Nov 7 2011
Fiscal fitness should matter in our state by Sen. Phillip Shoopman (R-Greenville)
Last year, the voters in the Upstate and across the country spoke loudly that they wanted real reform and real conservative solutions to the spending habits and inefficient government practices both in Washington and in Columbia. The 2010 election was a revolution for a change in Washington to fix a system where overspending and budgetary deficits were not only hurting economic development but saddling our children and grandchildren with incredible debts.
Unfortunately, we are facing similar problems with budgeting and spending in Columbia. During the past session, I was a member of a subcommittee that examined the problem of agencies incurring deficits even though our state Constitution requires that we have a balanced budget each year. Last year, three agencies were prepared to ask the Budget and Control Board for permission to run deficits for a total of over $250 million. By the end of fiscal year 2010-2011, two agencies were able to reassess their budgets, make spending cuts and end the fiscal year without running a deficit. However, the other agency, the S.C. Department of Health and Human Services, was not able to do so and was allowed by the five-person board to run a deficit of over $220 million.
We learned that the South Carolina Code allows a loophole for bureaucrats to bypass the Legislature and be allowed to overspend. Section 1-11-495 allows the five-member Budget and Control Board, if it makes a finding that “the deficit is unavoidable due to circumstances that are outside the control of the agency,” by a four-person vote, to recognize the agency’s deficit, meaning the board authorizes allowing the agency to spend more than your elected representatives budgeted for them. The board must then notify the General Assembly of this determination. If the General Assembly does not act, then the board’s vote stands, and the agency is allowed to run a deficit. The Board then gives additional money to the agency to make up the deficit amount. The additional money is taken from surplus revenues or surplus funds and from funds available in the Capital Reserve Fund and General Reserve Fund.
Fundamentally, we have whittled down to the central question of, if an agency has a legal mechanism to bypass their budget limits, then why budget at all?
I have observed in the General Assembly that financial problems that were estimated to be in the millions of dollars quickly became tens of millions of dollars. And, while I would like to believe that self-control would prevail in future spending practices, the prudent approach would be to ensure that it does. For that to happen, issues such as deficit prevention, regulatory reform, spending caps, trust fund protection and other topics must be addressed and enacted in South Carolina.
Senate President Pro Tempore Glenn McConnell, has asked me to serve on his Fiscal Fitness Subcommittee to consider those financial issues facing our state. As such, we will be conducting public hearings around the state so that we can hear from the public and get their opinions as they relate to those issues. As the sole member asked to serve from the Upstate, I hope that you will consider attending the public hearing in Greenville today beginning at 6:30 p.m. at the Greenville County Council Chambers.