Four Easy Cuts: The House Can Reduce Spending by Looking at the Entire State Budget

Cutting spending should be a top priority as the House takes up the proposed Senate budget. As we have previously noted, the proposed Senate budget increases spending by $60 million over and above the proposed House budget.

This spending increase is reflected as follows:

• ·         $18 million increase in General Fund appropriations
• ·         $42 million increase in Other Fund appropriations

Instead of just looking at General Fund cuts, however, House members should recall that the state’s $21 billion budget essentially has four parts. Each of these sections merits a close look and spending can be cut in each area.

The four parts of the budget are as follows: 

Agency Appropriations (Part IA). Instead of waiting for the Budget & Control Board to make across-the-board cuts once session is over, the House has one last opportunity to make targeted cuts to agency appropriations. Of course, the Senate budget does cut some agency budgets, but it also increases spending in several areas. Moreover, as reported in The Nerve, numerous agencies are up for spending increases in the FY10-2011 budget.

Of particular note are the following three items in the Senate budget: 

• ·         Senate funding.

The Senate’s decision to increase its own operating budget should serve as a wakeup call for taxpayers concerned about fiscal responsibility. The increase can be attributed to $4.4 million for additional legislative administrative/personal services. Meanwhile, the House funded this item at $4.917 million – a decrease from last year’s appropriation of $5.229 million. By comparison, the House cut its own administrative operating budget by $2.38 million. The Senate should follow suit, saving taxpayers $6.78 million.

• ·         BCB funding.

The Senate appropriated $1.907 million more in state funds to the Budget and Control Board – an increase from $23.327 million (House) to $25.234 (Senate). A majority of the additional funding is going to the Division of State Information Technology. This controversial entity has been criticized for overbilling other state agencies. See also proviso 70.24.

• ·         DHEC funding.

The Senate allocated $4.8 million more to DHEC than the House appropriations bill. The increase from $77.104 million to $81.954 million is largely due to additional funding for Family Health Services – specifically, the Total Access to Care program and infectious disease prevention programs.

Provisos (Part IB). The second area of the budget ripe for cuts is the provisos section. While the Senate is to be commended for eliminating some of the worst provisos (for instance, 89.112, 89.108 and 80A.55) in the House budget the Senate added a few boondoggles of its own that should be eliminated.

These include:           

• ·         Proviso 89.143, which provides $3 million in funding for the I-95 Corridor Authority. The proposed economic development agency would continue the current practice of relying on political deal making (and taxpayer subsidies) to try to create prosperity at the expense of free market initiatives. See S 1323, which passed the Senate, and is currently before the House Ways & Means Committee.
• ·         Proviso 31.11, requiring the State Museum to pay at least $1.8 million in rent to the BCB for expenses related to its Columbia Mills site. As we’ve written before, the BCB should not charge “rent,” or property management fees, to other state agencies. The museum could save $700,000 if it managed its own property while costs to other agencies could be reduced by $3.6 million if the BCB ceased charging rent. This proviso appears in both the Senate and House budgets, but was amended by the Senate.
• ·         Proviso 37.18, which uses $50,000 in taxpayer funds to subsidize the Southeastern Wildlife Expo. While the Expo may put on a great show, that’s all the more reason to require them to obtain additional corporate sponsorship. Such a handout is simply indefensible during this tight budget year.

Other Funds. As explained in our recent report on Other Funds, the Senate amended proviso 89.87 so as to make FY08-2009 the baseline for agency use of Other Funds, rather than the “prior fiscal year” – that is, FY09-2010. Appropriations for FY08-2009, however, were much higher than for FY09-2010, thus allowing agencies to spend up to $1 billion more in Other Funds dollars. If the House is serious about cutting spending, they have to begin by rejecting this Senate amendment.

Federal Funding (Parts III and IV). As the governor recently cautioned, the proposed state budget relies on millions in one-time federal funding to pay for recurring expenditures. In particular, the Senate budget relies on $213.5 million in enhanced Medicaid funding (FMAP) that may not materialize. The House budget set this figure at $174.9 million.

Already, the House is reportedly planning to reject $50 million in new fines and fees proposed by the Senate. If they are serious about cutting the budget, they should also make targeted cuts to agency budgets (especially, the Senate’s own operating budget), as well as scale back the use of Other Fund raids and reduce dependence on federal funds.

Nothing in the foregoing should be construed as an attempt to aid or hinder passage of any legislation.

Copyright  © 2010 South Carolina Policy Council.