These House budget provisos need attention

The House this week passed its version of the largest state government budget in South Carolina’s history – a bill that would appropriate $38.2 billion in tax dollars, federal funds, and other fines and fees. Included in the bloated budget are hundreds of temporary laws called “provisos”, which are meant to guide spending but are often used to enact policies that lawmakers couldn’t achieve through regular legislation.

We examined the latest proviso list and found many that should not be in the budget, and others that should be modified if they’re to pass. Below is a list of our findings with recommendations for each.

72.2 – Exempting PSC experts and consultants from contract fairness laws  

This updated proviso continues to exempt the Public Service Commission (PSC) from state procurement laws when hiring third-party experts and consultants in an effort to reform state-owned utility Santee Cooper. These laws are important as they promote healthy competition for state contracts and attempt to keep the process fair and transparent. 

According to a similar proviso added last year (which would be struck and replaced with this one), the PSC was appropriated $1,000,000 for its reform efforts. It’s not clear how much has already been used, but not a single dollar more should be spent on experts and consultants hired outside of the procurement code. The exemption in question should be removed from the proviso.  

50.22 – Adding the House and Senate budget chairmen to an economic development board  

This proviso, inserted in the budget last year, adds the chairmen of the Senate Finance and House Ways and Means Committee (or their designees) as members to the Coordinating Council for Economic Development – a state board that awards tens of millions in grants each year for handpicked business projects.  

This remains one of the most inappropriate provisos in the budget. First, it appears to be an obvious violation of the “one subject rule” set by the South Carolina Constitution, which requires that items in the budget be “reasonably and inherently related to the raising and spending of tax monies”. Adding seats to a state board (even if that board awards public funds) is unlikely to satisfy this rule. Second, the lawmakers it adds to the council already control the state’s entire budget by virtue of their committee chairmanships. How much economic authority must one need? This proviso should be struck from the budget. 

50.23 – Establishing another taxpayer funded grant program 

This proviso would establish another unnecessary grant fund under the Department of Commerce, called the Strategic Economic Development Fund. Its enabling language offers little information, only that is intended for “projects that are essential to the State’s ongoing and future economic development success”.  

Grants paid from existing Commerce handout funds are notoriously flexible, but at the very least, projects are selected by a multi-member panel (the Coordinating Council for Economic Development, discussed in proviso 50.22). This new fund, however, vests decision-making power with the Secretary of Commerce, requiring only that the Joint Bond Review Committee review and comment on projects before money is awarded.  

The Policy Council opposes discretionary incentives, particularly those which are paid for by taxpayers directly (read our extended analysis here). This proviso should be struck. 

82.2 – Diverting Department of Motor Vehicles processing fees 

This amended proviso would instruct the DMV to divert excess processing fees related to Freedom of Information (FOI) requests to the State Highway Fund. Currently, the fees are kept by the department without spending instructions.  

There are a couple things to unpack here. First, if the DMV is collecting more in fees than is necessary to fulfil FOI requests, isn’t the logical response to charge less? Second, requiring that those extra dollars be funneled to the State Highway Fund, which pays for expensive road projects, suggests that this is no small sum of money. This would be further evidence the DMV is charging more than it needs.  

A simple policy would be to require the department to post public records to its website, saving the time and money associated with manually processing requests (read more about this policy here). In the meantime, the proviso should be amended so that FOI costs are covered using general operating funds to minimize the out-of-pocket cost to citizens.  

47.16 – Expanding permissible use of a water recreation fund  

This proviso would expand the list of items that can be purchased using a state water recreation fund to include boats, boat trailers, and other equipment for law enforcement and water rescue services. The fund, which gets its money from a portion of the state gas tax, is effectively controlled by county legislative delegations thanks to state law. Projects/items that aren’t recommended by delegations to the Department of Natural Resources, the administering agency, have a slim chance of receiving funds.  

If lawmakers feel that our law enforcement officers are underequipped, then they should appropriate money directly through the budget to address such shortages. That approach would be far more transparent and efficient than what is being proposed here. This proposed proviso should be replaced by a regular line item.  

117.172 – Suspending the state’s name, image and likeness laws 

This proviso would suspend South Carolina’s recently enacted name, image and likeness (NIL) law, which governs student athlete compensation. Among other things, the law protects the interests of student athletes and schools by stating that students must be free to explore and accept NIL deals, and that students must get permission from a school if they wish to use that school’s name, logo or facilities for marketing purposes. Players in states without NIL laws are subject the policies set by the National Collegiate Athletic Association (NCAA).  

There are questions to be asked about why the state is so eager to suspend a law it passed just last year, and concerns about doing so through the budget. The practical effect would be that schools get to set their own NIL policies, in accordance with NCAA guidelines. In theory, this would seem to promote flexibility, but leaving students to navigate disparate rulesets may create more confusion than freedom. 

More importantly, the budget would seem the wrong vehicle for this policy change. The law in question relates to compensation paid by third parties, not tax dollars. This proviso should be struck in accordance with the one subject rule.  

88.6 – Transferring ownership of the Port of Georgetown  

This proviso would transfer ownership of the Port of Georgetown from the State Ports Authority to Georgetown County. The deal, which must be completed by June 2023, would see the site’s land, buildings and equipment delivered “as-is” to the county in exchange for the ports authority getting to keep funds once appropriated for the project. The proviso does not specify a dollar amount, though an article from the Coastal Observer, a Pawleys Island-based newspaper, puts the number at $3.25 million. 

Regardless of whether this is good policy, a deal of this size should be addressed through standalone legislation, not slipped in the state budget. The proviso gives no information on how the port site will be used, nor does it provide spending instructions for the $3.25 million. This should be removed and filed as a bill.  

64.3 – Creating a new law enforcement center   

This proviso would establish a new support and professional development center for police officers within the Law Enforcement Training Council (LETC). The center’s main focus would be on assisting “command staff” and “mid-level supervisors”, but also with helping to promote the recruitment and retention of officers generally. Unfortunately, the paragraph-length proviso does not explain how the center will use the $10 million in non-recurring funds it’s set to receive under the House budget.  

While the intention here is commendable, the state almost certainly doesn’t need this. The Law Enforcement Training Council did not ask for the center in its latest budget request. The agency is, however, expected to receive funding for the items it requested – increased staff salaries and officer dormitory renovations. This proviso should be removed until lawmakers can provide more information that justifies a need for the center.  

1A.75 – Requiring once-failing school districts to provide monthly progress reports  

This proviso would require that after a state of emergency for a failing school district has been lifted and control of the district has been returned to the local school board, the district must provide monthly progress reports to the State Board of Education.  

The issue with this proviso is that it reflects more of a policy change than a set of spending instructions. One could argue that filing monthly reports is a cost for school districts, but neither the proviso nor the budget itself mention this. Additionally, there’s no end date telling districts when they can stop filing reports. This proviso should be removed and filed as a bill.