Gov. Haley’s Budget: Same Deal, More Money


Update* Budget documents prepared by the Executive Budget Office not available at the time of initial publication reveal an even larger executive budget. The full executive budget comes in at $26 billion, an $890 million increase in total appropriations over last year’s budget.

Gov. Nikki Haley has released her executive budget for fiscal year 2015-16. As we’ve come to expect, it’s the largest budget in South Carolina history.

When you include a $1.5 billion appropriation for food stamps that was first moved to an unbudgeted accountin 2013-14, Haley’s new budget comes in at $25.7 billion. The new executive budget recommends increasing General Fund appropriations by $215 million, and total fund appropriations by $590 million over last year’s ratified budget.

Two of the most pressing issues in South Carolina today are school funding/reform and the state’s broken road funding system. Gov. Haley has attempted to address both of these problems in more or less the same way: by dumping more money into them.

Roads: Repeat Refrain, with More Money

On transportation, the governor has chosen to double down on existing policy. The executive budget’s most significant change to transportation funding is a $105 million hike to the State Infrastructure Bank Board (STIB), a 70 percent increase over last year’s budget. This increase would bring the total STIB budget to roughly $250 million. And, thanks to the STIB’s bonding powers, the money can be turned into $2.5 billion of new debt financing to be used on whatever projects the unaccountable STIB Board sees fit. This increase is a continuation of a policy begun with Act 98, which required an annual transfer of $50 million from the Department of Transportation (DOT) to the STIB.

In fact, if the governor’s recommendations are adopted, the STIB’s budget will have grown from $50 million in fiscal 2014 to $250 million in fiscal 2016 – a 400 percent increase over only 3 years. This increase is coupled with a decrease in overall DOT funding. While the decrease is relatively small (around half a million dollars), it demonstrates warped priorities. Whereas the DOT actually funds road maintenance, the Infrastructure Bank has historically financed projects in only a handful of counties and only finances expansionary projects, not the maintenance work our road system desperately needs.

In short: The executive budget prioritizes more debt and more unnecessary road expansion projects over the maintenance of our already crumbling roads.

True, the STIB funding increase doesn’t preclude other needed transportation reforms such as devolution of local roads to local control, DOT prioritization of road maintenance over expansion, and a more accountable DOT governance structure. But it demonstrates poor long-term planning by the governor’s office, and makes other needed reforms less likely. Infrastructure reform should begin by eliminating the STIB – not inflating its budget.

Education: Same as Before, Only More So

On education, Gov. Haley is pushing the same education policy she emphasized through last year’s budget: more money. The Department of Education would receive a $189 million increase – a 4.7 percent increase over last year’s budget. Included in this larger increase: $79.6 million for increasing base student cost, $10 million for reading coaches, $3 million for summer reading camps, $12 million for new instructional materials.

The governor also proposes spending $1.5 million to create a much discussed program that will recruit teachers to rural areas. The recruitment program would receive future funding by ending and re-appropriating funds from a current program that pays teachers for achieving national board certifications. The new program would offer to cover college tuition for students who commit to teach (for a defined time period) in high turnover school districts after graduation. The program would also boost the pay of young teachers, and help pay off student loans for teachers who transfer to high-turnover districts. The incentives will attract both high- and low-quality teachers, so it’s unclear how much this program will help to improve teacher quality in rural districts.

It’s extremely difficult to believe that these timid program proposals (like other attemptsto improve education through increased funding) will produce any significant long-term improvements in academic achievement. A better way to see that students are instructed by high quality teachers, and to improve academic achievement overall, would be to introduce a little competition into the quasi-monopolistic one-size-fits-all public school system. This competition could easily be achieved by implementing broad based school choice in the form of tax credits for tuition paid to private schools, and tax credit scholarships for low income families. Unlike funding increases to the public school system, school choice programs have demonstrated the ability to improve academic outcomes and save taxpayer resources (see the last two paragraphs in the linked piece).

Other Hikes

Some non-spending items in Haley’s budget also caught our attention. Page 14 of the budget lays out the process by which the state budget is legally developed – from agencies submitting requests to the Office of State Budget, all the way to the House and Senate voting on the governor’s line-item vetoes of the conference budget. What’s notably absent is a description of the legally required open joint hearings on the executive budget by the House Ways and Means and Senate Finance Committees. These hearings would force legislative budget-writers not only to take the governor’s priorities seriously – an important goal, since unlike lawmakers the governor is elected by the whole state – but also to bring an opaque budget process into the public view.

For as long as anyone can remember, lawmakers have almost completely ignored executive budgets, resulting in budgets that dole out plenty of local favors but that exhibit poor overall priorities. That’s at least partly because lawmakers ignore the law’s requirement to hold hearings on the governor’s spending plan.

Those initial joint hearings are more important now than ever, because during last year’s budget process legislative leaders didn’t even hold open conference committee meetings. Conference committees, remember, are the temporary committees between House and Senate that iron out the differences between the two chambers’ version of the budget. The conference committee – always open to the public – is the last time the public will have any say in the state budget before it goes to the governor for vetoes. Last year, however, lawmakers worked out their differences in private – a practice of doubtful legality – and the public had no clue what was going on until the deal was done.

If anyone should be fighting to force lawmakers to hold open budget hearings on the executive spending plan, it’s the governor. She has so far opted not to, however, with the result that we’re losing what little transparency still exists in the budget process.

Finally, consider several funding increases recommended in the governor’s budget:

  • Clemson University: up $65 million, a 7.9 percent increase
  • Technical and Comprehensive Education: up $35 million, a 5.2 percent increase
  • Department of Social Services: up $45 million, a 6.9 percent increase
  • Department of Employment and Workforce: up $15 million, a 8.3 percent increase
  • Department of Natural Resources: up $8.4 million, a 9.5 percent increase
  • Department of Commerce: up $5.8 million, a 6.8 percent increase
  • Office of Regulatory Staff: up $2 million, a 18.1 percent increase
  • Patriots Point: up $1.8 million, a 17.2 percent increase

To sum up: The 2015-16 executive budget is just like last year’s – only more of it.

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