South Carolina’s state government is on life support.
Left and right, state agencies – Education, Social Services, Transportation, Health and Environmental Control, Juvenile Justice – are saying they cannot do their jobs.
They are underfunded. They can’t fill vacancies. The salaries they pay are not competitive. Work loads are oppressive, causing workers to quit, and threats to the public to go undiscovered until there is a crisis.
South Carolinians are suffering as a result.
Rural schools fail their students. Children die while in the care of the state Department of Social Services. Crumbling roads cost some S.C. drivers their lives and, according to a national research group, other residents about $3 billion a year. Dams collapse, causing hundreds of millions in damages. Violent youths riot, torching part of a state facility.
While South Carolinians suffer, the state’s leaders fail to fix the problems. And they are not held accountable.
Gov. Nikki Haley and some lawmakers blame the lingering impact of the Great Recession. Others say years of devotion to the idea that government is too big have resulted in a government that is too small to support the state’s growing population.
Since 2007-08, South Carolina’s general fund spending has grown by only 6.8 percent. However, that increase has been more than offset by inflation, up about 15 percent during that same period.
Meanwhile, South Carolina’s population has exploded by 11 percent, a population that state government tries to serve with 5,000 fewer workers than it had almost a decade ago.
The result is a state government that spends less per resident to provide services – almost $300 a resident less, in inflation-adjusted dollars – than it did nine years ago, in 2007-08.
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How did we get here?
The recession took its toll. But so, too,
has a one-party political system controlled by a small fraction of the state’s residents, GOP primary voters who focus on lower taxes.
Even when the Republican bosses of South Carolina agree taxes must be increased to fix a problem – the state’s crumbling roads, for example – they are unable to act. To OK a gas-tax hike, the state’s GOP governor demands a larger income-tax cut. The GOP-controlled House and Senate debate the structure of roads agencies for more than a year and, finally, facing re-election, legislators agree to spend money from the state’s general fund. That money, they agree, won’t be enough to fix the roads problem but will come at the expense of other troubled state agencies.
That is state government today, licking its financial losses after the recession and paralyzed by politics.
The question: What can be done to rebuild S.C. government so that it works for S.C. residents?
Rise of the GOP, impact of the Great Recession
When Mark Sanford took office as S.C. governor in 2003, all of Palmetto State government – the S.C. House, state Senate and governor’s mansion – were controlled by Republicans for the first time.
Sanford entered office preaching limited government. Time and again, he said the size of government – in dollars – should not increase more than the sum of inflation and population growth, or 6 percent a year, whichever was less.
Two years later, then-S.C. House Speaker David Wilkins, R-Greenville, touted the success of South Carolina’s Republican revolution. Adjusted for inflation, state spending had increased by less than 4 percent since Republicans had taken control of the S.C. House, a decade earlier in the early ’90s.
Said Wilkins, “We changed the theme from, ‘How do we generate more revenues to grow government?’ to ‘How do we reduce revenues to shrink government?’”
Republicans also continued their push – started in the late ’80s under late GOP Gov. Carroll Campbell – to give the governor control of state agencies. That, they argued, would make government more business-like and efficient. Also, if a state agency that reported to the governor blew up, voters would have someone to hold accountable – the governor.
Three years later, the Great Recession struck, slashing state revenues and the size of state government.
State general fund spending plummeted, falling to $5.1 billion in 2010-11 from $6.6 billion in 2007-08. Agencies that depend on the general fund – including K-12 education – saw their budgets whacked. Per-pupil K-12 spending in the general fund dove, plummeting to $1,880 in 2011-12 from $2,578 in 2008-09.
In the wake of the recession, state agencies that could raise fees fared better than agencies dependent on the general fund. For instance, colleges dramatically increased the amount they charged for tuition to offset the loss of state money.
Today, it is no secret that state agencies dependent on the general fund are underfunded.
Several state agencies – including Health and Environmental Control, Juvenile Justice and Social Services, agencies now controlled by the governor – have struggled with inadequate funding for years.
▪ Education. In the early 1990s, South Carolina’s rural schools sued the state, alleging they were underfunded. In 2014, the S.C. Supreme Court agreed. Seeking re-election in 2014, Republican Gov. Nikki Haley, who grew up in rural South Carolina, took up their cause. This year, she decried decaying rural schools – where, she said, roofs leak and mold grows in unsafe structures.
