House Version of FY13 Budget Calls for $1 Billion-Plus Increase

March 29, 2012

Investigative Reports

Print Friendly, PDF & Email

CountingIf you were looking for one word to describe the S.C. House’s version of next fiscal year’s state budget, “austere” wouldn’t be it.

The Nerve’s review of a budget document produced by the Office of State Budget, known as the “summary control document,” shows that compared to the ratified state budget for this fiscal year, which started July 1, the recently passed House version of the fiscal year 2013 budget would:

  • Increase total authorized spending by slightly more than $1 billion, or 4.5 percent, to $23.3 billion. That doesn’t include another $549 million automatically taken off the top of a projected $6.5 billion in general fund revenues for property tax relief;
  • Hike authorized state fund spending by more than $590 million, or 9.7 percent, to $6.63 billion, which includes tapping year-end surplus general funds and raiding the state’s capital reserve fund; and
  • Authorize federal and “other” fund spending to increase to $8.66 billion and $8.03 billion, respectively, which represents a jump of more than 2 percent in each category. Other funds include such things as college tuition, lottery proceeds, 1 cent of the state sales tax earmarked for education programs, and various fees charged by state agencies.

The state Board of Economic Advisors last year projected that lawmakers would have some $900 million in additional general funds to play with for next fiscal year. So far, however, there has been no serious effort by the General Assembly to refund any of that money to taxpayers.

The House’s budget version is now being considered by the Senate Finance Committee; that panel’s version will go to the full Senate. Any differences between the Senate and House versions would be worked out by a conference committee, made up of members from both chambers, before the budget is sent to Gov. Nikki Haley.

The Nerve’s review of the summary control document for the House budget version found that of 100 agencies, divisions and separate funds, just nine would see decreases in state funds in 2012-13 compared to what was appropriated for them for this fiscal year.

But that doesn’t mean those agencies are hurting for money – far from it.

Take the state Conservation Bank, for example.

Under the House version, the two-employee agency, which was established to help preserve land, historical buildings and archaeological sites, would lose its entire general-fund allocation of $2 million next fiscal year. But its total budget would increase to $7.5 million – all of which is listed in “other” funds.

The proposed 276 percent increase was the single-largest percentage hike in The Nerve’s review.

In a written response last week, Marvin Davant, the Conservation Bank’s executive director, told The Nerve that his agency normally receives $7 million to $8 million per year with a portion of  document stamp fees, which are charged for the recording of documents in real estate transactions. But because of the “way our statute is written and the budget restrictions in the past three years,” his agency had not received those amounts, he said.

Instead, the Legislature for this fiscal year funded the agency through a budget proviso allocating $2 million in surplus general fund revenues, Davant said.

‘Not Real Money’

Like the Conservation Bank, the S.C. Judicial Department also would see a decrease in state funds – $1.2 million – next fiscal year under the House budget version. Total authorized spending for the state court system would drop by $2.35 million to $65.75 million.

But as The Nerve has reported previously, the Judicial Department’s other fund revenues – made up primarily of fees imposed on users of the court system – have grown rapidly in recent years, from $19.55 million in fiscal year 2006 to $23.77 million at the end of last fiscal year.

Nearly $9.6 million in other funds was carried over into this fiscal year, Office of State Budget records show.

The Nerve also has previously pointed out that lawmakers historically have allowed state agencies to low-ball their other-fund estimates at the beginning of a fiscal year, then come back later during the fiscal year and request authorization through the Office of State Budget to spend more as additional revenues are received.

The state’s total authorized other-fund budget for 2011-12 was set at $7.84 billion, yet the adjusted budget for this fiscal year puts the figure at $8.12 billion, an increase of more than $276 million, or 3.5 percent, records show.

In a story last month, The Nerve reported that state agencies and divisions started this fiscal year with nearly $1.5 billion in surplus other funds.

