October 1, 2022

The Nerve

Where Government Gets Exposed

Many SC voters favor bigger state reserves. Will they approve it this year?

By RICK BRUNDRETT

South Carolina voters in November will decide whether to approve constitutional amendments to increase the state’s two “rainy-day” funds, though a just-released poll casts doubt on their passage.

The statewide poll by the South Carolina Policy Council – The Nerve’s parent organization – found that a plurality of voters indicated general support for the proposals when explained in plain language.

But the total expressed support didn’t break the 50% mark and dropped noticeably when voters were given the exact text of the amendments as it will appear on the Nov. 8 general election ballot.

One of the amendments would increase the General Reserve Fund (GRF) over four fiscal years from 5% to 7% of general fund revenues from the latest completed fiscal year, while the other amendment would raise the Capital Reserve Fund (CRF) from 2% to 3% of those revenues.

The GRF and CRF balances as of June 30 were $458.9 million and $183.5 million, respectively, state comptroller general records show. The overall state budget for fiscal 2023, which includes state, federal and “other” funds, is $38 billion.

“People who don’t understand ballot questions tend to vote no, and that is concerning for those of us who favor saving more and spending less,” Dallas Woodhouse, the South Carolina Policy Council’s executive director, said in a release Monday on the latest poll results.

The poll, which sampled 529 registered South Carolina voters and was conducted by the Washington, D.C.-based Morning Consult, indicated that the proposed amendments could fail because of a lack of voter awareness and complex ballot language, according to the release.

The poll surveyed voters about a variety of topics, including President Joe Biden’s job performance, inflation, tax cuts and women’s issues. The margin of error was a plus or minus 4 percentage points.

Complete poll results can be found here.

Amendments to the S.C. Constitution must be approved by two-thirds of each chamber of the 170-member General Assembly and a majority of qualified voters in the next general election for House members, followed by a majority vote of each legislative chamber supporting ratification. A joint resolution and companion bill to increase the reserve funds passed the Legislature in June by near-unanimous votes.

Rep. Gary Simrill, R-York, who is chairman of the House Ways and Means Committee and served on conference committees that approved compromise versions of the joint resolution and companion bill, told The Nerve in a written response Monday that the House “began in earnest in 2019 with a goal of increased reserves.”

“This was prior to the pandemic; and when the pandemic hit, having to go into a continuing resolution (to keep state government operating at the prior year levels), those reserves were helpful,” said Simrill, the former House majority leader who announced earlier this year he would not seek re-election after serving 30 years.

Simrill added that “codifying increased reserves protects core functions of government in case of a downturn in the economy or for any other reason.”

Contacted by The Nerve, Sen. John Scott, D-Richland, who was one of the main co-sponsors of the joint resolution, said healthy reserves are needed to help offset the effects of a recession on state government.

“I’ve been through about four recessions,” said Scott, who serves on the Senate Finance Committee. “I’ve been there when we’ve had to lay people off. That’s not a good feeling.”

Without the reserves, “you cut straight across the board,” Scott added. “All the agencies and schools take the biggest hits.”

Ballot language

The Policy Council’s poll found that a collective 40% of S.C. voters generally supported the proposed amendment increasing the GRF when informed it would “help protect critical government services during a recession and help avoid tax increases.” When asked about the other amendment to increase the CRF, a collective 37% of respondents indicated general support.

But when given the exact ballot language for both proposals, at least half of the respondents said they were unsure about how they would vote or didn’t understand the question, according to the poll. Following is the amendment language that will appear on the November ballot:

Amendment 1: Must Section 36(A), Article III of the Constitution of this State, relating to the General Reserve Fund, be amended so as to provide that the General Reserve Fund of five percent of general fund revenue of the latest completed fiscal year must be increased each year by one-half of one percent of the general fund revenue of the latest completed fiscal year until it equals seven percent of such revenues?

Amendment 2: Must Section 36(B), Article III of the Constitution of this State be amended so as to provide that the Capital Reserve Fund of two percent of the general fund revenue of the latest completed fiscal year be increased to three percent of the general fund revenue of the latest completed fiscal year and to provide that the first use of the Capital Reserve Fund must be to offset midyear budget reductions?

Under the current constitution, the CRF can’t be used to offset midyear budget cuts but has to be tapped to replenish the GRF if that account was needed to cover “operating deficits of state government.”

The constitution allows lawmakers to make annual appropriations from the CRF if it’s not needed to replenish the GRF. In recent years, the CRF has been designated primarily for maintenance, renovation or new building projects at the state’s public colleges and universities, though it has been funded annually to meet the constitutional 2% requirement.

State law allows for a “simplified or more detailed explanation” of proposed constitutional amendments. That determination is made by the “Constitutional Ballot Commission,” composed of the S.C. attorney general, and the directors of the State Election Commission and Legislative Council.

In an email response to The Nerve, Chris Whitmire, the Election Commission’s deputy executive director, said the following explanations on the proposed constitutional amendments will appear on the November ballot:

Amendment 1 explanation: A ‘Yes” vote will increase the amount of money state government must keep in the General Reserve Fund (its “rainy day” fund) from 5% of the previous year’s revenue to 7% of the previous year’s revenue.

Amendment 2 explanation: A ‘Yes’ vote will increase the amount of money state government must appropriate to the Capital Reserve Fund (the “reserve and capital improvements” fund) from 2% of the previous year’s revenue to 3% of the previous year’s revenue and require that the Capital Reserve Fund’s first priority is to offset midyear budget cuts at state agencies.

Between 1985 and 2018, there were a total of 54 statewide ballot measures, 45, or 83%, of which were approved, according to Ballotpedia, an online politics and elections encyclopedia.

In the Policy Council’s release on Monday, Woodhouse said the state’s major political parties and candidates should encourage voters to pass the two constitutional amendments in November as part of their respective get-out-the-vote campaigns.

The Policy Council’s latest poll was the second since June, as reported then by The Nerve. The first poll covered a variety of topics, including inflation, tax cuts, energy independence, election reform and confidence, school choice and school board transparency.

Brundrett is the news editor of The Nerve (www.thenerve.org). Contact him at 803-3948273 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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