▪ Social Services. After several children died while in the care of Social Services, a legislative investigation two years ago revealed some workers at the agency were carrying caseloads more than twice the nationally recommended norm. Social Services leaders also told legislators that, because of low pay, they could not hire enough new workers to replace the employees who were quitting because of overwhelming work loads.
▪ Transportation. For two years, legislators have debated growing complaints about the condition of South Carolina’s crumbling roads and bridges. Road-repair advocates have pointed to a solution: Raise the state’s gas tax, the third-lowest in the nation, so that it is closer to the higher gas taxes of neighboring North Carolina and Georgia, giving the Department of Transportation more money to maintain roads. But the Republican lawmakers who control the Legislature – wary of defeat in low-turnout primaries, dominated by GOP activists who loathe tax hikes – have kicked the can down the road. For two sessions, legislators have debated the structure of the state’s road agencies and raided the state’s general fund – money that otherwise could go to schools or Social Services – to make small down-payments on road repairs. Raiding the general fund – normally not used to pay for roads – is a stop-gap measure, not a solution, GOP leaders acknowledge. But, they add, a long-term solution will have to wait until next year.
▪ Health and Environmental Control. Last October, 31 state-regulated dams failed in a historic rain storm, causing tens of millions of dollars in damage. The collapses followed shrinking spending on dam inspections by the Department of Health and Environmental Control. For years, that program’s budget – one of the most poorly funded in the country, according to the Association of State Dam Safety Officials – hovered around $200,000 or less. After October’s dam-busting rains, DHEC asked for $595,000 more to increase its dam-safety staffing.
▪ Juvenile Justice. Earlier this year, a Columbia detention facility for youth offenders was wracked by riots. In response, Department of Juvenile Justice leaders told legislators that trouble recruiting and high turnover had led to a large number of vacancies among corrections officers who were supposed to control the facility. Among the vacancies: police chief and an anti-gang expert.
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Governing from crisis to crisis
After a crisis, lawmakers and Haley have agreed to spend money.
Last year, for example, legislators agreed to boost the pay of Social Services caseworkers. This year, almost three decades after the rural schools sued, the S.C. House agreed to borrow money to help those schools build new facilities. Senators may do so next year. This year, legislators also are promising to increase the pay of juvenile corrections officers, more money to add dam inspectors and proposing increased spending on roads, albeit from the general fund budget.
“There seems like there’s always a crisis somewhere, and that’s the one that gets the attention first,” said state Sen. Harvey Peeler, R-Cherokee, a member of the Senate’s budget-writing Finance Committee.
That’s part of the problem, said state Rep. Gilda Cobb-Hunter of Orangeburg, ranking Democrat on the House’s budget-writing Ways and Means Committee.
“We are reactionary as a Legislature,” said Cobb-Hunter. “We don’t do enough prevention spending. We wait until a crisis.”
After crises at her cabinet agencies, Gov. Haley said she has reacted swiftly to find out what went wrong and how best to fix it. Lawmakers have agreed to spend more money at her recommendation, she says.
In an interview with The State newspaper, Haley said it’s her responsibility to take care of her cabinet agencies. “I have to take care of them. I’m very hands-on. If there’s a crisis, I have to lead on how to handle it.”
Republicans blame problems at state agencies, in part, on waste and mismanagement. The solution, they add, is not more spending but more effective management of those agencies, including those now controlled by fellow Republican Haley.
“You got to have people at the head of the agency who are capable of managing people and money, and they’re paying attention to things,” said Senate Majority Leader Shane Massey, R-Edgefield.
Others point the finger directly at Haley.
Asked about failures at state agencies, Senate President Pro Tempore Hugh Leatherman of Florence, a Republican but Haley foe, asked, rhetorically, “The agencies that have had problems – are they cabinet agencies?”
Haley said she accepts responsibility for how her agencies perform. Asked whether it’s her responsibility to prevent crises from occurring, Haley said, “That’s my hope ... to prevent something bad from happening.”
But, she added, “When something happens, it’s not about the problem. It’s how quick are we going to fix it.”
Democrats say Republicans are starving agencies to avoid raising taxes that could cost them elections.
