If you want to see two very different pictures of the state budget, you need look no further than Gov. Nikki Haley’s financial “summit” last week.
Wednesday’s meeting was a briefing by state officials to representatives of Moody’s Investors Service, a national credit-rating agency that earlier warned it might lower South Carolina’s top AAA bond rating if the federal government doesn’t raise the national debt ceiling.
During the meeting, Les Boles, longtime director of the Office of State Budget, and Chad Walldorf, appointed in January by Haley as chairman of the S.C. Board of Economic Advisors, discussed the state budget.
They weren’t exactly speaking from the same playbook, however, though both of their offices are under the S.C. Budget and Control Board, the central administrative agency for state government.
In a rare admission by a state financial official, Walldorf said the state budget was far bigger than what most S.C. lawmakers typically talk about.
“While the focus from the media and often in the Legislature tends to be on general funds, our entire budget is much larger than that – over $21 billion this past year,” Walldorf said.
Walldorf said while general fund revenues in recent years were flat or declining amid the Great Recession, the state’s total budget – made up of federal and “other” funds in addition to general funds – has been growing.
“There have been fairly consistently increasing revenues over the past decade in South Carolina,” said Walldorf, whose office is responsible for making official general fund revenue projections for the state budget.
In contrast to Walldorf’s presentation, Boles, who spoke immediately afterward, never specifically acknowledged the total budget, instead focusing mainly on the general fund budget, which makes up less than a third of the total budget.
“Overall, we’re going to be spending the same amount in (fiscal year) 11-12 that we did in (fiscal year) 10-11,” he said, citing an approximate $6.9 billion figure comprised mainly of general fund revenues, plus about $900 million from two sources of “other” funds – proceeds from the state lottery and a penny of the 6-cent state sales tax earmarked for education.
Boles said general fund revenues declined from December 2007 until January 2010, noting that the state’s unemployment rate during the period rose by five percentage points. Walldorf, however, pointed out that revenue losses were offset in part by proceeds from the lottery and the penny of the state sales tax.
“Things have not been as bad as they may have appeared,” Walldorf said.
Boles said general fund revenues have picked up in recent months with a gradual improvement in the state’s unemployment rate. The unemployment rate for June, however, rose to 10.5 percent from 10 percent the previous month; the national unemployment rate for June was 9.2 percent, according to the U.S. Bureau of Labor Statistics.
“If we don’t have any major shocks to the national economy, our revenues will continue to grow,” Boles said, describing a projected 1 percent growth in general fund revenues for this fiscal year as “understated.”
Walldorf said annual state sales tax collections are up approximately 2 percent, while individual income and corporate income tax collections are up about 9 percent and 50 percent, respectively.
Boles said the recent spike in general fund revenues, combined with a 50-cent-per-pack increase in the state cigarette sales tax and cuts in the state’s Medicaid program, allowed lawmakers to erase an approximate $800 million budget gap for this fiscal year, which started July 1.
And Boles left open the possibility of lawmakers having tens of millions in extra general fund revenues to play with this fiscal year if current growth rates hold up.
“We expect when the (S.C.) comptroller general closes his books (on the fiscal year that ended June 30), we will have a real surplus that will then be available – not only a reserve for (fiscal year) 11-12, but a surplus the General Assembly can possibly appropriate for 11-12 as we go forward,” he said.
The Whole Budget Pie
Ironically, though Boles didn’t mention the total budget during Wednesday’s meeting, his office earlier last month released a budget document to The Nerve, known as a “summary control document,” which for the first time breaks down the total budget by the three main pots of money – state, federal and other funds – appropriated to each agency by the General Assembly.
The document, however, is not posted on the Office of State Budget’s website or anywhere else online for that matter, as pointed out earlier this year by The Nerve.
The General Assembly provides budget information online, but, as reported earlier by The Nerve, its website doesn’t contain details of all sources of state funding, other and federal funding by agency.
Boles did not respond last week to written questions from The Nerve about why the summary control document is not made available online. The Nerve has posted the document with this story.
