State revenues are running way ahead of schedule, and that means there’s a boatload of additional taxpayer money up for grabs as state officials begin crafting a budget for next fiscal year.
Last week, the Board of Economic Advisors, which makes official revenue projections used to write the budget, said the state is looking at an extra $920.5 million for 2012-13. The new fiscal year begins July 1.
The additional revenue comes from a $127.8 million surplus from last year; an expected $273.7 million more in tax collections this year; and an anticipated $519 million more in collections next year.
For budgeting purposes, the surplus from last year and the larger tax collections this year equal a one-time cash infusion of $401.5 million, while the projected $519 million boost in collections next year is annually recurring money.
Naturally, then, the question becomes:
Just what exactly will Gov. Nikki Haley and members of the General Assembly do with that extra nearly billion-dollar windfall? Give it back to taxpayers? Apply it to future obligations, such as state retirement costs, or otherwise spend it?
Many eyes will be watching, to be sure.
On the spending side, a host of agencies are pitching for a cut of the $920.5 million jump in state revenues by way of proposed funding increases for next year. And among them, the S.C. Forestry Commission is seeking one of the largest budget hikes.
In its formal request for 2012-13, the Forestry Commission asks for more than $46.4 million.
That’s $21.1 million, or 84 percent, more than the commission received this year, $25.2 million. All of the proposed increase is in general state funds.
Nearly $5 million of the agency’s requested $46.4 million budget is federal funding, and almost $7.3 million is an estimate of “other” funds the commission expects to collect.
“That’s revenue that we earn to help fund what we are asked to do,” commission director Gene Kodama says, adding that the money comes from timber sales and services such as controlled burning.
South Carolina law requires all state entities receiving or requesting state funding to submit yearly budget requests to the governor by Nov. 1. The Office of State Budget compiles the proposals.
The Forestry Commission presents much of its request for next year as a matter of protecting people’s safety and property.
The commission also is seeking additional funding to increase its economic development efforts.
The agency aims to do that through a public-private partnership designed to create jobs in, and grow the economic impact of, an industry the commission describes as the No. 1 manufacturing sector in South Carolina.
“It could be,” says Lewis Gossett, president and CEO of the South Carolina Manufacturers Alliance. “I have got a ton of members in that business – a ton. It really is dramatic.”
One of the Forestry Commission’s main functions is fighting wildfires, and its ability to do so has been seriously degraded by budget cuts, according to Kodama.
The agency’s funding has been reduced 50 percent since 2008 while demands for its services, and the costs of providing them, have increased, Kodama writes in a letter beginning the agency’s proposal.
“Therefore, the Forestry Commission is requesting $24.25 million to return its firefighting capacity to a level that can adequately protect the public, their property and forest industry investments which are a major economic engine in the state’s economy,” the letter says.
Of that $24.25 million, $13.25 would be a one-time allocation to purchase firefighting equipment. “The agency has eliminated its firefighting equipment replacement budget in order to retain critical employees,” the commission’s request says.
Continuing his letter, Kodama writes, “After the Highway 31 fire (in Horry County) that damaged or destroyed almost 200 homes in April 2009 and other large wildfires, the public and our legislators asked how to prevent and be ready for similar future disasters.
“The definitive answer is to adequately fund firefighting as requested herein.”
In a phone interview with Kodama and Larry Moody, the commission’s legislative liaison, Kodama says the commission lacks sufficient firefighting personnel and its firefighting equipment is old and dangerous.
Citing an example, Kodama says seven bulldozers broke down in one day during another Horry County fire in July.
Asked about the agency’s staffing levels, Kodama says the commission had 295 full-time employees, six grant-funded workers and 37 temps as of Monday.
How many commission employees are dedicated to firefighting?
“Probably at least 80 percent,” Moody says.
That ratio rises to between 90 percent and 95 percent during fire season, says Kodama, whose annual salary is $105,000.
The commission employs 29 people who earn more than $50,000, or about 10 percent of its full-time staff, according a state salary database the S.C. Budget and Control Board maintains.
Asked how much of the Forestry Commission’s budget is allocated to administrative expenses, Moody says it’s between 3 percent and 4 percent.
In another effort to obtain additional funding, the commission is backing House bill 4082. “To say we’re interested in it is putting it mildly,” Kodama says.
Rep. Ted Vick, D-Chesterfield, is chief sponsor of the bill, which is pending before the Ways and Means Committee. The legislation has two co-sponsors: Republican Reps. Tracy Edge of Horry County and David Hiott of Pickens County.
The bill would direct 7 percent of state taxes collected on insurance premiums to the Forestry Commission. The agency would have to use the money for firefighting, including equipment, “and forest industry economic enhancement.”
Given its size, one might wonder whether the industry needs the help of “economic enhancement” efforts by a largely taxpayer-funded state agency.
Forestry contributes about $17.4 billion per year to South Carolina’s economy, employing some 90,000 people, according to the commission’s budget request for 2012-13.
The agency hopes to increase that impact to $20 billion by 2015 through its “20/15” project, a public-private partnership. The commission is seeking $1 million in recurring funding for the program.
“This project will grow the industry, more fully utilize the resource, and add 14,000 jobs,” the proposal says. “A five-year investment of $5 million could add $2.6 billion in impact to the state’s economy with a net benefit in state tax revenue of $135 million. This would equate to a return of $27 for every $1 invested in forestry by the state.”
Asked about the Forestry Commission’s economic development activities, Kodama says they are similar to the role the state Department of Parks, Recreation and Tourism plays in promoting tourism, “wherein they’re there to support and grow that industry for the benefit of the citizens of South Carolina.”
The same is true for the state Department of Agriculture and that industry, Kodama says.
The term “economic development” is not in the S.C. Code of Laws where it prescribes the Forestry Commission’s duties – Title 48, Chapters 23, 28 and 30.
However, Section 48-23-80 says the agency may acquire, rent or otherwise use property and cooperate with the federal government “in all matters pertaining to reforestation and providing employment for the benefit of the public …”
And Section 48-28-20 says the commission director shall implement a forest renewal program in part to ensure “related employment and other economic benefits …”
Kodama says he firmly believes that economic development is within the purview of the agency.
Gossett of the South Carolina Manufacturers Alliance offers a more nuanced perspective. “There are some appropriate roles for a commission like that,” he says. “Whether or not it needs to be done by the government I don’t know.”
Gossett says he has not heard any complaints about the agency. “And if they were particularly bad to private industry I would probably hear about it.”
The Palmetto State has some “pretty dramatic” economic development opportunities in agribusiness, Gossett says. But he says he is not familiar with the Forestry Commission’s “20/15” project as to weigh in on it:
“I just don’t know enough about what they’re trying to accomplish with that one that (the S.C. Department of) Commerce isn’t doing.”
Reach Ward at (803) 254-4411 or firstname.lastname@example.org.