“So many of our state agencies are now dysfunctional – a disgrace,” state Sen. Vincent Sheheen, D-Kershaw, said recently. “I’m very sad about our state government. Sixteen years of Sanford and Haley have pretty much broken it.”
“Republicans in the State House lack the backbone to get the job done,” said House Minority Leader Todd Rutherford, D-Richland. “And why?
“Because they are responsible to 15 percent of the people who live in their districts, that 15 percent that vote in primaries. That is the reason why they are scared to death to do their jobs.
“We can educate our children, fully fund local government and pay for our roads at the same time if we simply do our jobs. We are asking that Republicans be more concerned with doing their jobs than keeping their jobs.”
Needed: Priorities, not spending?
Lawmakers have spent most of this year talking about how
to spend a windfall in tax dollars that added more than $1 billion to the state’s general fund, sending it to a record high.
The general fund – where individual and business income taxes and sales taxes are funneled – has grown by 6.8 percent since 2007-08, the fiscal year before the Great Recession. But that increase has been outpaced by growth in the state’s population – 11 percent – and inflation – totaling about 15 percent.
Put another way, through its general fund, the state was spending $100 to pay for services for 100 residents in 2007-08. Today, it is spending about $91, in inflation-adjusted dollars, to pay for services for 111 residents.
One S.C. economist attributes the unwillingness of voters and state leaders to support more spending to a shift in attitudes about government, starting in the 1980s.
“It goes back to the emergence of an anti-government ideology that government is bad,” said Holley Ulbrich, a retired Clemson University economics professor and senior fellow at the Strom Thurmond Institute. “Government isn’t bad.
“Government just is.”
Ulbrich said talk about making government more efficient goes only so far.
“Service industries (including most state government services) have limited potential for increases in productivity,” Ulbrich said. “How do you increase the productivity of a public-school teacher? Put more kids in their class?”
Technology has improved, making some jobs more efficient, the economist said. “(But) we’ve also demanded more accountability, more security,” which increases the demand for more workers.
“There’s only so much blood you can get out of a turnip. There’s only so much work you can get out of an employee, and that hasn’t changed a lot.”
But Senate Majority Leader Massey said the state should not be hasty to increase its spending.
“I don’t think that the population growth by itself necessarily means you’ve got to have government growth,” he said.
Instead, Republicans say the state needs to set priorities, rather than spend more money.
Lawmakers are part of the problem, says former Gov. Sanford. Their narrow focus prevents wider discussions of shifting priorities, added the Republican, now a congressman from Charleston. “Everyone guards their territory very jealously.”
Some agencies – including Juvenile Justice and Social Services – have a tough time winning more state money because they lack the powerful lobbying interests that other agencies can call on, Sanford said.
“There’s no constituency for poor, impoverished kids,” he said. “They have no one fighting for them.”
There also is little focus.
For example, in 1985 and then again in 2006, while Sanford was governor, the Legislative Audit Council found Social Services had no policy for limiting its workers’ caseloads. The council found the same problems again in 2014.
Lowering already low taxes
One focus, however, has been consistent – lowering taxes.
Last year, Haley said she would support a gas-tax increase to help pay for road repairs only if lawmakers agreed to reform highway spending and cut income taxes by a far larger amount. She billed it as the largest tax cut in state history.
In an interview with The State earlier this month, Haley said a tax cut was the right thing to do, given the amount of money lawmakers had on hand to spend.
“When you have a billion dollars in new money last year, and $1.3 billion in new money this year, what was irresponsible was we overcharged the taxpayers,” Haley said. “It doesn’t mean, ‘Oh, quick, spend it. ... Which agencies aren’t at the (spending) level prior to 2008?’
“You say, ‘How can we give it back to the people so that they can spend it – so that they can improve the economy?’”
Haley also says S.C. income taxes remain too high.
“We are now the highest income tax state in the Southeast,” Haley added. “I am feeling it in trying to recruit jobs, in talking to CEOs. ... They always ask about the 7 percent tax (rate).”
Since the recession, the General Assembly has put a priority on property tax relief, which has risen by more than 20 percent, or $111 million.
“We take almost $600 million off the top (in state spending) for the property-tax relief fund,” Democrat Cobb-Hunter said. “A few years ago, we, as a General Assembly, said, ‘You know what? It is more important to us that we provide taxpayer-homeowner relief than it is for us to fund education or fix our roads.’ That has become a sacred cow.”
