SC Senate Fiscal Fitness Subcommittee Reports Bills Out

The South Carolina Senate Judiciary’s Subcommittee on Fiscal Fitness (Sens. McConnell, Knotts, Malloy, Sheheen, Davis and Shoopman) met in Columbia today (December 7) to, more or less, finalize its recommendations on changes to the Full Judiciary Committee.

Streamlining Commission. The subcommittee discussed, but did not have language on, replicating the Louisiana Commission on Streamlining Government. They reported out S. 10 understanding that it would be amended. There is no doubt that South Carolina could do a lot to improve how state government functions. However, the mission of such a Commission should be just that, better government, and not just looking for ways to cut spending. At some point, South Carolina’s leaders need to figure out the notion of value, bang for the buck, and not just focus on how much we spend. The Louisiana Commission is heavy on “private enterprise” folks, plus some politicians and a representative of the Louisiana AFL-CIO. Sen. McConnell made clear that the “private group” was not going to have a voice, but he wanted both business and consumers.

Sen. McConnell indicated that he was interested in Zero-Based budgeting. A closer look might suggest that no state really adopts pure zero-based budgeting and it has its pluses and minuses. As the legislation moves forward, we’ll be writing more on this.

Budget Stabilization Fund. SC needs a large rainy day fund to get us through hard times by building up reserves in good times. Our General Reserve Fund is too small (5 % of the General Fund) and can only be accessed when there is an actual deficit. The subcommittee reported out Senator McConnell’s S. 3, a proposed Constitutional amendment. The implementing language is in Senate Finance (S. 4 ). This is a wise approach which I commended in testimony to the subcommittee and about which I have previously written.

Recognizing Deficits. For several years, the Department of Corrections ran budget deficits. Last year, Health & Human Services announced a $228 million projected deficit, largely the product of providing an inadequate request to the General Assembly in the first place. Currently, the Budget & Control Board can “recognize” a deficit, allowing a state agency to overspend its budget. Those funds have to be paid out of surplus or covered from the following year’s budget. The Medicaid deficit set the General Assembly into an uproar.

The subcommittee amended S. 372 to replace the existing provisions and assign responsibility for recognizing deficits to the General Assembly by majority vote in each House. The General Assembly will have to find that the impending deficit is both beyond the agency’s control and unavoidable . The amendment also will require agencies to report quarterly on their spending and, if exceeding the expected spending, to notify the General Assembly within 14 days. Health & Human Services waited until after the 2010 General Election.

“Regulatory Reform”. In 2011, 18 regulations went into effect because they were not approved or disapproved by the General Assembly within the 120 day review period. H. 3226, amended, would require every regulation to have an affirmative vote to go into effect. Further, it would prohibit fee increases in the Appropriations bill, requiring that they be in separate legislation. The explanations did not make clear whether you could raise a fee in a regulation, as long as it was voted on.

Sen. Vince Sheheen, who voted against the bill, urged that a single Senator (or 2 or 3) not be able to stop consideration of a regulation, effectively killing it. He indicated that he might support the bill if that was fixed by, perhaps, requiring consideration automatically within a certain number of days.  Agencies already face the terrors of the damned in getting regulations approved. It shouldn’t be made impossible to get any decent regulation through the General Assembly.

“Taxpayer Fairness Act”. Intended to stop the Department of Revenue from expanding the tax code through interpretations, the bill (S. 11) will create a rebuttable presumption that a taxpayer does not have to pay if a tax statute is unclear. We thought that a Law of Nature required that tax statutes be unclear, but we sure can’t wait to see the statutory definition of an “unclear statute”.

Trust Funds. In hard times, the General Assembly has been known to raid trust funds. S. 12, a proposed Constitutional amendment, would prohibit that unless the General Assembly passed a separate law to change the purpose of the trust fund.

When the General Assembly returns, the Judiciary Committee will have a full plate.

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