Throwback Thursday: Poor transparency for federal funds in the state budget

December 5, 2019

Inside Insight

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Federal Spending South Carolina

A recent Pew Research Center report showed that federal dollars comprised roughly a third of states’ overall revenue in fiscal year 2017. This is precisely what the South Carolina Policy Council, The Nerve’s parent organization, has shown in budget reports year after year, but federal funds receive almost zero attention in the budget process, are not debated, and (along with “Other Funds” – fines and fees which comprise the remainder of the appropriations bill) sometimes aren’t even reported in budget totals.

To put this into perspective, the General Fund was the smallest of the three spending categories last year – in other words, the 2019-2020 budget contained more federal dollars than state tax revenue.

Despite this, taxpayers know very little about that $8.8 billion pot of federal money – what it’s being spent on, what strings are attached to it, or what kind of financial obligations it could create down the road. This is despite a state law requiring all of these things and more to be disclosed during the budget process. If state agencies do in fact report this information to the Governor’s Office as required by the law, none of it is disclosed to the public.

Worst of all, the federal funds total reported in the budget does not include all of the federal dollars accepted by state government. In 2013, lawmakers transferred $1.5 billion in federal food-stamp assistance payments from the S.C. Department of Social Services’ budget to an “unbudgeted account” – artificially reducing the size of the DSS budget. To this day, those federal dollars – $876 million in the last fiscal year – remain unreported in the state budget. Today’s throwback highlights The Nerve’s discovery of this practice.

South Carolina’s Billion-Dollar-Plus Hidden Budget

What S.C. House members likely won’t be talking about today as they begin debate on the fiscal 2014 spending plan for South Carolina is the billion-dollar-plus hidden budget.

That’s the collective amount in general and “other” fund reserves that 18 non-college agencies with the largest agency budgets started this fiscal year with on July 1, a review by The Nerve found.

In the typical annual budget process, lawmakers decide to spend billions of taxpayer dollars for the upcoming fiscal year while ignoring huge agency reserves carried over from the previous fiscal year.

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