Earlier this month, Senate leader Leatherman put the cost of tax relief even higher, telling senators the budget proposal for the state’s fiscal year that starts July 1 includes about $1.3 billion in tax relief, most of it for homeowners.
Still, many South Carolinians think they are overtaxed or taxed enough already, the acronym of the GOP’s Tea Party faction.
They are not, when compared to residents of other states, according to the conservative-leaning Tax Foundation.
The Tax Foundation issues an annual report, ranking states –1 through 50; the higher the number, the lower the taxes – on taxes.
South Carolina ranks in the top half only in “sin” taxes, including its taxes on beer, wine and liquor.
▪ The state’s overall tax burden for state and local government ranks 42nd. State individual income tax collections rank 35th of 43 states with such a tax.
▪ Corporate tax collections rank 39th of 46 states with such taxes.
▪ Sales tax collections rank 33rd of 46 states with such taxes.
▪ Property taxes rank 46th.
Despite those comparatively low taxes, more cuts could be on the way.
Lawmakers now are considering a proposal to exclude military retirement benefits from state taxes. Estimates say the bill could shave $18 million a year from the state’s tax revenues, money that otherwise could go to roads or schools.
Instead of cutting more taxes, Cobb-Hunter says the state should look at eliminating some of its hundreds of tax exemptions, which reduce the state’s tax revenues by $3 billion each year.
Those tax exemptions have been studied at least three times in recent years. Each time, the study recommended that many of the exemptions be eliminated. Most recently, in 2010, a commission recommended repealing, amending or modifying more than 60 of the state’s 80-plus tax exemptions. But, as happened at the end of the previous studies, legislators did not act.
“Everybody starts screaming and hollering, ‘My ox is being gored,’ ” Cobb-Hunter said. “It’s time to gore some oxen.”
Democrat Cobb-Hunter says the GOP-led Legislature has done a bait-and-switch on taxpayers. Lawmakers have cut some taxes but raised the regressive sales tax as well as fees and fines – for everything from cars to fishing licenses, she said.
‘Asking ... a whole lot more ... for less’
Collected outside the general fund, fees and fines, which includes college tuition payments, have risen by 40 percent since 2007-08 – six times faster than the tax collections that make up the general fund.
But those higher fees do not help state agencies that depend on the state’s general fund for money.
Several – including Health and Environmental Control, Juvenile Justice and Social Services – have told legislators they need more money and staffing after cutbacks in the wake of the Great Recession.
Today, however, the general fund pays for almost 15 percent fewer employees – 5,015 fewer positions – than it did in 2007-08.
“We are asking state employees to do a whole lot more work for less,” Cobb-Hunter said. “How can you do justice to a (Social Services) caseload that is ... twice what the recommendation is? Our workers are spread too thin.”
And state workers are paid too little, leaders at Juvenile Justice and Social Services have told lawmakers.
“Children are dying because we’re not paying enough (to retain caseworkers),” House Minority Leader Rutherford said.
Democrat Rutherford said the heads of state agencies that report to Republican Gov. Haley – including Juvenile Justice and Social Services – have been afraid to ask for more money.
“The reality is what we kept hearing from agency heads is that they were told, by the governor’s office, not to ask for more money,” Rutherford said. “They don’t want to look like the governor is asking for more money that she is unwilling to pay for by raising any taxes or fees.
“As Gov. Haley exits office, I hope this hangs around her neck like an albatross with what she did to the government and the state of South Carolina. Because all she did was try to underfund everything for years to say she never raised taxes, and we’re going to be paying for that the rest of our lives.”
Even some Republicans agree.
“The previous governor – Sanford – and maybe this governor (Haley) would not allow the cabinet agencies to ask what they felt like they needed,” Senate leader Leatherman said earlier this month.
Haley said she never tells agency heads not to ask for more money.
Each year, Haley says she sits down with the directors of cabinet agencies to come up with a “game plan” for their agency’s budget and how to make improvements.
“We’re very involved in what we’re going to work on,” Haley said of her staff. “When we submit the budget, there is no reason to ask for more money because we came up with it together.
