House Budget: Misplaced Priorities

THE HOUSE FOUND MONEY FOR SPECIAL INTERESTS PROJECTS, BUT NOT FOR CORE SERVICES

The recent House-passed FY16 budget is the largest of the three versions of the budget released this year (the other two include the governor’s budget and the House Ways and Means budget). The House budget restores the trend of each successive version growing larger than its predecessor. The House Ways and Means budget actually appropriated slightly less than the governor’s executive budget, but this proved to be little more than an aberration. The full House budget is larger than the Ways and Means or Executive Budget for FY16.

All told, the House budget appropriates just over $26 billion (including a $1.5 billion appropriation for food stamps that was moved in 2013, for unspecified reasons, to an unbudgeted account). Total House budget spending exceeds the Ways and Means budget by $57 million.

House members had initially planned to include a $500 million bond package in the budget, but pressure from the public – coupled with “social media and blogs,” as one irritated legislator put it – forced them to back down. Once it became clear that the bond package wouldn’t pass, lawmakers compromised by putting many of the pet projects previously funded by debt into the Capital Reserve Fund bill and/or Part 1B (provisos) of the state budget.

The primary beneficiaries of budget growth were two-year and four-year higher education institutions. The items which contributed to college budget increases include:

  • $38.6 million to the Board of Technical and Comprehensive Education for various capital projects, including $20 million for an aeronautical training center at Trident Technical College
  • $8.5 million to USC Columbia for renovation of the old law school (the university is constructing a new law school) and the South Carolina Library
  • $7 million to Clemson University for a business and behavioral science building.
  • $25 million to the Medical University of South Carolina for a children’s hospital.
  • $2.5 million to the University of Charleston for repurposing a pool.
  • $1 million to Lander University for a Montessori education building.
  • $3 million more for higher education tuition grants.

SCPC has explained before why colleges and universities don’t need more public money. Appropriations like those listed above only serve to enable university administrations that favor new construction and administrative bloat over funding core education expenses.

Other notable changes

Contrary to the institutions it oversees, the Commission on Higher Education (CHE) didn’t fare nearly as well in the House budget. House members approved amendments that defunded the CHE and transferred its line items to the state treasurer. As a result, the House budget increased appropriations to the treasurer by $86 million, or over 1,000 percent, when compared to the Ways and Means budget.

The defunding of the CHE was likely a response to the CHE’s failure to do anything to prevent (or even warn anyone) about the current fiscal meltdown at SC state.

The Department of Commerce (DOC) also saw a $20.5 million cut from the amount it received in the House Ways and Means budget. Most of this reduction came from a $17.5 million reduction in appropriations to the deal closing fund. Historically, the fund has been used by the governor and DOC to give businesses monetary reasons to relocate to South Carolina. This is an laudable reduction, although a cynical interpretation would suggest House members cut the fund simply in order to free up money for their pet projects – knowing full well the Senate will restore the money.

On a less positive note, the House also opted to cut $700,000 in appropriations to the Office of Inspector General (OIG). This is a small part of a $26 billion state spending plan, but it represents over half of the OIG’s current budget. The Inspector General, according to the office’s website, is charged with “investigating and detecting fraud, waste, abuse, mismanagement, misconduct, violations of state or federal law, and wrongdoing in the Executive Branch.” It’s natural to assume a significant reduction in the OIG’s budget would have a significant effect on the office’s ability to carry out its mission. As such, a large cut to the OIG may well cost state government more (in undetected waste) than it actually saves.

Finally, the House reduced Department of Transportation (DOT) funding by just under $1 million. This reduction comes at a time when lawmakers are lamenting their inability to pay for roads. What they mean when they complain about insufficient revenue for roads, however, is that there is insufficient money for roads and their pet projects.

This year’s House budget process has been illuminating. The sheer size of the budget, as well as the many specific line items, demonstrates that the state has more than enough revenue to fund core government services, including roads. What lawmakers lack isn’t money but the will to cut wasteful special interest funds out of the budget, or to make any other meaningful reforms.

The Senate received the House budget last week, and has been holding its own budget hearings during the last several weeks. Historically, the Senate largely ignores both the governor’s and House-passed budgets in favor of its own priorities. Further, the Senate budget is almost always larger than its counterpart’s, since the Senate typically has access to more current BEA estimates with generally higher revenue projections. Don’t expect this thing to get any smaller.

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