Haley’s Budget Would Add $22M in Restructuring Spending

February 9, 2015

Investigative Reports

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Money TrickA government restructuring law that Gov. Nikki Haley long sought could cost at least $22 million more next fiscal year if lawmakers approve her proposed state budget, The Nervefound in a review of budget documents.

It also would result in a net increase of 94 authorized full-time government jobs under her executive budget released last month. Haley didn’t get into specifics about restructuring costs when she revealed her state spending plan to reporters.

Lawmakers currently are working on next fiscal year’s spending plan. The first legislative version will come from the House Ways and Means Committee.

Haley’s proposed budget for fiscal 2015-16, which starts July 1, calls for $278.3 million for a new Department of Administration (DOA) under her control, including $56.45 million in state funds, $75.3 million in federal funds, and $146.56 million in “other” funds, according to a budget record, known as a “summary control document,” provided recently to The Nerve by the Executive Budget Office, which will be part of the DOA next fiscal year.

The restructuring law passed last year (Act 121) will eliminate the current Budget and Control Board (BCB), an agency that controls many of the daily functions of state government, such as management of state buildings, vehicles and computer systems, and is led by an executive-legislative panel with the same name, headed by Haley. The BCB’s ratified budget for this fiscal year is about $173.2 million, according to a summary control document.

The law also would merge the Executive Policy and Programs division of the Governor’s Office, which provides, among other things, various services to children, veterans and crime victims, into the DOA. That division was budgeted to receive a total of $106 million this fiscal year.

The elimination of the BCB agency and the merging of the policy and programs division into the DOA would result in a net savings of about $900,000 next fiscal year, based on a comparison of the summary control documents. But the restructuring law also created several stand-alone agencies and moved other parts of the BCB to existing agencies.

Following is a breakdown of Haley’s proposed spending plan for the new stand-alone agencies:

  • State Fiscal Accountability Authority (will be able to, among other things, authorize the sale of state bonds for building projects, approve large purchases and sales of real property by state agencies, and manage state procurement services and the state Insurance Reserve Fund; will be led by the same five-member panel overseeing the BCB agency):  $17.9 million;
  • Revenue and Fiscal Affairs Office (handles state revenue forecasts, budget analysis, fiscal impact statements and demographic research); $10.5 million; and
  • Confederate Relic Room and Military Museum (currently part of the BCB): $1.15 million.

The Revenue and Fiscal Affairs Office came into existence this fiscal year; its current ratified budget is $9.8 million – nearly $704,000 less than what Haley has proposed for 2015-16, the summary control documents show.

In addition, the State Auditor’s Office will become part of the State Fiscal Accountability Authority (SFAA), though it is listed as a separate line item in Haley’s proposed budget. Its proposed total budget for next fiscal year is nearly $5.4 million – about $400,000 more than its current ratified budget.

On top of that, some functions of the BCB will be transferred under the restructuring law to the following existing state agencies, with the total additional cost under Haley’s proposed budget in parentheses:

  • Local Government Division to the S.C. Rural Infrastructure Authority ($2.29 million); and
  • State Energy Office to the S.C. Office of Regulatory Staff ($2.06 million)

Under Haley’s proposed budget, total authorized spending for restructuring would increase by a net of at least $22.3 million, or 7 percent, over this fiscal year, most of it with the creation of the SFAA, The Nerve’s review found.

A total of 138 full-time employees are authorized under Haley’s spending plan for the SFAA. The Nerve’s review of online legislative budget records found that the collective restructuring changes would result in net increase of 94 authorized full-time employees, an overall 6-percent growth in those categories.

The SFAA will be governed by the same five members who currently oversee the BCB: Haley; state Treasurer Curtis Loftis; state Comptroller General Richard Eckstrom; Rep. Brian White, R-Anderson and the House Ways and Means Committee chairman; and Senate President Pro Tempore Hugh Leatherman, R-Florence and the Senate Finance Committee chairman. Critics contend the BCB’s governing board is largely unaccountable to the public because power is diffused between the executive and legislative branches, and that the creation of the SFAA merely maintains the status quo.

The Nerve on Friday sent written questions to Haley spokeswoman Chaney Adams seeking comment onThe Nerve’s findings about the governor’s proposed budget for restructuring, but received no response.

In her first year as governor in 2011, Haley, a Lexington County Republican, was so mad that lawmakers hadn’t passed four restructuring bills she was pushing that she ordered the GOP-dominated Legislature back from a break near the end of session to deal with the legislation. The S.C. Supreme Court, however, quickly nixed the order, ruling that she had overstepped her constitutional bounds.

After much ensuing debate, lawmakers in January last year finally passed a massive restructuring bill (S. 22), which Haley quickly signed into law. The main sponsor of the bill, which was introduced in the 2013 session, was Sen. Vincent Sheheen, D-Kershaw, who unsuccessfully ran against Haley for governor in 2010 and last year.

Haley was clearly happy about the passage of the bill when she gave her January 2014 state-of-the-state address the day after the bill’s passage.

“And while patience has not always been my strong suit, the passage of the Department of Administration, the biggest and most important piece of government reform South Carolina has seen in two decades, was well worth the wait, she told lawmakers.

“There is not time tonight for me to go into all the good that will come from this change, but I will say this: The Budget and Control Board – what I call the big, green, ugly monster – is dead, and with it the legacy of a backwards administrative government that was as wasteful as it was clumsy, as inefficient as it was embarrassing.”

“We are a better state today,” Haley continued. “We will be a better state tomorrow. And yesterday truly was a great day in South Carolina.”

Reach Brundrett at (803) 254-4411 or rick@thenerve.org. Follow him on Twitter @thenerve_rick. Follow The Nerve on Facebook and Twitter @thenervesc.