“Ask my directors,” she said. “If I threw money at them, they don’t necessarily want money. They want results, because that’s what they care about.”
Yet two of Haley’s cabinet directors – at Social Services and Juvenile Justice – testified before legislative committees that their staffing are not adequate. After last fall’s flooding, another agency the governor controls – Health and Environmental Control – asked for more money to double the staffing of its dam-safety program.
‘Look at how we do business’
Part of the solution?
Time, says Senate leader Leatherman, the Florence Republican who also heads the Senate budget-writing committee.
Coming out of the recession, Leatherman notes the state had less money to spend. “So, we had to do more with what we had.”
However, if the state’s economy continues to grow and create jobs, spending might get back to prerecession levels. But, Leatherman added, it won’t be next year or in the short term.
Other Republicans insist higher spending is not the answer. Instead, legislators need to do a better job of prioritizing state spending and overseeing state agencies, they say.
“There are certain things money can’t buy,” said Haley, adding she’s been a “hands-on” executive, meeting with agency heads, getting “on the ground” at state agencies to talk to front-line workers and helping leaders improve programs.
“I show up. I find out what the problem is. If there is ever an incident that happens, I sit down and find out what’s happened.”
Haley described her involvement at Social Services after child-welfare advocates raised questions about children dying while in the agency’s care. She said she took a similar course of action at Juvenile Justice after recent riots.
“I don’t look as much at the dollar as I look at the result,” she said. “We have 15 percent less state employees than we had when I started.
“To me, they’re working smarter.”
GOP lawmakers say they are taking a similar approach.
Last year, the General Assembly formalized its oversight role, starting House and Senate
committees to review all state agencies, a process that could take years, but should help lawmakers better determine priorities.
“We need to look at how they do business,” Senate Majority Leader Massey said, referring to state agencies. “And figure out where the services are going to be.”
Now, lawmakers do not get a full view of agencies and their spending during annual budget meetings, Massey said.
“It’s limited to a brief discussion in a subcommittee hearing about: How much money do you need to do certain things?” Massey said. “We haven’t really gotten into policy very much. We haven’t looked under the hood very much. It’s a long-term process to get that changed, because it’s a culture change.”
Better oversight would give lawmakers more knowledge about the agencies requesting money, Massey said. And the result could require some investment, he added.
“We’ve got to do a better job of paying our employees and ensuring the sustainability of the retirement system and the benefit packages that we offer,” Massey said. “But I don’t know that that means the government needs to bring in more money from the citizens. It may mean that we just need to do a better job of prioritizing what we have.”
House Ways and Means Committee chairman Brian White, R-Anderson, said he is conducting a review of budget priorities to avoid shortfalls in case of another economic downturn. He expects to finish in time for next year’s session.
“We are trying to get away from (being) reactionary,” said White, whose committee writes the House’s version of the state budget. “A lot of it goes around salaries. Instead of hiring more, let’s pay what we have.
“State agencies say, ‘We need more people,’ ” said White. “That might be the case, but let’s look at the turnover rate. Let’s retain them.”
Already, White say he knows one area where more money is needed.
“Next year, you’re going to have to look at the gas tax,” he said. “You’re going to have to look at other things to get a steady revenue stream” for road repairs.
‘We have failed the people’
Democrat Rutherford says that sounds like more of the same.
For 15 years, Republicans have talked about running government more like a business, and eliminating waste and fraud.
“I have challenged those people to find out where those inefficiencies are, to find out where that fraud is,” Rutherford said. “Is government perfect? Absolutely not. Is private industry perfect? Absolutely not. Perfection is found only in God. For the rest of us, we have to suffer and make do with what we have. ...
“We have failed the people of South Carolina,” he said. “Right before the Great Recession and now, we have all this money and what did we do? We let taxpayers down. We raided the general fund to pay for roads, and now we can’t pay for anything else.”
Democrat Cobb-Hunter says the state should raise taxes.
“If people in this state are satisfied with driving on bad roads, with having poorly educated children, it will never change,” she said. “What the public has got to understand is that they have to hold us accountable and stop falling for the okie-doke.”
Former staffer Andrew Shain also contributed
First in a monthly series: A decade after the Great Recession, South Carolina state government is reeling as agency after agency says it no longer can do its job. Why? And what can be done?
