The State Budget: What You’ll Be Paying for Next Year

calculator and pen grip on the calculations of profit, loss, etc.

Every year, South Carolina state agencies tell lawmakers how much money they want for the upcoming fiscal year. Unfortunately for taxpayers, they don’t offer a comprehensive report on what the money will be used for; indeed, they specify only the amounts the agencies want above what they received last year. The possibility that some programs in agency budgets may not require last year’s funding level – the possibility that the agencies could cut their budgets in some places and thus fund the new responsibilities without asking taxpayers to cough up more money – doesn’t seem to occur to anyone.

If every agency gets what they ask for, the state budget will increase by a massive $2 billion over the present year’s budget – bringing it to a record high $26.2 billion. (Just to keep it in perspective: A billion is one thousand millions.) The following list of agency requests is in no way a comprehensive list of items that taxpayers should be concerned about, but it does suggest this year’s trend is in keeping with that of previous years, and the trend is a bad one.

Department of Agriculture

As it usually does, the Department of Agriculture is again asking for tax dollars to be spent on functions that almost everyone – or at least everyone not working for the Department of Agriculture – would believe to be outside of the role of an agriculture agency.

With this first request, the dollar amount is comparatively small (let’s stress the word comparatively), but the department’s explanation suggests that department officials no longer have any firm idea of what a department of agriculture should and shouldn’t be doing.

Agritourism Product Development (Agricultural Services): $100,000

Summary: With the agency’s new agritourism emphasis, this request is a supplement to put programming in place to help standardize features, messaging, and educational components so that the public can more easily identify and participate in agritourism activities in SC. These funds will also be used to educate operators about the requirements and complexities of necessary business components, such as safety protocols and insurance. Participating businesses could apply for cost-share funding for signage and programmatic activities.

Recipients of Funds: Vendors, non-profit organizations, and participating businesses would be the primary recipient of these additional funds.

Future Impact: The state will not incur any other obligations if this request is approved. Without developing agritourism ventures, the State of SC will not realize potential tax revenue from the economic activity.

We have no idea what “agritourism” is, or why the Department of Agriculture should be promoting tourism of any kind. Nor do we understand why taxpayers should give the agency $100,000 to pursue this nebulous concept and so “realize potential tax revenue.” A far better way for Ag to “realize potential tax revenue” is not spend an additional $100,000 on a preposterous venture. Why, moreover, is the department spending money in order to make more money? Investment for the sake of profit-making is the business of the private sector, not the business of government employees using other people’s money.

A good rule of thumb to use regarding the funding of government programs: If the necessity of the program has to be explained to the average taxpayer, it almost certainly shouldn’t be funded. Indeed, agritourism just seems like another ambiguous government-created vocabulary word, similar to such “collaborations” as EngenuitySC, SCLaunch, Innovista, TransformSC, etc. These invented terms would be comical if it weren’t for the fact that real people have to pay for them

Similarly questionable is this requeset:

Public Information/Media Management (Agency Operations): $75,000

Recipients of Funds: This funding will go towards salary and benefits for one employee. Vendors would receive funds for associated software necessary for proper job functions.

Will lawmakers stop to ask why a government department needs a “media management” position worth $75,000?

Ag also asks for an additional $200,000 for the Greenville and Pee Dee state farmers markets. Now, there is nothing wrong with farmers markets – they’re a great way for locals to purchase fresh produce from local farmers at cheaper market prices. It’s unclear, however, why they require taxpayer subsidy. Funding these markets essentially defeats the purpose of farmers markets, inasmuch as it takes away the non-coercive, local, community and family atmosphere that farmers markets are supposed to be associated with in the first place. (Bear in mind, too, that any time the state gets involved with ventures of this kind, shady deals and cronyism are bound to be the end result – as has been the case with the Columbia farmers market.)

Department of Commerce

The Department of Commerce (informally and justifiably known as the Department of Corporate Welfare) has in its recent history become less involved in “commerce” in the general sense and has instead become the command-economy control center of the executive branch. This state agency redistributes wealth from both citizens and disfavored companies to companies the agency (and some politicians) would like to “recruit” to the state. It’s a practice that distorts the economy through grants and special tax favors with the government rewarding companies instead of the market, creating inequality of opportunity.

Based on its request for tax dollars for the next fiscal year, the department plans to continue the policy of creating a government-dependent economy.

Closing Fund: $17,000,000

Summary: The SC Department of Commerce is requesting seventeen million in funding for the closing fund which when combined with recurring funds would equal the amounted requested in the prior fiscal year and funded by the General Assembly in FY2012-13. These funds will be used to recruit new jobs and new investment to South Carolina. The Closing Fund offers greater flexibility than other incentive resources.

Recipients of Funds: The purpose of the Closing Fund is to assist [i.e. give money to] companies in locating or expanding in South Carolina. This program provides funding necessary to encourage competitive projects to locate or expand in South Carolina [i.e. lure companies with tax dollars].

Intended Impact: Increase the number of new/retained jobs and capital investment recruited into South Carolina.

According to the summary, we’re supposed to assume that because the department was funded the same amount in FY 2013, it should get that same amount two years later. But how did they get that much money, which added up to $25 million and five times higher than the previous year, in the first place? Here’s how: $8 million came from its normal recurring base, $7 million came through non-recurring budget provisos, and $10 million came from the National Mortgage Settlement Fund – a settlement that awarded states a total of $25 billion (South Carolina received $30 million) to assist those whose homes were improperly foreclosed upon during the mortgage crisis. How using this money to give to companies of this agency’s choosing helped those affected by the mortgage crisis is beyond us, but leave that aside. Why should state taxpayers suddenly be obliged to replenish that $25 million?

It’s a familiar dynamic: Once you give a government agency non-recurring money (in this case, $17 million out of a $25 million total budget), it will ask for at least that much on a recurring basis the following year. This is his government growth happens.

Note also this item:

Increase Business Efforts: $400,000

Summary: Commerce is seeking to increase its presence with the existing business community. Over the last year, Commerce has initiated an existing industry visitation program. The purpose of the visitation program is to maintain and grow the relationship between Commerce and the company by a one-on-one visit between the plant manager and a Commerce representative. It is our belief that these visits will bring about a closer and ongoing relationship with the industrial base of South Carolina. Through this effort we hope that our existing companies will be encouraged to grow in South Carolina, rather than in another state.

Also for the last two years, Commerce has been fortunate to have received a federal grant related to small businesses and trade. Commerce is seeking to continue this program with state resources since the federal program has ended. We have two years of experience with this program and will be using lessons learned to implement the state program.

Recipients of Funds: These funds would be used to pay contractors, vendors, grantees, and employees. The grants to companies would be allocated on predetermined eligibility criteria.

Future Impact: None.

This summary is an excellent example of how reliance on federal money increases the state’s general fund budget. Now that their federal money has run out, the Commerce Department comes to the General Assembly to ask for state dollars instead. As with most temporary federal grants, once the money runs out, the state ends up footing the bill.

It’s not at all clear how the department can claim there is no “Future Impact.” The summary says explicitly that the federal grant for the program has run out and that Commerce officials want to continue it with state dollars. For there to be no future impact means that the department will not ask for this money next year, and that is extremely difficult to believe.

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