May 18, 2024

The Nerve Archive

Where Government Gets Exposed

State Budget Process: What the Law Says vs. What Lawmakers Do

The NerveAmid football season and the approaching holidays, all’s quiet on the State House grounds with the S.C. General Assembly out of session until legislators reconvene in January.

But, behind the scenes in state government, the ultimate sausage-making is in full grind as state agencies face a Nov. 1 deadline to present their budget requests for next fiscal year to Gov. Nikki Haley’s office.

The new budget year, 2012-13, begins July 1.

Many state entities already have submitted their spending proposals ahead of the due date. The blueprints can be viewed on the Office of State Budget website.

For taxpayers and supporters of accountable, efficient government, there’s much more at stake in the budget process, however, than whether all state agencies meet next week’s deadline to get their fiscal frameworks for next year in to Haley’s office.

Indeed, when it comes to how the annual state budget is crafted, there’s the way it is supposed to work – as spelled out in the law – and then there’s the way it actually works.

The former is clear, at least in terms of understanding the basics.

The latter? Not so much, as getting a handle on how the budget process really shakes out would seem to depend on who’s explaining it.

But to the point – is the law being followed? Are taxpayers’ best interests being served, as against special interests? And is anyone or any group unduly influencing the process?

These are the key questions in the writing of the state budget.

One senior lawmaker intimately involved in the process says it leaves a lot to be desired.

“It’s just terrible,” says Sen. David Thomas, R-Greenville and a member of the Senate Finance Committee. “It’s absolutely ridiculous what we do to craft a budget.”

Thomas says the main problem is a lack of line-by-line historical analysis to look for waste, such as duplication, excessive staffing and inefficient programs. “There’s no zero-based approach to it,” he says.

In a zero-based model, budgets are built from scratch each year according to priorities, rather than just carrying everything over and making incremental changes based on available revenue.

(The Nerve reported on state legislative efforts to explore zero-based budgeting in a July 2010 story.)

Year in and year out, the budget is the big whopper at the State House.

Sometimes other issues light up the Legislature and overshadow the budget for a while – a five-year sales tax collection waiver for this year, for example. But without fail, the budget is the main concern every legislative session.

Given the face-value importance of the budget, one might assume the process by which it’s drafted is full of transparency signifying accountability.

But, yeah, one might be wrong.

The beginning sections of Title 11, Chapter 11 of the S.C. Code of Laws lay out exactly how the state budget is to be prepared. The process was formalized in the code under Act 130 passed in 1919.

Then, at the end of the 1993 legislative session some three generations later, a major adjustment was made to the modus operandi.

Prior to the change, the Budget and Control Board exercised the power of crafting a recommended state budget. But under a bill the late former Gov. Carroll Campbell signed into law in the latter part of his administration, that authority was transferred to the governor.

The shift occurred as part of a successful push by Campbell, a two-term Republican who was governor from 1987 to 1995, to restructure state government.

“Under the provisions of the newly enacted executive budget legislation, I hereby submit my spending proposals for the 1994-95 fiscal year,” Campbell wrote in a January 1994 letter to the Legislature as a forward to his spending plan for the-then year ahead.

Continuing, Campbell said, “While I have put forth executive budget recommendations in years past, I am pleased that the General Assembly recognized the value of formalizing this process so that future governors will be able to make clear their appropriations priorities at the beginning of your deliberations.”

It is, in fact, a task for which the governors of more than half the states are responsible, according to the National Conference of State Legislatures.

Such an arrangement arguably makes sense, because a governor theoretically looks out for the state as a whole, whereas legislators are more inclined to focus on their districts.

But here in South Carolina, that theory morphs into a different reality, by some observers’ accounts anyway.

The law says the governor prepares the recommended state budget to be presented to the General Assembly based on a survey of state entities, their spending proposals and financial statements furnished by the comptroller general, all due by Nov. 1 each year.

The comptroller general also must provide an estimate of the state’s financial needs by Dec. 1.

Then, within five days of the legislative session starting, the guv is required to tender his or her budget to the General Assembly.

And by five days on from that, the Legislature’s appropriations committees – Senate Finance and House Ways and Means – are to hold joint public hearings on the budget.

“The General Assembly may increase or decrease items in the budget bill as it may deem to be in the interest of greater economy and efficiency in the public service,” the law says.

So how’s that all been working out?

It depends on whom you ask.

Governors since Campbell have varied in their proposed budgets.

Campbell’s successor – Republican David Beasley – and Beasley’s successor – Democrat Jim Hodges – tended to offer generalized spending priorities and recommendations rather than detailed, line-by-line blueprints.

“His (Hodges’) document was school bus yellow and had a school bus on it,” says Office of State Budget director Les Boles.

The Office of State Budget is part of the Budget and Control Board and helps the governor prepare an executive budget in accordance with revenue projections by the state Board of Economic Advisors. The BEA also is an arm of the Budget and Control Board.

Former Gov. Mark Sanford was a budget wonk’s best friend. Sanford presented voluminous executive budgets with unmatched minutiae. See the 2008-09 example here.

The question becomes then, what does the Legislature do with the governor’s budget: consider it carefully; disregard it summarily; or something in between?

“Everybody takes it seriously,” says Thomas, who has an inner-workings perspective on the legislative budget process as a Senate Finance Committee member. “Whether or not they’re going to follow it is another matter.”

Thomas, who has served in the Senate since 1985, points not to a lack of attention to executive budgets as troublesome, but to a dearth of analysis of year-to-year spending specifics. “And I’ll tell you why,” he says. “A lot of special interests have things built into the budget and don’t want them to be analyzed.”

As for those required joint public hearings of the appropriations committees, Thomas says, “I cannot, just off the top of my head, recall that (happening).”

Neither can Jeff Schilz, who was Sanford’s budget and policy director for the final three years of Sanford’s administration. “The only joint (legislative budget action) would be the conference committee after the House has passed the bill and the Senate has passed the bill,” Schilz says.

Sanford’s relationship with many lawmakers, especially legislative leadership, was notoriously acrimonious.

Whether for that reason or legitimate policy differences or other factors, the budget committees largely dismissed Sanford’s proposals “while I was there,” Schilz says.

Kevin Kibler was Sanford’s budget director from 2004 to 2007, and he was a fiscal analyst in the Office of State Budget working with agency spending plans for five years before that.

“The Legislature in this state just feels like the budget is their deal,” Kibler says.

But at the same time, Kibler says lawmakers understand and accept the fact that “the governor gets the first crack” at the budget. “They’re very formal at that,” he says. “They’re very respectful of the governor’s budget, at least at face value.”

Schilz says the reality of the process does not square with how it’s supposed to work. “Really what happens is Ways and Means does their own thing and Senate Finance does their own thing.”

And in the end, the Senate Finance Committee chairman, Republican Hugh Leatherman of Florence County, ends up controlling the entire affair, Schilz says. “I mean Sen. Leatherman drives the budget process,” he says. “That’s where his power comes from.”

As for Haley’s executive budget for 2012-13 and her thoughts on the legislative budget process, her press secretary, Rob Godfrey, did not acknowledge or respond to questions emailed to him Thursday afternoon.

Reach Ward at (803) 254-4411 or

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