SC’s lost decade: The findings
The last decade has seen SC’s population boom, but its general fund grow only slightly – an increase overwhelmed by inflation. The result? State agencies unable to do their jobs, critics say.
Growth in South Carolina’s general-fund budget – made up of personal and corporate income taxes and sales taxes, which pay for schools and other state services – after midyear cuts in 2007-08, the year before the Great Recession struck, to 2015-16
Growth in the state’s population during that period
Growth in inflation since 2007-08, erasing all that growth in the state’s general fund budget
The result? General fund spending for each South Carolinian has dropped – to about $1,440 in 2015-16 from about $1,500 in 2007-08; adjusted for inflation, spending now is about $1,220 per resident
When saving $25,000 cost $20 million
In some cases, saving a dollar has cost S.C. taxpayers tens of millions.
In 2012, for example, the state Department of Revenue was hacked, compromising the tax returns and identities of millions of current and former S.C. residents.
In the wake of the nation’s worst data breach of a state agency, legislators were told the Revenue Department missed several chances to head off the hackers.
▪ The Revenue Department did not have a computer security chief for nearly a year before the hacking incident. The agency said it could not attract candidates for the post, which paid $100,000 a year, about half of what the private sector pays.
▪ A dual-password system, costing $25,000, also likely would have prevented hackers from stealing tax data belonging to 6.4 million consumers and businesses.
▪ The Revenue Department considered encrypting its tax data, making it safe, in 2006, but balked at the $5 million price tag.
Any – or all – of those precautions would have been cheaper than the more than $20 million the state subsequently has spent on fixes, including credit monitoring for S.C. taxpayers, who still face a lifetime of identity insecurity.
“At Revenue, we should have been paying attention to security risks,” said new Senator Majority Leader Shane Massey, R-Edgefield. “That’s not necessarily a money issue. That (security) ought to be one of your top priorities.”
SC’s lost decade: Winners and losers
A series of state agencies now are saying they can’t do their jobs because of underfunding. But there have been budget winners since 2007-08, too. A look at some of the winners and losers (unadjusted for inflation of about 15 percent during that period):
Total increase, counting federal and state money, for the state Department of Transportation. Funding for the agency has increased to $1.6 billion from $1 billion, including a $49.9 million increase in money from the state’s general fund.
$111.2 million increase in spending in the state’s general fund for property tax relief
$182.7 million increase in general fund spending for Medicaid, the joint federal-state insurance program for the poor and disabled
Increase – to $104.5 million from $102.7 million – in general fund spending for Juvenile Justice, the state’s corrections system for juveniles; however, total spending by the agency, including federal money, has decreased by 8 percent
Drop in general fund spending for the S.C. Department of Social Services, the agency responsible for – among other things – the safety of endangered children
Drop in per-student state funding of K-12 education to $2,200 in 2015-16 from $2,476 in 2007-08. While they now get less money per pupil, K-12 schools have about 37,000 more students today than in 2007-08. K-12 schools do get money from other sources, including the federal government, a penny added to the state’s sales tax for schools in the ’80s and a small part of the profits from the S.C. lottery, started in 2002.
Drop in general fund spending for the state Highway Patrol, down $5.6 million from 2007-08; the patrol has 17 percent fewer troopers on the road today than in 2007
Fewer state employees paid from the general fund, down 5,015 from 33,721 in 2007-08; other state employees are paid by federal dollars and from fees and fines, including tuition payments
Drop in general fund payments to local governments – counties and cities – for services they provide for the state
Drop in general fund spending on higher education, down $207 million from 2007-08; S.C. colleges do have other sources of income, including federal grants and tuition and fee payments by students
Drop in general fund spending for the S.C. Department of Health and Environmental Control, the agency responsible for – among other things – regulating dams; however, total spending at the agency, including federal money, has increased by 4.1 percent
SC’s Republican revolution
Republicans have controlled South Carolina’s Legislature and Governor’s Mansion since 2003. During that period, the GOP has had three consistent goals – consolidating its power, giving the governor more power and lowering taxes.
Republicans took control of the S.C. House in 1994. Today, they hold almost two-thirds of the seats there.
The GOP took control of the Senate in 2001. Today, they hold 24 of 46 seats.
The Governor’s Mansion has been held by Republicans since 2003, and 25 of the past 29 years.
