Governor addresses Budget Concerns

Believe it or not, I have folks who often ask me “Do y’all (Legislature/Governor) ever talk to each other?” and they ask “How is that done?”. Well, honestly, most folks inside and outside Columbia know the communication (or lack of) between both groups so I won’t rehash or point out who’s to blame (more).

I’ve been in several small-group settings with the Governor in the past few years and he’s actually visited the House Republican Caucus a few times. But in general, there’s not as much communication as one would hope between the Executive Branch and Legislative Branch in our state.

Tonight, I just wanted to share the letter we all received today that outlines the Governor’s views on the proposed House and Senate budgets and signals his possible vetos that are sure to come.

Also: this past weekend, I wrote about some “deal breakers” that, if not worked out in conference, may leave our state without a new budget for next year.

***

May 3, 2010

The Honorable Hugh K. Leatherman, Sr.
Chairman, Senate Finance Committee
111 Gressette Building

The Honorable Daniel T. Cooper
Chairman, House Ways and Means Committee
525 Blatt Building

Dear Chairman Leatherman and Chairman Cooper,

As the House of Representatives and the Senate prepare to meet in conference committee to
reach an agreement on the Appropriations Act for FY 2010-11, I wanted to take an opportunity
to offer our administration’s position on a few of the proposals we would like to see changed. I
offer our point of view knowing how difficult this budget year is, having prepared our Executive
Budget only a few months ago. We are currently facing tremendous challenges, but we all know
that we will confront even greater challenges next year when the FY 2011-12 budget is crafted.
I’d respectfully make four points that I would ask you to consider as you put together the
conference report:

First, we believe the proposal to, once again, rely on so-called “Maybank Money” to balance the
budget is ill-advised. Last year, the General Assembly relied on $48 million from an “Increased
Enforcement Collections” proviso to balance the budget. Fortunately for agencies, but
unfortunately for taxpayers, the Department of Revenue (DOR) was able to collect this money
and none of the agencies that received appropriations through this proviso have gone without
funding. However, this year the General Assembly is asking DOR to collect $100 million under
a similar proviso. Many agencies that provide core functions of state government, such as the
Department of Corrections, PPP, Prosecutors, the Department of Juvenile Justice, and the
Department of Commerce will rely on these funds to operate in FY 2011-12. We find this
proviso troubling for two reasons. First, it is obviously unwise to plan on funding core
government functions with money that we don’t actually have. Second, we have seen no
evidence to suggest that DOR will be able to collect the same amount of money it did last yearlet
alone almost double that amount. As we have mentioned in the past, hope is not a method.
We believe sound budgetary practices should rely on more than hope, and we ask that you
reconsider this proviso.

Next, we would ask that you remove the proposals to raise roughly $45 million in new fees from
the budget. We view these fee increases as backdoor tax increases and believe that raising taxes to cover budget shortfalls is not good policy. Given this year’s budget outlook, shouldn’t we
instead conserve our limited state funds and allocate general fund revenue to only the most
important functions of government? This is particularly true given the $1 billion hole in which
the state will find itself next year. Otherwise, the easy answer next year will once again be to
raise taxes to cover the shortfall. Nonetheless, the Senate’s version of the budget allocates state
funds to programs as it has in the past, and makes up for the funding shortfall for core
government services by imposing significant fees on taxpayers. I don’t believe economic
opportunity will be increased for the people of our state by raising state government’s weight and
cost.

For instance, instead of funding the South Carolina Department of Public Safety with general
fund dollars, the Senate’s version of the budget raises more than $22.7 million in driver’s license
fees to support our Highway Patrol officers and the Department of Transportation. Likewise, the
Senate’sversionofthe budgetcutsthe fundingfor the State’s JudicialDepartment- a co-equal
branch of government – and makes up the difference by increasing court costs by over $16
million. Likewise, the budget supplements the Department of Natural Resources’ budget with
increased recreational license fees. Altogether, the Senate increased fees on South Carolina
taxpayers by nearly $45 million this fiscal year. All of these agencies provide core functions of
state government, and they should be funded with recurring general fund dollars, not increased
fees. At a time when citizens across this state must make tough choices about how to spend their
money, this administration is troubled that the Senate’s version ofthe budget places an even
greater burden on taxpayers.

Third, in a year when nearly every agency’s budget is being slashed considerably, we
respectfully cannot understand the rationale for increasing the Senate’s recurring base budget by
over 52 percent. In last year’s appropriation act, the Senate had a recurring budget of$8,098,075,
but the Senate-passed budget for this year appropriates $12,330,194 – an increase of more than
$4.2 million. This sum does not even reflect the non-recurring $1 million the Senate is slated to
receive for reapportionment.

We recognize that these are tough times for agencies, and we certainly recognize the essential
role that the legislative branch plays in State government. Our office, as well as every other
executive branch office, saw its base budget reduced in this year’s Senate proposal. We are
happy to take these cuts as long as all executive and legislative agencies are treated similarly.
Given the fact that teachers, law enforcement officers, and others are being laid-off or
furloughed, we would respectfully request that the increased appropriations currently budgeted
for the Senate be removed and re-appropriated for other critical areas. Although $4.2 million will
not solve our budgetary problems, it can go a long way toward keeping more teachers in the
classrooms and law enforcement officers on the streets.

Finally, in another section, this budget is again simply spending money we don’t have. Last year
we opposed a portion of the stimulus funds coming down to South Carolina because they would cause more damage to our state’s fiscal house in the future. We all now recognize that when the
budget is being prepared this time next year we will have roughly $1 billion less to work with,
due to the loss of stimulus funds. The $175 million that is included in Part IV will make next
year’s budget hole $175 million deeper, and we have grave reservations about this. We believe a
more fiscally prudent step would be to set aside $175 million to help alleviate the pain caused by
the loss of $1 billion in stimulus funds next year. By setting aside this money the shortfall next
year would be reduced by $175 million.

There are obviously other things our administration likes and dislikes about the budget, but in
keeping each of you abreast of our standing I thought it important to send this letter. Please don’t
hesitate to contact me if we can be of assistance throughout the conference committee process.

Sincerely,
Mark Sanford

cc: Members of The Senate
Members of The House of Representatives