TALK 94.5 Liz And Nick
TALK 94.5 Liz And Nick
SCPOLICYCOUNCIL.ORG (THENERVE.ORG) RICK BRUNDRETT STOPS BY 8/25/26
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We're so out of the loop here on the state budget. So maybe you can bring us up to speed.
SPEAKER_02It's not don't feel bad, Liz. It's hard for me even after all the years trying to keep uh keep track on how they're uh spending our tax dollars. So don't feel bad. And obviously the news cycle today is being dominated uh by a certain uh U.S. Senate uh you know uh primary runoff. So uh I get it. But um the budget is still very important, and why is that? Because uh even though, as uh you mentioned earlier correctly that today's election day, um the legislature, state legislature scheduled uh to come back into full session today to deal with um uh government master's vetoes, which are not very many, uh which is uh I joke that uh uh Government McMaster in recent years has not taken a you know a chainsaw to uh you know in terms of issuing his budget vetoes, more like a dull butter knife. Um but uh uh it's important because so the legislature um essentially uh adopted close to 44 and a half billion with a B total state budget for the fiscal year that's already underway. Okay, it started on July 1. And generally the the state budget's divvied up into kind of three big pots of money. One are state general funds, other are what's called other funds, which are state funds but not revenue that's derived from, say, the you know, the corporate and personal income taxes, for example. Um these things are uh other funds are like lottery proceeds, the the state gasoline tax, um, even part of the state sales tax, um, you know, uh which normally goes on the general fund side, part of it goes to other funds for like um um K through 12 education for like special ed and busing and things like that, court fees and fines are other funds. And then the third big pot of money are federal funds, okay? So you kind of keep that in mind, divvied up by three, and you get roughly in the 15 million, you know, 15 billion range for each big pot of money. So what I did, what's not known is every year when the legislature passes its overall big budget, uh what they don't talk about is that um just because you have something on paper that says you're authorized to spend X amount of money from the from one or all three of these pots of money, um you can spend beyond that during the fiscal year. You're allowed to do that, all right? And not just willy-nilly, but you know, if there are what are called carry-forward funds, whether they're general funds or other funds or federal funds, you can do that. Well, that's not what's talked about a lot because it's a whole lot of money. And I focused my story last month just on the uh other and federal fund side of the ledgers, legislature uh ledger, and what I found was this that for the fiscal year that ended, uh nearly three billion dollars, okay, in federal total federal and other fund spending increase requests for 42 agencies collectively were approved. That's a massive amount of money, okay. Um and you know, that worked out, as I pointed out in the story, to be about $535, you know, for every man, woman, and child in South Carolina. Um it's a huge amount of money that's quietly approved. And get this, Liz. It's not that you say, well, the legislature's not in session, right? Typically, unlike today, they're typically not in session this time of year. They usually don't come back to January. So what what happens between July and January, for example? Well, what happens if you know uh you are you're a state agency and you want, you believe you need to spend more than what you were authorized for your budget uh to spend in federal other funds? How do you do that? Legislature's not in session, right? Well, what they did is they passed a uh a special law that allows uh uh uh a little known office, okay, in the Department of Administration called the Executive Budget Office to, you know, approve these requests, which they typically are. They're rubber stamped, essentially. And uh they're you know, they're just submitted these state agencies, submit them on standardized forms, whether it's a federal fund increase request or an other fund increase request. And so what I did is under the Freedom of Information Act, I asked the Department of Administration, well, let me see all these request forms, you know, for the last fiscal year. And that's why how I did my story. And I think what's important for your listeners to understand is, and I pointed this out in the story, is that you're talking billions of dollars that you know that are being approved after the quote official budget is adopted, and yet there's not a public hearing. The department administration or the executive budget office, they don't hold public hearings to, you know, gather input from you know taxpayers to see whether these you know increases are justified or not. And that's in contrast, for example, state law requires, for example, county governments. They can do that as well. They can have what's called a supplemental mid-year increase, but they're gonna have public hearings on that um before they can do that. And so that's not being done at the state level. And so it's all all this is being done very quietly. And so I was taking a look at um, you know, well, you know, what are these amounts and what are these agencies and you know, analyzing the data and looking at, you know, who's who's requesting what and for how much. And so, you know, um, if you um I had a chart in in the story, I mean, uh, the rural infrastructure authority, for example, had, you know, over $800 million approved. And when I asked them about it, what do they, you know, specifically they needed for? Well, where's that money? Um, they basically told me this was, you know, Biden era money under the American Rescue Plan Act and federal funds that flow to South Carolina to improve like water, sewer, wastewater, um, you know, infrastructure for, you know, at the local, you know, at the local municipality level.
