What Will Gov. Haley Veto?



Last year, Governor Nikki Haley vetoed $57.1 million of a $23.6 billion budget – less than one quarter of one percent of the budget. While she was able to get rid of a few expendable appropriations, billions of dollars in unnecessary spending remained on the table. With a $24.3 billion budget handed to her this year, there is again an egregious level of wasteful spending the governor has the opportunity to veto.

Agencies with No Core Government Functions

There are a great many agencies that arguably shouldn’t be state agencies at all. A few stand out:

Arts Commission: $4,494,551. You don’t have to be opposed to art to wonder whether state employees and political appointees have the wisdom and aesthetic insight to know which artists and works to fund and which not to fund. Nor is there any reason why taxpayers as a whole should be forced to support ventures they may or may not appreciate or even encounter. In any case, art won’t dry up without taxpayer support. There are plenty of in and out-of-state donors that voluntarily donate to the arts, and it is reasonable to suppose that state support of the arts provides a disincentive to private donors to boost their giving.

Rural Infrastructure Authority: $21,845,000. The purpose of this authority is to hand out taxpayer-funded grants for enhanced infrastructure projects (e.g. water and sewer services).  If lawmakers feel rural areas are getting passed over for infrastructure projects, that should be dealt with via existing governmental structures – not by creating yet another state agency with new powers and millions to spend.

Infrastructure Bank Board: $50,429,800. Keep in mind this $50 million doesn’t include the other extra $50 million that will be transferred from the Department of Transportation in order to create up to $500 million in new bond debt. This board controls the State Transportation Infrastructure Bank (STIB) and has proven its inability to prioritize the state’s transportation needs (mentioned here). The state may or may not need the money in question. But it certainly shouldn’t be given to this unaccountable board which has funded nothing towards maintenance and repair and given 95 percent of its funding to only six counties. Transportation funding should be allocated through the Department of Transportation, not through an unaccountable board with a well-deserved reputation for funding political priorities rather than state needs.

 “Core Function” Agencies Funding Non-Core Activities

Department of Agriculture: $24,257,148. To call South Carolina’s Department of Agriculture a “core function” agency is definitely a stretch; the only part of its mission statement – “assuring the safety and security of the buying public” – would seem to have much to do with the legitimate functions of government. As is evident from its budget – take last year’s – that phrase seems more of an afterthought than a mission. Here are the department’s priorities: $7 million for the State Farmers Market; $842,377 in “administrative services”; and over $10.7 million for just marketing. What does promoting and marketing have to do with assuring safety and security?

Dept. of Parks, Recreation and Tourism: $82,320,844. Maintaining state parks may be a legitimate function of government. But that’s hardly all PRT does. The proposed state budget includes over $6.3 million in administration services, including $788,000 for “Executive Offices”; $75,000 for “First in Golf”; and $50,000 for the Sports Development Fund. Furthermore, the PRT budget includes $7.5 million in new recurring funds over last year for tourism sales and marketing, and over $11 million for the State Film Office, which loses 81 cents on the dollar by handing out taxpayer-funded grants and incentives to Hollywood producers. Bottom line: South Carolina attracts tourism all by itself, and there is neither evidence nor reason to suppose taxpayer-funded marketing schemes have any positive effect on the state’s economy.

Dept. of Natural Resources: $89,736,667. While the department’s mission statement insists that it is here to be a steward of South Carolina’s natural resources, a fair proportion of its budget doesn’t go to that end at all. For example, its budget includes over $3 million in administration costs, including the $129,877 salary for its executive director. And while the department does provide core services, that shouldn’t give them a blank check to increase funding in several areas over last year, like $907,702 for 18 new law enforcement officers, two more full-time employees for the “Earth Sciences Group,” $1.5 million for a State River Basin Study, and $1.75 million for information technology. Nor is it clear why taxpayer should be paying almost a million dollars – $911,719 – for one low-circulation magazine, South Carolina Wildlife, that also has private donors and subscription payments.

