Why S.C. Lawmakers Can’t Pass a Budget on Time

EVERY YEAR, LAWMAKERS TRY TO PASS POTENTIALLY CONTROVERSIAL CHANGES THROUGH THE STATE BUDGET. BUT NOT EVERY PROBLEM IS A FUNDING PROBLEM.

Legislators returned to Columbia July 6 for a third week of extended session. The purpose, in part: to vote on the governor’s budget vetoes and thereby finalize the fiscal year (FY) 2016 budget. The fiscal year began, of course, on July 1. The state operated under a continuing resolution for more than a week in July.

Lawmakers have one clear task to accomplish every year: pass a state budget. This year, they proved incapable of fulfilling this duty in the course of the regular session, or even before the last year’s budget expired. What can account for the General Assembly’s sloth-like pace in passing a budget?

One reason is lawmakers’ refusal to follow state law and consider the executive budget in joint open hearings at the beginning of session. Another is lawmakers’ tradition of wasting time on floor introductions and symbolic or otherwise pointless resolutions.

Of equal importance, however, is the transformation of the budget from a bill designed to fund the day to day operations of state government into a vehicle for addressing every policy issue facing South Carolina.

The entire legislative session has become absorbed by the budget process. In other words, lawmakers try to pass measures that won’t otherwise pass by putting them into the state budget. Predictably, that has made it nearly impossible for lawmakers to complete the budget on time.

Transportation

Solving South Carolina’s roads problem was billed as the major issue facing the General Assembly this session. But the problem was only ever addressed as a funding problem. Throughout session legislators shied away from reforms that would improve the state’s road system in an ongoing way. They almost completely refused to discuss abolishing the Infrastructure Bank (STIB), making the Department of Transportation (DOT) fully accountable to the governor, or requiring full transparency in DOT contracts and spending. Their answers had instead exclusively to do with revenue: massive tax and fee increases, sometimes in the form of deceitful tax swaps, the revenue from which would be allocated to the unreformed transportation authorities via the budget.

And when passing a tax hike proved too difficult, lawmakers compromised by increasing budgetary appropriations for County Transportation Committees (CTCs). In other words, they moved from one budgetary non-solution to another.

Even the one non-monetary road reform effort considered by the legislature this year was handled through the budget. Rather than outright repealing a bad law, lawmakers used the budget to suspend a provision of state law removing the governor’s power to appoint the DOT Secretary. The reform was appropriate but the method was questionable at best. Lawmakers are now facing a lawsuit challenging the constitutionality of the suspension proviso, which if successful could invalidate the entire budget.

Education

Education was another allegedly “top priority” issue. It was thrust into the spotlight after the Supreme court ruled that state government was failing to meets its (implied) constitutional obligation to provide a “minimally adequate education” to all students.

Put simply: there is no solid evidence that funding increases improve educational outcomes, and plenty of evidence to the contrary. The only feasible way to address that issue in any substantial way is through school choice (see the final paragraph of the linked piece).

Yet lawmakers and the governor seem incapable of thinking about educational improvement except as a budget issue. Over the last two years, the Governor has pushed for and received more state funding for education in the budget. The increases have come in the form of reading coaches, instructional materials, and increases to base student cost. The state Department of Education received a $155 million increase to its budget from fiscal years 2014 to 2015, and will receive another $182 million increase in 2016.

As for school choice, the most significant bill filed this session, which would provide $5,000 tax credit to all parents and guardians for schooling expenses, never made it out of committee.

In recent years, the one nod to school choice produced by the General Assembly has come in the form of a budget proviso, and later a section in the FY 2016 supplemental appropriations bill. The proviso originally passed in 2013 and renewed in 2014 created $8 million in tax credits for donations to non-profit organizations that award education scholarships to exceptional needs children. The version of the program appearing in the fiscal 2016 supplemental appropriations bill also includes $4 million in tax credits for tuition expenses paid directly by the guardian of an exceptional needs child, with the maximum value of each such credit set at $10,000.

There are at least three major limitations on this form of school choice: a) it is only available to small subset of students, b) the cap on credits puts a strong limitation on the amount of children who can be helped, and c) authorizing the program through the budget requires annual reauthorization.

Health care

Officially, the General Assembly has declined to expand Medicaid under ObamaCare, but the state budget tells a different tale. The state Department of Health and Human Services (DHHS), which administers the state’s Medicaid program and is largely funded by the federal government, will receive a $116 million funding increase in fiscal 2016. Over $42 million in the DHHS 2016 budget is specifically designated to cover the cost of increased enrollment in Medicaid.

Going back a year, DHHS requested over $300 million in additional funding in 2015 to finance increased enrollment in Medicaid associated with the Affordable Care Act. The legislature exceeded the Department’s request by appropriating $382 million in new dollars in 2015 for the Medicaid program.

Following the trend, non-budgetary policy ideas on healthcare have sputtered. There were no bills introduced this year that would repeal some of the 30 different insurance coverage mandates that drive up the cost of health insurance in South Carolina. The most significant healthcare bill introduced this session, a measure to repeal certificate of need laws, passed the house, but never received debate in the Senate.

(Note: There actually is a way to achieve significant healthcare reform through the budget. Lawmakers could free South Carolinians from many harmful federal mandates and regulations related to healthcare by simply rejecting federal funds. In order to do that, however, a law must be passed that mandates a contract process for accepting federal funds. State officials should have to document and make publicly accessible the mandates and regulations they’re imposing on citizens by taking federal dollars. There was no effort to pass a federal funds contract law this year.)

Bottom line

The budget is not the right place to set policy. Budget debates can be confusing and difficult to follow for the average citizen, and in South Carolina the budget process is already secretive to the point of being undemocratic. Further, the budget is a blunt tool which can only change policy through increase or decreases in public financing. But many of the state’s most pressing needs have nothing to do with government money.

The budget should be openly debated, not fashioned in innumerable committees and subcommittees before being brought to the floor of House and Senate as virtually a done deal. And it should address the state’s financial needs only, not serve as a tool for policy changes that might prove unpopular or politically difficult to pass openly.

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