State budget 2019: Highlights from the House spending plan
House lawmakers have adopted the largest spending plan in state history. Here’s what you need to know about it.
What they’re spending
The House budget is a grand total of $29.8 billion – a spending increase of $1.1 billion (or around 3.8%) over last year. This includes a surplus of $328 million.
The state budget consists of three spending categories: General Funds (tax revenue), Federal Funds (revenue derived from the federal government) and Other Funds (fines and fees). However, lawmakers only debate the first category of general fund spending. The amount of federal and other funds each agency receives cannot even be viewed in the budget (instead only general funds and total funds are included).
However, not all the funding received from the federal government is reported in the budget. In 2013, federal dollars funding the food stamp program (Supplemental Nutritional Assistance Program – SNAP) (estimated at $1.5 billion for fiscal year 2013-14) was moved “offline” into an unbudgeted account and has been unaccounted for in state budget documents since then.
Below are charts showing the breakdown of the three funds as a budget percentage (including the federal SNAP funding from the latest completed fiscal year), and the increase of each fund over last year’s budget.
It should be noted that lawmakers do not include the $328 million non-recurring surplus in their reported budget totals, or in Part 1A (the main section) of the budget (although they are included in the charts to give a complete picture of state spending). Instead, the funds are reported and spent separately in a budget proviso.
What they’re spending it on:
The House budget would give most state agencies a funding increase, with a handful of exceptions – notably, the Legislative Audit Council (which audits state agencies), the Ethics Commission, the Public Service Commission, and the Comptroller General’s Office.
Below are some specific spending highlights from both the budget surplus and new recurring tax dollars:
- Classroom funding and teacher raises ($2.7 billion)
- Public colleges and universities ($36 million)
- Employee raises ($41.4 million)
- Employee health plan ($49.7 million)
- State pension ($36.4 million)
- SC House ($250,000)
- SC Senate ($250,000)
The budget is divided into two main parts: Part 1A, which appropriates state revenue to the various agencies line-by-line, and Part 1B, a long conglomeration of provisos.
Budget provisos should explain the spending decisions made in Part 1A, but over the years they have become a catch-all for a wide assortment of legislative purposes. Lawmakers routinely include spending favors, create new government programs, establish new committees, and insert bills that failed to pass into provisos. This practice often violates the constitutional one-subject requirement for bills.
Here’s a look at a few of the worst examples in this year’s budget.
Spending the surplus by proviso (118.16)
As mentioned earlier, the $328 million surplus is not included in the state’s official budget totals – it is both reported and spent by this proviso, which also includes special projects proposed by specific lawmakers. Here are a few examples of the House surplus spending:
- Parks, Recreation & Tourism projects:
- Coastal tourism advertising – $1 million ($200,000 of which goes to Coastal South Carolina, USA “to increase international travel” to SC. $800,000 would be spent on advertising to mitigate the effects of hurricanes and flooding on tourism)
- Saluda River greenway – $1.5 million
- SC Aquarium – $1.5 million
- SC Association of Tourism Regions – $550,00
- Parks revitalization – $2.5 million
- Epworth Children’s Home – $350,000 (an earmark)
- Greenville Cultural and Arts Center – $5 million (to build a convention center that, among other things, would house the Bob Jones University arts collection)
- Hunter education – sporting event range – $750,000
- Conservation Bank grants – $4 million
- Department of Transportation rest areas – $4 million
- Department of Commerce’s closing fund – $3.7 million
- LocateSC – $4 million
- State-owned buildings deferred maintenance – $26.9 million
- DOR taxpayer rebate – $34.7 million
Tax revenue in exchange for a partial one-year college tuition freeze (117.155)
This proviso distributes the $36 million higher education spending increase to the various colleges and universities. In order to keep the funds, universities cannot increase in-state tuition or mandatory fees for the 2019-20 year – except for increases needed to cover pension and state health plan increases. College tuition and fees back both general obligation and revenue bond debt, and this proviso begins shifting the burden of this debt onto taxpayers.
Raiding the debt service fund (112.1)
Proviso 112.1 appropriates the following dollars from excess debt service. This policy could leave only the minimum funding due for debt payments, leaving little room for a shortfall.
- $85 million to Commerce for the “Rural School District and Economic Development Closing Fund”
- $50 million to Dept of Education for school district capital improvement projects.
- Up to $11.9 million of the previous year’s excess debt service funds can be carried forward and spent on debt service
Creating the Rural School District and Economic Development Closing Fund (50.21)
This proviso creates the Rural School District and Economic Development Closing Fund under the Department of Commerce. It would be used to fund economic development and infrastructure improvements for projects that create at least 50 jobs in the poorest 28 school districts. Funds are to be used on “economic development projects, water and sewer infrastructure, and school building infrastructure.” $85 million must be allocated from excess debt service to maintain the fund.
Taxpayer dollars for economic development (50.13)
This proviso appropriates $5 million to the following economic development organizations, to be used for economic development purposes.
- Upstate Alliance ($750,000)
- Central SC Economic Development Alliance ($750,000)
- North Eastern Strategic Alliance (NESA) ($745,000)
- Charleston Regional Development Alliance ($660,000)
- I-77 Alliance ($660,000)
- Economic Development Partnership ($450,000)
- Southern Carolina Alliance ($600,000)
- The LINK Economic Alliance ($385,000)
Gives $400,000 to the school board association (1.77)
This proviso directs $400,000 of the Department of Education’s funding to the SC Foundation for Educational Leadership for Center of Executive Leadership (which is publicly funded via member dues) for “professional development” purposes.
Allows state employees to draw both salary and pension (108.16)
This proviso allows public employees who have been retired for a year to return to work, drawing both a state paycheck and their state pension benefits. This policy (which was previously enacted for teachers, but ultimately included other state employees) contributed largely to the $81.9 billion pension deficit.
Allows volunteer firefighters to join the state health plan (101.1)
This proviso allows lottery commissioners and State Transportation Bank board members to participate in the state health and dental plan, and was amended by the House to include volunteer firefighters (which are not state employees) and their dependents as well.
Gives technical school graduates 60 transfer credit hours (117.147)
This proviso gives students with Associate of Arts/Science degrees from technical colleges junior status and at least 60 transfer credit hours at a four-year public college/university.
Tax favor for clothing used in food preparation and packaging (109.13)
This proviso adds sales tax exemption for clothing used in food preparation and packaging. Not only is this poor fiscal policy, it is unrelated to the appropriation of tax dollars and does not belong in the appropriations bill as a proviso.
Legislative ethics committees to approve reporting system changes (110.1)
This proviso requires the Ethics Commission to submit any changes in the public disclosure/accountability reporting system to the legislative ethics committees for approval. This proviso was struck in committee, but reinserted on the House floor.
Increases lawmakers’ postage budget (91.15)
This proviso increases lawmakers’ postage cap from $700 to $1,200.
Healthcare data warehouse (102.3)
This proviso (which has been in the state budget for over ten years) gives lawmakers and multiple state agencies access to a massive data warehouse containing personal medical records of many South Carolinians.
The budget is currently in the Senate Finance Committee and is scheduled for Senate debate in mid-April.