Three budget solutions on our Christmas list

This is the time of year when Governor McMaster is working on his proposed state budget to the Legislature, which starts its regular session next month. The next fiscal year begins on July 1st. The current state budget is $42.2 billion, including about $14.5 billion in state general funds. 

The budget process in South Carolina is complex and often criticized for its lack of transparency and accountability. Here's a breakdown of the key issues: 

1. Surpluses and overspending

The state consistently underestimates its revenues at the start of the budget process, typically leading to massive surpluses baked into the final budget.  

Instead of returning this money to taxpayers or using it to reduce debt, lawmakers often designate it for non-essential projects or programs. By state law, spending cannot exceed revenue, but the under-projected revenue surplus deems this spending regulation effectively useless. 

2. Earmarks

Legislators can easily request specific surplus money to be passed through state agencies for pet projects in their home districts, often without clear justification. This leads to wasteful spending on projects that typically don’t benefit the state as a whole.  

As previously reported by The Nerve, most earmark requests are made near the end of the budget process with little to no public scrutiny. 

3. Budget requests

State agencies typically make annual increased funding requests, either for existing or new programs; This allows for inefficient spending and a lack of accountability.  

State law requires agencies and the governor to justify their entire proposed budgets, not just requested increases or new programs.  

Basic proposals to address these issues: 

Zero-based budgeting

State agencies and the governor must comply with current state law requiring agencies to justify their entire budget requests annually, a process known as “zero-based budgeting.” Agencies also must also provide purposes, objectives and quantitative measurements of each program.  

These requirements already exist and must be enforced by the governor.  

Spending caps

Annual spending increases by state agencies must be restricted. This is why SCPC created the South Carolina Responsible Budget Project (SCRB). The SCRB recommends limiting spending based on the rate of inflation and population growth, but only after zero-based budgeting is done first. This prevents spending growth from exceeding what the taxpayer can afford.  

Reining in earmarks

Local governments and nonprofits must be required to submit detailed earmark requests, including an explanation of how the earmark will benefit the state along with the names of the sponsoring lawmakers, to be posted online at the start of the budget process.  

As previously highlighted as a recommendation by SCPC, any proposed changes in earmark requests during the budget process must be posted online within 24 hours, and that public hearings be held for earmark recipients to justify their requests. 

By implementing these reforms, South Carolina can improve its budget process, promote fiscal responsibility, and ensure that taxpayer dollars are used wisely.