 Section 1B Provisos

Each year, the legislature uses the nearly 200 page, virtually unreadable part of the budget, Section 1B, to fund pet projects, non-profits, and other highly questionable items. Owing to the budget’s non-transparent format, these items don’t receive any real media attention or open debate. Here is a partial list of dubious items from this – as it seems to us – $115 million slush fund:

  • Regional Economic Development Centers: $5,000,000.
  • Deal Closing Fund: $12,677,766. (These are taxpayer dollars handed to private companies for the sole purpose of persuading them – some would say “bribing” them – to relocate to or expand in South Carolina.)
  • Business Incubator Program: $5,000,000. (These programs are meant to “attract” businesses to certain areas by, in effect, offering them free state resources for allotted periods.)
  • SC Railroad Museum: $200,000.
  • National Flight Academy: $400,000.
  • SC Council on Competitiveness: $650,000.
  • Certified SC Grown Program: $500,000. (This program is meant to enable consumers to identify South Carolina-grown products in their local grocery stores – although why state government should protect in-state farms from competition isn’t clear; nor it clear if the program really does what it claims to do.)

Also included in this section are the “Obamacare Light” provisions pushed by the governor and House leadership. This $80 million+ group of provisos gives hospitals and clinics (many of which are upset that the state isn’t implementing a costly Medicaid expansion) tens of millions of tax dollars. Regardless of the intentions of this group of provisos, these allocations do nothing to actually promote the health of South Carolinians and only put the state on the hook to cover new costs every year in the future. If state leaders are serious about pushing back on Obamacare, they shouldn’t replace it; they should flat-out reject it. (Read more on how they can do that here.) The governor has in the past promoted this effort, so the expectation of vetoes is slight, but bear in mind: Although these are one-year provisos, if they become law for one year they will be de facto recurring appropriations.

“Obamacare Light” Provisos:

  • Healthy Outcomes Initiative: $34,500,000
  • Rural Hospital DSH Payment: $20,000,000
  • Federally Qualified Healthcare Clinics-Baseline funding: $5,000,000
  • Free Clinics: $2,000,000
  • Innovative Care Strategies: $5,000,000
  • FQHC-documented Capital Needs: $2,000,000
  • Rural Provider Capacity: $3,200,000
  • Optional State Supplement Increase: $12,000,000

Capital Slush Fund

The state constitution mandates that the Capital Reserve Fund be appropriated 2 percent of the previous year’s General Fund Revenue. The Fund is intended for capital projects (long-term, large-scale, necessary improvements – roads, bridges, etc.). In recent years, however, the terms “capital” and “reserve” have become meaningless.  The fund is typically used for non-capital projects every year, leaving no funds to be reserved: hence its popular nickname, the Capital Slush Fund. If there are really no legitimate and immediately necessary capital projects to be undertaken in a given fiscal year, or at least if such projects haven’t taken all the previous year’s appropriation to the Capital Reserve Fund, that money should be returned to the taxpayer. Here is a partial list of the non-capital items lawmakers are funding with the $112 million Capital Reserve Fund this year:

  • The Citadel “Cadet Accountability system”: $1,500,000.
  • University of Charleston Science Center: $2,000,000.
  • Lander University National Center for Montessori Education: $750,000.
  • ReadySC: $7,538,694. (ReadySC is a workforce development program that one may or may not think a wise use of taxpayer money. But a capital project it is not.)
  • Manufacturing Skills Standards Council Initiative: $2,500,000.
  • Advanced Manufacturing Technology Training Center – Central Carolina Tech College: $3,500,000.
  • Child Support Enforcement System Development: $212,221.
  • Clemson PSA Advanced Plant Tech Lab: $3,000,000.
  • Deal Closing Fund: $3,322,234. (How on earth can reserve fund money for capital projects be used for corporate welfare?)
  • Repayment of BCB loan: $20,170,000.
  • Legislative Printing and Info Tech systems Data center and Server Room: $950,000.
  • DoR Tax Processing System Improvements: $7,533,374.
  • Francis Marion Health Sciences Building: $1,750,000.
  • Aiken Tech-Academic Building in Support of STEM and Engineering: $640,000.
  • Oconee Workforce and Economic Development Center: $750,000.
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