Meanwhile, S.C. Democrats lost their last statewide office – Education superintendent – in 2010.
Give the governor more power
Starting with the late Carroll Campbell, Republicans slowly have won battles to give the governor more control – and the Legislature less control – over the administration of state government.
The vision is twofold.
No. 1. Legislators would give up direct control over agencies and, instead, exercise an oversight role, ensuring the agencies were doing what they are paid to do. However, legislators only established oversight committees last year.
No. 2. Voters would have someone – the governor – to hold directly accountable for the promised more efficient, business-like operation of state agencies.
Has the restructuring produced the promised results?
Three of the state’s most troubled agencies – Health and Environmental Control, Juvenile Justice and Social Services – now are controlled by the governor. But voters have not held the governor – recently re-elected – accountable for those problems. Also, legislators this year are debating proposals to give the governor control of another troubled agency, the state Transportation Department.
However, legislators can claim their oversight helped uncovered many of the problems at Social Services and Juvenile Justice.
Lowering or restraining taxes
Shortly after his election in 2002, Republican Gov. Mark Sanford began pushing the idea of a cap on state taxes. Looking to slow the growth in state government, Sanford said state taxes should not go up more than 6 percent a year or the sum of population growth plus inflation.
Since 2007-8, the state’s general fund spending has gone up a total of 6.8 percent, less than 1 percent a year. Meanwhile, the state’s population has grown by 11 percent and inflation has totaled about 15 percent. Combined the two have averaged about 3 percent a year over the last nine years.
By Sanford’s standard, that’s a brilliant success, particularly considering that tax relief grew 20.8 percent during that period.
Taxed enough already?
South Carolinians might think they are overtaxed. But, compared to residents of other states, they are not, according to a 2015 study by the conservative Tax Foundation. A look at how South Carolina’s taxes rank versus the other 49 states (the higher the rank, the lower the taxes, comparitively):
State and local tax burden as a share of state income. In South Carolina, that burden per person was $2,784. Nationwide, the average was $4,217.
State tax collections per person were $1,836. Nationwide, the average was $2,689.
S.C. individual income tax collections per person average $707 vs. a national average of $983. (Seven states do not have individual income taxes, so the ranking was 1-43.)
State and local corporate income tax collections per person in South Carolina were $54. Nationally, the average was $157. (Four states do not have corporate income taxes, so the ranking was 1-46.)
Sales tax collections per person averaged $674 vs. the national average of $809. (Four states do not have sales taxes, so the ranking was 1-46.)
Property taxes paid as a percentage of the value of a owner-occupied home in S.C. The national average was twice as high.
7th, 17th and 27th
“Sin” is heavily taxes in S.C. For instance, the state’s excise tax on beer was the nation’s 7th highest. The S.C. excise tax on wine ranked 17th. And the excise tax on liquor ranked 27th.
Understanding SC’s budget
The state of South Carolina’s budget is complex. Start with the question: How big is it? The answer is not simple. S.C. legislators and the state’s governor spend six months every year debating the state’s general fund budget, made up largely of revenues from corporate and individual income taxes and the state’s sales tax. But the state also gets money from the federal government, and from fines and fees. And those revenues exceed the general fund. A look at the state’s three revenues streams, what they include and how they have changed since 2007-08.
Increase in the general fund – made up of corporate and individual income taxes, and 4 cents of the state’s 6-cent-on-the-dollar sales tax. The general fund totaled $7 billion in 2015-16 and made up 29 percent of total spending, down from 33 percent in 2007-08.
Increase in federal funds, including federal money for Medicaid, education and transportation. Federal spending totaled $8.1 billion in 2015-16 and made up 33 percent of total spending, down from 34 percent in 2007-08.
Increase in “other funds,” including court fines, hunting and driving licenses, park admission fees, college tuition payments, the education lottery, part of the sales tax and a host of other sources. Other funds totaled $9.4 billion in 2015-16, making up 38 percent of total spending, up from 33 percent in 2007-08.
Increase in total spending – general funds, federal money and “other funds” – to $24.5 billion in 2015-16 from $20.3 billion in 2007-08. During that same period, South Carolina’s population increased 11 percent and inflation totaled about 15 percent, or a combined 26 percent.