June 3, 2023

The Nerve

Where Government Gets Exposed

State surpluses keep growing. Taxpayers likely won’t get any of it back


Lawmakers have far more state tax dollars to play with this fiscal year, though there has been no serious interest in returning any of it to taxpayers.

In an annual report released earlier this month, S.C. comptroller general Richard Eckstrom – the state’s top accountant – said the state had a $1.024 billion general-fund surplus for fiscal 2020-21, which ended June 30.

That works out to be about $200 for every man, woman and child living in South Carolina. A press release that accompanied Eckstrom’s report described the windfall as “unprecedented.”

Lawmakers earlier this year appropriated $1.8 billion more in actual and projected state funds for fiscal 2021-22, including an estimated $646.7 million general-fund surplus for the fiscal year that just ended.

The $1 billion surplus identified in Eckstrom’s report – $377 million more than the earlier estimate in the current budget – doesn’t include a collective general-fund surplus of about $640 million that state agencies had at the start of this fiscal year, according to the report.

It also doesn’t include $525 million from the state’s settlement of a federal lawsuit – which The Nerve has reported extensively about – that lawmakers could decide to divvy up when they are expected to return next month to Columbia.

The Nerve earlier this year revealed that lawmakers had designated tens of millions of surplus tax dollars in the 2021-22 state budget for their pet projects, later overriding nearly all of Gov. Henry McMaster’s vetoes of the total $152.5 million in earmarks.

The total current budget is $32.5 billion, which includes state, federal and “other” funds, budget records show. That’s $2.5 billion, or about 8.5%, more compared to last fiscal year’s budget, which lawmakers set at the same spending levels as in fiscal 2019-20 after the coronavirus outbreak first hit South Carolina.

This current budget projects a total of $9.9 billion in recurring state funds. The state ended fiscal 2021 on June 30 with $10.4 billion in actual general-fund revenues – $1.5 billion more than what was estimated for that year, according to Eckstrom’s report.

About 90 state agencies and divisions carried over a total of approximately $640 million in general funds into this fiscal year, Eckstrom’s report shows, which grouped some agencies into single categories. Under an annually renewed budget proviso, state agencies can transfer up to 10% of their unspent general funds from a given fiscal year into the next fiscal year.

A separate proviso allows the House and Senate chambers to keep all of their respective surpluses for the new fiscal year. The 124-member House had a $22.7 million general-fund reserve to start this fiscal year, Eckstrom’s report shows – which represents 90% of its entire $25.2 million current chamber budget.

The 46-member Senate, which has a $22.6 million current chamber budget, started the fiscal year with a $3.4 million general-fund surplus, according to Eckstrom’s report.

Neither House clerk Charles Reid nor Senate clerk Jeff Gossett – the top administrators in their respective chambers – responded to The Nerve’s written questions this week about chamber surpluses.

The following 10 state agencies had the largest general-fund surpluses as of July 1, according to Eckstrom’s report:

  • Department of Health and Human Services: $110.1 million
  • Department of Education: $95.5 million
  • Department of Commerce: $72.9 million
  • Department of Corrections: $45.5 million
  • Adjutant General: $42.4 million
  • Department of Social Services: $27.1 million
  • Department of Motor Vehicles: $23.8 million
  • House of Representatives: $22.7 million
  • Department of Health and Environment Control: $19.9 million
  • Department on Aging: $17.9 million

Big reserves have allowed some agencies to spend more in a fiscal year than their authorized base amounts listed in the state budget. The Senate chamber, for example, spent nearly $1.9 million more last fiscal year above its base general-fund appropriation, according to Eckstrom’s report.

Taxpayer-funded windfalls

The Nerve this week sent written questions to the departments of Health and Human Services (HHS), Education and Commerce about what those agencies plan to do with their general fund surpluses.

In an email response Tuesday, HHS spokesman Jeff Leieritz said the agency will use most of its $110.1 million reserve to cover expenses connected to increased enrollment in the state’s Healthy Connections Medicaid program as a result of the (federal) Families First Coronavirus Response Act.

“Using the funds the agency has accrued to cover this abnormal cost will enable SCDHHS to bridge the gap of increased cost without seeking additional state funding to meet its obligations,” he said.

Leieritz added the agency also will use a “significant portion” of the surplus to “add to its reserves to safeguard from potential future unexpected increases in health care costs for Medicaid members.”

HHS’ total budget, which includes federal and other funds, for this fiscal year is $8 billion – nearly a quarter of entire state budget and easily the largest overall budget of any stand-alone state agency.

At the Department of Education, which has a nearly $5.8 billion total 2021-22 budget, its $95.5 million surplus will be primarily used for purchasing or repairing buses, bus parts and fuel; expenses related to consolidating school districts; and supplementing base student-cost funding, according to agency records provided to The Nerve.

The Department of Commerce, which has a $159.5 million total budget for this fiscal year, didn’t respond to The Nerve’s written questions about its $72.9 million surplus.

The Nerve this week also asked the Judicial Department – the third branch of state government – about its $12.8 million surplus, but received no response. The department’s total 2021-22 budget is $119.4 million.

In the press release about the annual general-fund report, Eckstrom said the overall $1.024 billion surplus should be used mainly to help reduce a collective $47 billion deficit in the state’s retirement and retiree health insurance programs, contending, “It’s a ticking time bomb and a financial train wreck happening in slow motion.”

But lawmakers haven’t significantly addressed those issues – or seriously considered returning any of the massive general-fund surpluses to taxpayers.

Brundrett is the news editor of The Nerve (www.thenerve.org). Contact him at 803-254-4411 or rick@thenerve.org. Follow him on Twitter @RickBrundrett. Follow The Nerve on Facebook and Twitter @thenervesc.

Nerve stories are free to reprint and repost with permission by and credit to The Nerve.


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