SPEAKER_00So I need to ask you this question. I I mean, does it seem like we have a any fiscal conservative approach to the South Carolina budget in in your from your perspective, or is this just a freewheeling, out-of-control process?
SPEAKER_02Well, that's well, that's an accurate. Well, it is secretive from my perspective. It's it's way too secretive. Um and quick aside, just on that secretive front, I the legislature is supposed to come back. Um the talk is they're going to approve a quote supplemental bill, separate bill that will, you know, on about 350 to approve $350, $350 million in earmarks, okay, um, out of surplus general funds. Well, apparently that's all being done behind closed doors, and they're just going to present the final, you know, could present the final um supplemental appropriations bill on the floor today. You know, I mean, it the stuff is there's too much in the budget process that's secretive. Um, in terms of um what about fiscal restraint? Okay, is there anything on the front end? Well, uh it's an excellent question you have, Liz, because you know, uh come fall in the next several months, or in fact, right now, agencies are starting to prepare their budget requests for the following fiscal year. All right. But in doing so, what they typically do is they just say, well, this is how much extra we want for the upcoming fiscal year. They're not justifying their entire budget. And so uh the Nurse Parent Organization, the South Carolina Policy Council, has recommended um that the governor and the state agencies actually follow state existing state law and basically do what's called zero-based budgeting. Justify on the front end, you know, why you want you know your money for the upcoming fiscal year. Not just, you know, put in your increased wish list, which is typically done, you know, every single year. So there's not there's not a lot, you know, there's not an um there's not a lot of at least fiscal, what you would describe as fiscal conservative conservatism, fiscal restraint on the front end. There's, you know, there's no uh zero-based budgeting has been a concept that's been around for years, um, but it's never been, you know, it's never been quote, you know, enforced. Uh and that used on a regular, certainly, you know, on a on a regular basis. And so what's the end result? Every single year we get bigger and bigger budgets.
SPEAKER_00Right.
SPEAKER_02And every single year, besides the stuff that you see on paper, okay, you know, you still get these, if not hundreds of millions of dollars, sometimes like last fiscal years, even into the several billion dollar more approved and supplemental spending during the course of the fiscal year. That's on top of what you know, what was unpro appropriate.
SPEAKER_00So I what I'm trying to understand is that the politicians, the lawmakers make a budget, but then the agency can do whatever they want in the interim?
SPEAKER_02I mean, well, they can they can't the lawmakers adopt the state budget. That's their spending plan for revenues that are coming in for the fiscal year, okay? But what happens is a lot of these agencies have a lot of money that's left over that they carry over year to year.
SPEAKER_00Right.