The total budget for this fiscal year, according to the summary control document, is $22.3 billion, made up of about $8.4 billion in federal funds (38 percent of the total), $7.9 billion in other funds (35 percent of the total), and $6 billion in general funds (27 percent of the total).
Four state agencies – the departments of Health and Human Services, Education, Social Services and Transportation – have total budgets of at least $1 billion. The University of South Carolina’s Columbia campus comes close with a budget of $907 million, though when the university’s seven other campuses are included, the total is more than $1 billion.
Boles during Wednesday’s meeting said Medicaid costs along with K-12 and higher education expenses are the main “drivers” of the state budget.
Besides the proceeds from the state lottery and 1 cent of the state sales tax, other funds include such things as college tuition, the state gasoline tax and various fees and fines by state agencies.
The state funds include a $71 million surplus from fiscal year 2009-10 and a projected approximate $174 million surplus from last fiscal year. Those amounts allowed lawmakers through a budget proviso (90.18) to earmark $146 million in one-time money for relief to businesses paying higher unemployment insurance rates, and an extra $56 million for base student funding for K-12 school districts.
The summary control document also includes other state funds not listed in the Legislature’s online budget summaries. One of the biggest pots in that category: $107 million doled out to 38 agencies, divisions, colleges and universities from the state’s rainy-day capital reserve fund.
Some of the biggest expenditures from that fund include:
- $13 million earmarked to the S.C. Technical College System for specialized worker training for companies that locate or expand in South Carolina, including Fortune 500 firms such as Boeing; and
- $10 million to the Department of Commerce, split evenly between a “deal closing fund” and grants to regional economic development organizations, several of which, as reported earlier by The Nerve, have or had ties to state lawmakers.
Budget Breakdown
The Nerve reviewed the summary control document and ranked agencies by how much they will receive in various categories. Following is a breakdown of the top-10 agency appropriations in the main funding categories:
Total Funds*
- Department of Health and Human Services – $5.87 billion;
- Department of Education – $3.36 billion;
- Department of Social Services – $2.22 billion;
- Department of Transportation – $1.13 billion;
- University of South Carolina (Columbia campus) – $907.2 million;
- Clemson University – $805.4 million;
- S.C. Technical College System – $643.1 million;
- Medical University of South Carolina – $643 million;
- Department of Disabilities and Special Needs – $574.8 million; and
- Department of Health and Environmental Control – $553.2 million
Federal Funds
- Department of Health and Human Services – $3.94 billion;
- Department of Social Services – $1.93 billion;
- Department of Education – $711.5 million;
- Department of Health and Environmental Control – $272.5 million;
- Department of Employment and Workforce – $186.1 million;
- Medical University of South Carolina – $176.9 million;
- University of South Carolina (Columbia campus) – $161.3 million;
- S.C. State Housing Finance and Development Authority – $153.8 million;
- Department of Vocational Rehabilitation – $105.3 million; and
- Clemson University – $89.6 million
Other Funds
- Department of Transportation – $1.13 billion;
- Department of Health and Human Services – $763.6 million;
- Clemson University – $650.6 million;
- University of South Carolina (Columbia campus) – $641.8 million;
- Department of Education – $625.2 million;
- S.C. Technical College System – $456.7 million;
- Medical University of South Carolina – $410.3 million;
- Department of Disabilities and Special Needs – $407.6 million;
- Department of Mental Health – $223.3 million; and
- Department of Health and Environmental Control – $191.2 million
State Funds*
- Department of Education – $2 billion;
- Department of Health and Human Services – $1.16 billion;
- Department of Corrections – $353.7 million;
- Department of Disabilities and Special Needs – $166.7 million;
- Department of Mental Health – $140.2 million;
- S.C. Technical College System – $130.4 million;
- Department of Social Services – $119.2 million;
- Commission on Higher Education – $108.9 million;
- University of South Carolina (Columbia campus) – $104 million; and
- Department of Juvenile Justice – $89.47 million
*Rankings did not include the Department of Employment and Workforce because an additional $146 million in projected surplus general funds for unemployment insurance rate relief was not listed in the agency’s budget category, though the amount was figured in the overall state budget calculations.
Reach Brundrett at (803) 254-4411 or rick@thenerve.org.