Government Spending

Pretending to Cap Spending

H 3368: South Carolina desperately needs an effective, comprehensive spending cap. This one is neither. Like S 207 (see immediately below), it would cap yearly General Fund appropriations to either 6 percent per year, or population growth plus inflation growth, whichever is lower. Unlike S 207, though, government would get to keep excess revenue, depositing it in a “Spending Limit Reserve Fund.” In short, excess revenue would eventually get spent anyway. Finally, an effective cap should be comprehensive and so include Other Funds and Federal Fund spending.

Capping Spending by Refunding Surplus Revenue

S 207: This bill would limit yearly General Fund appropriations to either 6 percent per year, or population growth plus inflation growth – whichever is lower. While that formula may not be ideal (since inflation could skyrocket and make the cap virtually meaningless), and while it doesn’t include Federal Funds and Other Funds, the bill’s great virtue is that it refunds excess revenue. It creates an Income Tax Rebate Fund that would be used to: 1) replenish the General Reserve Fund; 2) offset the cost of natural disasters; and 3) provide tax rebates to those with individual and corporate income tax liability. As we have written elsewhere, an automatic tax rebate mechanism is the only thing that can make a spending cap a true cap.

Capping Spending to Population Growth + Inflation

H. 4478:  would cap general fund at a rate of 6 percent, or population growth + inflation. The governor would be required by law to include an OSB certification saying that the law conforms to these standards. The General Assembly can suspend the spending limit in the case of an emergency. All the other money would go into Income Tax Rebate Fund, which can be used only to replenish the general reserve fund and pay for natural disaster relief. All other funds would go to individual and corporate income tax relief. While the bill improves on previous attempts to limit spending – it doesn’t, for example, place excess revenue in a “reserve fund” guaranteed to be spent by government – it’s still weak. It only caps General Fund growth, not revenue from fines and fees or from the federal government; and it has the potential to allow government to grow faster than incomes. (There’s more on the strengths and weaknesses of different spending caps elsewhere on our website.)

Prohibiting Fee/Fine Increases

H 3051: One reason government spending rises every year is because state agencies can administratively create and increase fines and fees. This bill would prohibit that practice, requiring instead that the General Assembly introduce fee/fine increases as a joint resolution subject to a recorded roll call vote.

Requiring Budget Narratives

H 3886: The way the budget is currently written makes it difficult to track funding for specific programs. This bill would require the governor’s budget and the House and Senate budget reports to include narrative descriptions of agency programs. These narratives would include the “mission, goals, statutory and regulatory basis of each program, and a brief history of the agency’s administration of the program,” as well as identifying the specific source of funds for the program. South Carolina is one of only seven states that do not include program descriptions in their budgets. (See also H 3887.)

Promoting Online Spending Transparency

H 3067: This bill would promote transparency by requiring all state agencies and local government entities to maintain searchable transaction registers on the Internet. In addition, it would require each local government entity to post the number of full-time employees and employees’ annual compensations for those earning more than $50,000.