SPEAKER_02Which are whether they're in general funds or other funds or federal funds. So it's money that's been appropriated, approved in in, you know, typically in prior years, and so they can only use them for that purpose. But it's not reflected, obviously, in the budget that's adopted. So the bottom line is that and and the law allows them to spend more than what's appropriated if they've got if they're allowed to do so with the extra money that's essentially carried, you know, carried over. And my question has always been is how much is too much? Okay. Um I had uh a USC, a University of South Carolina spokesman, tell me when I did a story several months ago on other fund surpluses, well, you know, we have, you know, our you know, we're we're being told, you know, um by our auditors and financial planners that we need to carry a a three at least a three-month buffer, you know, emergency buffer. And so part of it, these reserves that are carried over, uh, at least on the other fund side, you know, and again, it's not something that they're doing illegally. They're allowed under state law or or under state, you know, budget provisos, which have to be renewed every year. They're allowed to do it. So it's not that they're doing anything illegal. The question is, is it wise fiscal policy? Okay. Um you can make the argument that some state agencies probably should have a uh a buffer in case of, say, a natural disaster disaster like a hurricane hit. You know, you know, a couple of years ago, Hurricane Helene, right, tore through the Midlands and the upstate. Um so, you know, um it caused a lot of damage to state parks and the roads and things like that. But you could argue what you know, DOT or or PR uh parks, recreation and tourism, you know, could need that money to make those repairs. Well, what about other state agencies? Do they really need, you know, how much in reserves do they really need, particularly when we already, our state constitution mandates that we already have separate from all these state agencies, surplus accounts, two massive rainy day funds. One's called the you know, General Reserve Fund, and the other one's called the Capital Reserve Fund. And together, you know, it's it tallies close to a billion dollars. So we already have built-in um, you know, rainy day reserve funds, which, you know, several, you know, several years ago, voters approved the state constitution to increase those rainy day funds. So given that, why, you know, no one wants to ask the hard question, why do state age certain state agencies need big reserves? And should they be allowed to spend that kind of money when we already have massive rainy day reserves?
SPEAKER_00Yeah, and and why why does that the billions of dollars go into that rainy day fund when it should be maybe going back to the taxpayer?
SPEAKER_02Well, and you just hit the nail on the head, okay, that uh I've uh I've written about over the years is that you see very little discussion uh from lawmakers to say, hey, how can we get this money back to taxpayers as quickly as we can, right?
SPEAKER_00Yeah.
SPEAKER_02We've got a huge amount just in surplus general uh funds uh going in into this fiscal year. And of course, instead of talking about, you know, cutting rebate checks, right, back to taxpayers, which they could, you know, there are many families in South Carolina who could, you know, use that money right now, they're always looking at ways to spend it. And so it doesn't matter, and I've been looking at these budgets for years. It doesn't matter whether it's general fund money, other fund money, federal money.
SPEAKER_00But to me, like that's ill-gotten funds because that was that was money they took from us that wasn't appropriated for anything.
SPEAKER_02So you can't just take money. Well, they appropriated in previous years, and these state agencies didn't spend it at all, and they carried it over, and they're allowed to uh to spend that money in future years for the same purposes. They can't just spend it on anything they want. I understand that principle, that that part of the law, but the question becomes, again, is how much is too much? And it goes back to your earlier point, Liz. Where's the fiscal restraint on the front end? Okay, where are the priorities being set? Um, do they really need this much money for their agency? And so you don't even get to that level of discussion. All you get is, well, this is how much they had last year, last year's base last year's amount becomes this year's fiscal year's base, and then when they they ask for even more money on top of that, okay, for the following fiscal year. Just and it just it never it never decreases, and you you you never see serious talk about you know rebating money back to the taxpayers. Um now the policy council has pushed and with success, you know, of seeing a reduction in the state income tax rate because our state revenues have grown. Um, but it's been they they've encouraged you know uh the legislature to move even faster to get it down, you know, get down to zero. But uh, but those are with, you know, that's you know, with recurring funds. What I write about a lot are basically one-time what are called non-recurring funds, one-time funds. Well, shouldn't, as you pointed out, Liz, shouldn't taxpayers, you know, have a say in getting that some that money back? Right? You know, and I and I think it's a legitimate argument. Um whether they whether they're gonna pay attention to it or not, I don't know. Well, that's it just keeps me busy, you know, writing about all the you know the you know the extra spending that they're doing.
SPEAKER_00All right. Rick Brendret with the nerve dot org. You can find the article there or I'll post a link to the article on our Facebook page. Thank you so much for your time. You can go to SC policycouncil dot org for more details. Thank you.