What Lawmakers Want to Spend in 2017

 

● Ways & Means budget $1.28 billion larger than 2016 budget
● Committee does not treat roads as priority
● Lots of increases in education, but no real change in approach
● Medicaid continues to expand in state that “didn’t expand Medicaid”

The House Ways and Means (W&M) Committee budget has been released. The Ways and Means committee’s budget – and not the governor’s executive budget, as required by state law – operates as a first draft of the state spending plan.

What does the Ways and Means budget tell us? First, the state budget continues its inexorable growth. The W&M budget for fiscal year (FY) 2017 spends $26.2 billion, or $27.7 billion if an unbudgeted $1.5 billion appropriation for food stamps is included. This is $1.28 billion larger than the current year’s budget. Total state spending is up $782 million or 10.7 percent. Other funds spending is up $224 billion or 2.4 percent. And federal funds spending is up $280 million or 3.5 percent.

What about priorities?


Transportation

DOT funding in this budget is somewhat confused, since the over $200 million non-recurring line item DOT received for county transportation funds (C funds) in the current budget has been transferred in the W&M budget to the county transportation funds section. The county transportation fund section also includes a new $50 million transfer from the Infrastructure Bank (STIB) (the bank will transfer the funds to DOT which will in turn distribute them to the counties). Under the W&M budget DOT will also receive a one-time $37 million appropriation to finance repair costs from last October’s flooding.

The net result of these transfers and new appropriations is that the county transportation funds section has increased by $288 million while the DOT section is down $89 million. However, if we factor out the transferring of C funds, all but $70 million of the increase in county transportation funds disappears. As for DOT, if we factor out the transferring of C funds and the one time money for flood costs DOT’s budget is actually up by $90 million.

Of the $90 million in new funding for DOT, roughly $30 million is for general operating costs (toll operations, land and building operations, etc.) while $63 million is for one project, the port access road. The port access road is a new roadway construction for the purpose of “providing direct access between the proposed marine container terminal location on the former Navy Base and I-26.”

So apart from one specialty project, DOT and county transportation funding is up by around $100 million, about $30 million of which is for general operations. One hundred million dollars is not an insignificant amount of money, but it is a remarkably small increase in road funding given what lawmakers have been saying publicly.

It’s also worth noting that the STIB, which never finances maintenance work, and has historically served only a few counties, received a $15 million funding increase. The STIB’s budget has grown from $50 million in FY 2014 to $255 million in the current fiscal year, a 400% increase.

Bottom line: Roads are supposed to be an urgent priority, but you wouldn’t know it from the Ways and Means budget.


Education

 The W&M budget contains significant funding increases to education in the form of increases to the Department of Education (DOE), the Lottery Expenditure Account, and the Technical Education Board (Tech Board). It increases DOE appropriations by $358 million. Over half of this increase, $217 million is for increasing base student cost, the amount of funding each public school receives per student. Other notable increases to DOE line items include:

  • $19 million to increase bus driver salaries.
  • $10 million for school bus leases or purchases
  • $16.8 million for “technology technical assistance.”
  • $10 million for the Education and Economic Development Act, a workforce training program that focuses on career planning and crafting individualized curriculums.
  • $23 million for teacher raises (via the Education Improvement Act).
  • $8 million for incentives to attract teachers to rural districts (via the Education Improvement Act).
  • And $13 million for growth in the public charter school district (via the Education Improvement Act).

The size of the lottery expenditure account is increased by $97.7 million. Included in this increase is $29 million for a K-12 technology initiative, $18 million for instructional materials, and another $6.5 million for school bus leases or purchases.

The Tech Board budget is increased by $105 million, mostly for capital projects at various technical colleges. Some of the more notable line items are $13.5 million for ReadySC (a workforce training program that effectively finances business training costs with taxpayer dollars), $20 million for “critical training equipment”, and $16 million for the Trident Technical College Aeronautical Training Center (designed in part to train workers for Boeing).

The increased funding for K-12 education may be a response to the Abbeville decision where the State Supreme Court ruled the state was failing to meet a constitutional obligation to provide a minimally adequate education to all students. Whether that’s the case or not, it’s unlikely to achieve the goal set by the court. State and national evidence shows a profound disconnect between spending on public education and educational outcomes. If lawmakers wish to improve educational outcomes they should consider school choice policies. The closest they come to those policies in the budget is a small increase in the funds to the state’s charter school district. That increase represents 3.6 percent of the entire growth in the DOE budget.

Bottom line: More money for a failed status quo approach to public education.


More money for Medicaid

The Department of Health and Human Services (DHHS) budget receives a $266 million increase in the W&M budget. Unsurprisingly, since the large majority of DHHS’ budget is Medicaid related, virtually all of this increase is for services associated with the Medicaid program. Some of the DHHS line items that receive substantial funding hikes are Medicaid eligibility, pharmaceutical services, physician services, premiums matched, clinical care, and behavioral health services.

While South Carolina has not officially expanded Medicaid as defined by the Affordable Care Act (a.k.a. Obamacare), state government has been actively growing the Medicaid rolls through a variety of policies. South Carolina has been rapidly increasing the number of individuals receiving benefits from Medicaid through policies such as auto enrollment, presumptive eligibility, and alterations of the Medicaid eligibility formula.

Bottom line: One federal draw-down program – Medicaid – eats up more and more of the state budget.


Other notable Increases

Outside these areas, other notable budget items include:

  • $72 million to provide a state match for federal emergency funds received due to the October flooding.
  • $40 million for beach renourishment.
  • $40 million in set aside funds to provide more aid to farmers.
  • $17 million for the deal closing fund (a slush fund used to bribe companies to relocate to or expand operations in South Carolina)
  • No change in the amount of funds appropriated to the local government fund. Lawmakers continue to mistreat local governments, in part by failing to meet their legal obligation to fund the local government fund to the level of 4.5 percent of the last year’s general fund revenues.

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