David Ross, the recently appointed director of the state Commission on Prosecution Coordination, which coordinates the administrative functions of the state’s 16 solicitors, told The Nerve last week that the other-fund authorization for his agency, as listed in the proposed fiscal year 2013 budget, is “not real money.”

“That is a budget authorization that could be more or less,” he said, noting that a chunk of his agency’s funding comes from surcharges on court fines. “If people don’t pay their fines, we’re not going to collect what was authorized.”

Ross, who took over the agency last year, said he recommended a higher other-fund authorization in his proposed budget for next fiscal year, instead of planning to come back later during the fiscal year and ask to spend more of that money when additional revenues are received.

“I think we’re different than most other agencies,” he said.

Under the House budget version for next fiscal year, the commission’s other-fund budget would grow by nearly $2.7 million, or 47 percent, ranking it fourth in The Nerve’s review in terms of the highest proposed percentage increase in other funds.

The House version authorizes a total budget of $18.57 million for the commission in 2012-13, an increase of about $4.4 million, or 31 percent, Office of State Budget records show.

Biggest Increases

The Nerve’s review found that the following five agencies would receive the largest increases in total funds under the House’s fiscal year 2013 budget version:

  • Department of Education – $236.73 million increase, or 7 percent ($3.6 billion total budget);
  • Department of Transportation – $225.59 million increase, or 20 percent ($1.36 billion total budget);
  • Department of Health and Human Services – $73.48 million increase, or 1 percent ($5.94 billion total budget);
  • University of South Carolina, Columbia – $48.99 million increase, or 5 percent ($956.2 million total budget); and the
  • S.C. Technical College System – $33.64 million or 5 percent ($676.7 million total budget).

In a written response last week, Department of Education spokesman Jay Ragley told The Nerve that none of the proposed funding increase for the department is “for the agency or agency operations.”

“The increases in funding are for budget-line items the agency is required to distribute to school districts,” he said.

Pete Poore, spokesman for Department of Transportation, which faced intense criticism last summer after running out of money to pay contractors, told The Nerve last week in an email that the agency did “not ask for more money” for next fiscal year.

Rather, the agency “added to our request for additional budget authority this year when we identified revenues that were either new in nature or were not accounted for when we originally submitted our budget,” he said.

Poore noted that this fiscal year’s DOT budget was adjusted to $1.453 billion from $1.137 billion, an increase of $316 million, or about 28 percent.

“So our request for FY12/13 is actually less,” he said.

HHS spokesman Jeff Stensland told The Nerve last week in a written response that the proposed funding increase for his agency “mainly represents natural program growth,” adding, “We’ve got more people on Medicaid than we did a year ago, and expect even more next year.”

The department is projecting an additional $99 million in state and federal costs to add an estimated 70,000 South Carolina children to the Medicaid rolls in anticipation of the rollout of the Obama administration’s controversial health-care law, which is being challenged this week in the U.S. Supreme Court.

In a written response Tuesday to The Nerve, USC spokesman Wes Hickman acknowledged the proposed $49 million total budget increase for USC’s main campus, noting, “We are pleased the House of Representatives has provided increased support in some of our most innovative and critical needs areas.”

The House version, for example, authorizes about $17.3 million from tuition and fees, which are classified as other funds, to be used toward the startup of the Greenville School of Medicine, Hickman noted.

“However,” Hickman continued, “it is important to note that of USC Columbia’s total budget, only about $120 million or 12.5% actually comes from state tax dollars – a savvy investment that returns a $4.1 billion annual economic impact on our state.”

As for the S.C.Technical College System’s proposed $33.64 million increase in total authorized spending, college system spokeswoman Kelly Steinhilper in a written response last week referred The Nerve to the agency’s website for “our legislative priorities.”

“It would probably be best to ask the House Ways & Means Committee (regarding) specific allocations and sources of revenue,” she added.

Reach Brundrett at (803) 254-4411 or rick@thenerve.org.