People who live in glass houses…

December 1, 2017

Inside Insight

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Money

Lawmakers are against wasteful spending – in the counties

By HANNAH HILL

In a House Ways and Means subcommittee meeting this week, state lawmakers expressed great concern about the responsibility of county spending practices.

Let’s be clear: County spending habits are technically no concern of the state, from a jurisdictional perspective. However, the law requires the General Assembly to set aside 4.5% of last year’s general fund revenue for the local government fund (LGF) to cover state mandates on counties and municipalities. Lawmakers’ habitual failure to fully fund the LGF has been a source of local frustration for years.

Instead of simply following the law, the Ways and Means Local Government Fund Ad Hoc Committee sat down to hear a presentation by the Revenue and Fiscal Affairs office (RFA) on how local governments are spending their money. According to the RFA, county spending over the last twenty years on public safety has dropped while spending on debt service has risen.

Lawmakers apparently found this trend of underfunding core government services in favor of expensive projects to be highly troubling. Said Rep. Kirkman Finlay: “We’re bonding more projects that are going to take money away from police and basic services. How does that work long-term?”

It doesn’t, of course, but counties’ irresponsible spending habits really have nothing to do with whether or not state lawmakers follow the law by fully funding the local government fund.

However, if lawmakers want to discuss irresponsible spending habits, they should start with their own. According to information compiled by Truth in Accounting (a nonprofit that analyzes government accounting and financial information from all 50 states), South Carolina owes $28.2 billion despite having only $14.1 billion available in assets – resulting in a $14.1 billion shortfall. This doesn’t even include the entire pension deficit, which the most conservative estimates place at roughly $20 billion.

Regarding the underfunding of core government services, one has only to point to the state’s crumbling road system. The gas tax legislation that passed this year was ostensibly designed to be a long-term solution, but it contained provisions allowing the new funds to be diverted to pay down debt instead of patching potholes.

Meanwhile, state troopers are underpaid and the Department of Corrections – which oversees the prison system – is woefully underfunded.

Nor does legislative financial irresponsibility stop there. Consider the fact that state spending continues to grow, that legislative leaders have filed bills to increase South Carolina’s debt, and the simple fact that lawmakers won’t even follow the proper budget process as required by law.

In one particularly egregious example, Rep. Brian White added a proviso to the 2010 House budget that would have raided the Insurance Reserve Fund (which provides property and liability insurance for state and local agencies) in order to subsidize a new airline incentives fund and to “promote tourism.” Not only was the proposed expenditure itself irresponsible (fortunately, the proviso did not make it into the final appropriations act), but so was the method – the all-too-common practice of spending by proviso instead of budgeting for the funds properly. Incidentally, White is now the House Ways and Means Committee chairman and oversees the initial shaping of the annual state budget.

In a more recent example, lawmakers attempted to pass a budget proviso earlier this year that would have created a special committee to distribute the funds in the state’s Litigation Recovery Account (which is funded by money recovered by the state in legal proceedings) for “community”-oriented projects around the state. In effect, this budget proviso would have created a legislative slush fund for pork projects instead of simply appropriating the funds toward core government services.

The examples are extensive, and all point to a common theme: When it comes to responsible spending practices, state government is not a good role model.

More importantly, local governments’ spending practices do not let the General Assembly off the hook regarding the local government fund. The law requires it to be fully funded regardless of how irresponsible the counties may be.

And to borrow a phrase, legislators who live in glass houses really shouldn’t throw stones.