As South Carolinians’ income shrinks, state agency surpluses grow

September 3, 2020

Investigative Reports

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By RICK BRUNDRETT

The S.C. Department of Commerce started fiscal 2021 with a $103.1 million general-fund surplus – more than double its reserves from a year ago.

The S.C. House of Representatives had a $23.7 million surplus as of July 1 for its 124-member chamber – nearly $1 million more than its entire budget, records show.

Those amounts were part of $623.5 million in total general-fund surpluses among state agencies and several major state accounts at the end of fiscal 2019-20, according to a report by state Comptroller General Richard Eckstrom.

State agency general-fund surpluses collectively grew by $191.5 million, or 44%, from last year – while the state’s unemployment rate is hovering around 7% because of government-imposed shutdowns of the private sector following the coronavirus outbreak.

When state agency reserves are combined with $462.6 million more in actual general-fund revenues in fiscal 2020, leftover surplus money, and balances in the constitutional “rainy-day” funds, the state’s overall general-fund piggy bank as of June 30 was $1.8 billion, according to Eckstrom’s report.

To put the $1.8 billion in some perspective, it works out to be about $340 for every man, woman and child in South Carolina, or more than $12,000 for each of the approximately 144,000 workers receiving unemployment benefits as of Aug. 22.

Whether any of the windfalls will be refunded to taxpayers remains to be seen. Lawmakers are scheduled to return to Columbia this month to consider a final 2020-21 state budget. In dealing with the COVID-19 outbreak, they decided in May to temporarily fund state government this fiscal year at fiscal 2020 levels – more than $30 billion when state, federal and “other” funds are included.

As The Nerve previously has reported, lawmakers in recent years have annually raided the Capital Reserve Fund, one of the state’s two constitutional “rainy-day” funds, which for this fiscal year stands at about $162.5 million.

Lawmakers also have hundreds of millions in other revenue sources they could tap this fiscal year, including more than $660 million in unappropriated federal emergency COVID-19 funding, and approximately $525 million from a settlement with the federal government in connection with a long-running legal dispute over weapons-grade plutonium storage in the state.

State agency general-fund surpluses at the start of this fiscal year ranged from $103.1 million at the Department of Commerce to $11,857 at the S.C. Arts Commission, according to Eckstrom’s report. More than 20 state agencies had surpluses of at least $5 million.

It’s an open question whether certain agencies need multimillion-dollar surpluses year after year. Take Commerce, for example.

The agency’s general-fund surplus going into this fiscal year skyrocketed by more than $61 million – an increase of 146% compared to the prior year – and represented more than half of its total $200.5 million fiscal 2020 budget, records show. Commerce’s total budget last fiscal year included a $65 million “Rural School District and Economic Development Closing Fund,” which was pushed by Gov. Henry McMaster and approved by lawmakers.

Commerce spokeswoman Alex Clark didn’t respond to a written request this week from The Nerve seeking comment on the agency’s $103.1 million surplus.

At the Department of Parks, Recreation and Tourism, its general fund surplus as of July 1 was $12.9 million, which represented 9.4% of its total $136.7 million fiscal 2020 budget, records show. The agency had a $21 million surplus at the start of last fiscal year.

Asked why the agency needs a large reserve, PRT spokeswoman Dawn Dawson-House in a written response today said, “Much of the money is already committed, but the pandemic has suspended or delayed work on projects.”

The state’s executive branch wasn’t the only branch to start this fiscal year with a big general-fund surplus, according to Eckstrom’s report. The House chamber’s $23.7 million surplus was $328,052 more compared to the start of last fiscal year, while the 46-member Senate chamber had $5.8 million in reserves as of July 1, which grew by $556,881 over last year.

The Senate chamber’s surplus represented more than a third of its total $16.3 million fiscal 2020 budget, while the House’s reserves were $994,453 more than its total budget last fiscal year, records show.

Neither House clerk Charles Reid nor Senate clerk Jeff Gossett – the chief administrative officers of their respective chambers – responded to The Nerve’s written requests this week for comment. Each chamber typically carries over millions in general funds every year, as The Nerve has reported.

The state Judicial Department entered fiscal 2021 with a $12.8 million general-fund surplus – a nearly $11.6 million hike over the previous year and which represented 12.5% of its total $102.6 million fiscal 2020 budget.

In a written response Wednesday to The Nerve, department spokeswoman Ginny Jones said the $12.8 million is for “committed multiyear projects for which the vendors have not yet met the requirements for disbursement of funds.”

Specifically, the funds will be used to replace “our aging Case Management System, the Unified Judicial System’s repository of court data, and to complete our Disaster Recovery Project, which provides backup for critical court data and records,” Jones said.

Comptroller general records show the department had general fund surpluses at the end of fiscal years 2015 through 2018, ranging from $2.2 million to $3.7 million. Lawmakers last year approved a 33% pay raise for judges statewide, as The Nerve reported.

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.

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