Conference committee has the potential to save taxpayers $137 million

We now have finalized budget drafts from both the House and Senate. The two chambers will next appoint members to a conference committee to reconcile the differences between their proposals.

Before the conference committee convenes, we conducted a simple thought experiment: How much could the state save by adopting the lower funding level for each agency across the two budgets?

To answer this question, we used each chamber’s Summary Control Document and selected the lower figure in each instance. This analysis focuses solely on the general fund, which is primarily supported by tax revenue.

One additional factor remains. In early May, the South Carolina Board of Economic Advisors will meet and may revise revenue projections. Last year, rather than choosing between the House and Senate figures, the conference committee increased the overall spending total for a plethora of agencies.

That approach should not be repeated, particularly given the relatively weak economic outlook and signs of slowing growth. State government must demonstrate fiscal discipline by prioritizing lower spending levels and preparing to adjust if revenue projections decline.

Agency budget figures for fiscal year 2027: (these figures are all from recurring funds, if an agency is funded entirely via nonrecurring proviso, federal or capital reserve they are not listed in the chart.)

Takeaways

Looking at the chart, we find that overall, the House draft spent less than the Senate draft 39 times, while the Senate draft was lower than the House draft only 21 times. In all other instances, spending levels were the same.

The conference committee process typically works as follows: Three members from each chamber negotiate the discrepancies between the House and Senate drafts. Typically, they must choose one of the two figures unless the conference committee is appointed as a free conference committee.

Upon reviewing each budget, our analysis found that the House budget draft was just shy of $88 million less than the Senate version. It is important to note that last week, the House amended the budget prior to conference and added approximately $300 million in earmark spending requests.

If the conference committee chose the lower of the two figures for every agency highlighted in the section above, it would save taxpayers $137.6 million. This funding could be used to offset the expenses associated with tax reform legislation, letting taxpayers keep their money in their pocket.

Our recommendations

We have two broad recommendations for the conference committee.

1.) Eliminate all earmarks. When earmarks were not included in last year’s budget, we made a point to congratulate lawmakers on that development. However, we also noted that earmarks should only return if meaningful transparency measures were adopted.

The governor signed an executive order cracking down on some forms of agency spending, but there is still no statutory law outlining transparency and disclosure requirements to alert the public to earmark spending requests. For nearly all of these earmarks, the first time the public heard about them was when they were proposed last week. That is utterly unacceptable.

2.) Adopt the lower funding figure for each agency and return taxpayer dollars to their rightful owners. As our chart demonstrates, the lower funding figure has already been accepted by one chamber, meaning lawmakers themselves acknowledge the agency could function with the lower amount and continue operating effectively. This is not a radical request, but rather a call for restraint when it comes to state spending.

If the state spent less money on agencies, it could issue rebates or further reduce the overall tax rate. Only time will tell what direction the chambers will take on spending, but we encourage lawmakers to choose the lower figure for each agency. Once a final conference committee budget is released, we will conduct another evaluation to determine whether lawmakers adopted the lesser funding amounts.