The General Assembly’s failure is two-fold—they failed to produce a timely budget and,­ combined with gubernatorial vetoes issued late Thursday, have thrown school districts and at least two state agencies into uncertainty. Governor Nikki Haley’s vetoes would eliminate $10 million of the $49 million appropriated to pay for 2% raises for teachers and funding for the Arts Commission and the Sea Grants Consortium.

In the normal course of legislative business, the General Assembly adopts its budget, waits on the Governor’s vetoes and sustains or overrides those vetoes well before July 1 – the beginning of the fiscal year. Not this year when vetoed agencies are out-of-business until the General Assembly returns on July 17 and 18 to take up vetoes.

Annual Arts Tradition

Vetoes of the Arts Commission funding have become a routine of the budget process.  Both Governors Sanford and Haley claim that funding arts organizations is not “a core function” of government. The well-organized arts community rallies and the vetoes are overridden. Having to do that every year risks fatigue and puts arts funding at risk. Since the Governor vetoed both state dollars and authority to spend other funds, the Arts Commission has been told to shut its doors until the General Assembly returns.

We don’t know if the Sea Grants Consortium, which leverages the $428,223 General Fund appropriation into $6 million in total funding and has also been told to shut down, has that kind of support.

Too Bad for Teachers, Says Haley

Haley’s argument against the $10 million in funding for teacher salary increases has merit. The funding is non-recurring dollars. If the General Assembly had rejected Haley’s push for the misguided tax cut for pass-through entities, $20 million would have been available to put this in recurring funds. Still, teachers who have not had raises in several years while also suffering furloughs should get the raises … and the General Assembly will ensure that they do.

In fact, the Governor vetoed only $5.7 million in recurring General Fund appropriations, relative chump change in a $6 billion General Fund budget (or .1%). The majority of the vetoes focused on non-recurring funds. That included vetoes of $10.5 million in the Capital Reserve Fund, a short-term savings account and $20 million in 44 vetoes in Proviso 90.20(B) which allocates the $555 million in funds left-over from FY10-11 and FY11-12.

You can argue for or against many among those vetoes. Some vetoed provisions clearly are pork and some plain attempts to end-run agency priorities.

Sacrificing Health and Safety on the Altar of Political Ideology

Some of the vetoes are particularly troubling for the poorest, most vulnerable and most sickly South Carolinians. For example, five vetoes relate to non-recurring appropriations for the SC AIDS Drug Assistance Program ($200,000), domestic violence and sexual assault centers ($453,680), Kidney Disease Early Evaluation and Risk Assessment Education ($100,000), hemophilia ($100,000) and sickle cell ($100,000). Haley argues that “[e]ach of these lines attempts to serve a portion of our population.” She goes on to assert “these special add-on lines distract from [DHEC’s] broader mission of protecting South Carolina’s public health.” These programs should not be funded from non-recurring funds. They should be part of the core mission of DHEC, even if they serve only “a portion of our population” like those with AIDS and survivors of rape and domestic violence.

Many of the vetoes relate to higher education, some for programs and some for infrastructure.  Haley argues that higher education funding is as good as it should be and growth should be restricted to the annual increase in the inflation index for higher education. We wonder if Boeing, BMW and the high tech businesses she claims to want to recruit share that view. For many businesses, higher education infrastructure is more important than K-12 education to ensure a workforce than can keep their company competitive.

Governor’s Budget Pen: “Blue Line” is potentially devastating amendment to budget process

The most interesting item to come out of Governor Haley’s press conference on the vetoes was not her ad hominem attacks on Senate Finance Chair Hugh Leatherman for “buying votes” on the Department of Administration bill with funding for local projects, but her intent to try to move to “blue-line budgeting.” Apparently she intends a system of amendatory vetoes, allowing the governor to go in and reduce the number on a line or rewrite a proviso, rather than having to accept or reject a line or proviso in its entirety. That will require a Constitutional amendment. In a General Assembly unwilling to enact fairly self-evident legislation giving a governor control over basic administrative functions, this massive expansion of gubernatorial power is not likely to pass. It will, however, give our Governor another example of how “the good ol’ boys” have done her wrong.

Haley: Let’s Repeat Austerity’s Failures or “Tax Cuts or Bust”

Governor Haley continues to focus on tax cuts as the pathway to prosperity, ignoring the clear research that taxes have a very modest impact on economic development, an impact dwarfed by businesses concerns about human capital, infrastructure and quality of life. At this critical stage for our economy, long-term thinking has to be a priority, investment that will lead to growth and cultivating a strong workforce through training and an education system should be an easy political compromise.  Although not attacking the core funding for K-12 education, Medicaid or deferred maintenance in higher education, Haley’s 2012 vetoes undermine our efforts to improve human capital, quality of life and our research infrastructure in the long term.