a massive power grab for the General Assembly that solidifies government’s role in directing our state’s economy.

The Policy Council called for common sense reforms to protect taxpayer investments in these special interest deals, and supporting legislation was introduced.  However, it stood little chance in this year’s political environment.

The good news is that not every attempt by lawmakers to choose winners and losers in the market was successful. Controversial legislation that would have asked taxpayers and business to subsidize a mall in the Lowcountry failed.

The Facts: Taxpayer-Funded Special Interest Deals

Government leaders are ignoring not only the will of the people, but overwhelming evidence that government-manipulated, taxpayer funded economic development does not work—and is a bad investment of tax dollars. Here’s why:

Simply put, taxpayer-funded economic incentives don’t work, and there’s little accountability for how the Legislature doles out this money. Thus, in spite of having spent more than $1.5 billion on economic incentives over the last several years, South Carolina’s employment and per capita income levels continue to be among the worst in the nation.

The most important question is: If billions of dollars for special interests isn’t buying economic prosperity, what is it buying?

Further Reading

Policy Council: Economic Development Bill Rewards Special Interests Over Independent Businesses
The Nerve: Firms’ Decisions Show Incentives Not Necessary
Policy Council: Economic Development Spending Hurts South Carolina’s Economy
The Nerve: Legislators Push For Retail Incentives
Policy Council: A Review of the Sembler and Bass Pro Shops Incentives Legislation
The Nerve: Nonprofits Cheer Defeat of Economic Incentives Bill

The Budget

It’s like magic! The General Assembly has managed to pull a $21 billion dollar rabbit out of a hat—and once again passed the largest  budget in South Carolina history. Here’s how the sleight-of-hand worked:

  • Reduce the size of the General Fund.
  • Dramatically increase reliance on federal funds – that won’t be available next year.
  • Raid earmarked and reserve funds through budget “flexibility provisos.”

Appropriations

Overall, the state budget increased by $200 million over last year. The majority of the new spending is being sustained by Federal Funds (just over $8 billion) and increased Other Funds fine/fee revenue (more than $7.5 billion). Meanwhile General Fund revenue was cut to just over $5 billion. While the governor’s budget vetoes reduced the initial $21 billion budget by $261 million, the new budget is still the largest—$20.887 billion—in state history.

Two years ago—before the Policy Council launched a campaign to inform taxpayers (and lawmakers) about the true size of the state’s budget—nobody was talking about the “Other Funds” budget, composed of fees and fines. This year, fees and fines were center stage as lawmakers initially attempted to offset General Fund cuts with large increases in fees and fines.

Most fee and fine increases were eventually dropped from the budget, but lawmakers instead used “flexibility provisos” that allow state agencies to use e

armarked and restricted revenue to supplement general agency funding. In short, the Legislature will allow agencies to draw down Other Funds revenue by as much as $1.6 billion.

The bottom line for taxpayers? In both good times and bad, South Carolina’s lawmakers can’t stop spending—all but guaranteeing future tax hikes and fine/fee increases.

Further Reading

Policy Council: Making Sense of the Governor’s Budget Vetoes
The Nerve: Failed Budget Bet Puts State In Fiscal Vice
Policy Council: 10 of the Worst New Budget Provisos
The Nerve: Budget Board Battle Royale: The Guv’s Veto
Policy Council: Increased Fines/Fees Keeping Spending High
The Nerve: How the S.C. Senate Gave Itself a $4 Million Raise

Nothing in the foregoing should be construed as an attempt to aid or hinder passage of any legislation.

Copyright  © 2010 South Carolina Policy Council.

 

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