Op-Ed

By Gov. Mark Sanford

The common thread between a family, business and government budget is that none are perfect. The important questions are: Does the good outweigh the bad, and is there room for improvement?

Although a number of people have worked hard on the House and Senate versions of the budget, what I have seen so far suggests substantial room for improvement on the big issue remaining—trust funds. With the full Senate taking up this year’s budget discussion beginning this week, South Carolinians have one last chance to make their voices heard. If you care about how much you paid on April 15, or if you care about limiting new spending in our state, I think it is worth making your view known.

As a backdrop to the trust fund issue, I think it is worth knowing how much money is budgeted for new tax relief, given the new money coming into Columbia. Projections show $619 million of new money coming into Columbia this year, and by mid-May, that number could be around $800 million. I have long believed that you ought to give people a refund of their money, a tax cut, if they are sending that kind of additional money into government. We pushed very hard to do that this year, and while we lost on the idea of a bigger tax cut, I give credit to Speaker David Wilkins, R-Greenville, members of the House and a handful of Republican senators for the way they supported our efforts to enact a larger income tax cut.

Unfortunately, there was a big push by some key senators, including Senate Finance Chairman Hugh Leatherman, R-Florence, to limit the tax cut to small business owners, and that position ultimately prevailed. Sadly, this year’s budget calls for growth in spending but only $2.5 million of income tax cuts on the $600-800 million of new money taxpayers are sending to Columbia.

This brings us to trust funds. I believe that if we are not going to return more money in the form of tax cuts to the citizens of South Carolina, the first order of business is to repay trust funds before we begin substantial commitments to new and additional spending.

A little history on our trust fund balances: Before I came to Columbia, our state budget, like so many others across the country, suffered serious revenue shortfalls. Policy makers elected to borrow from a wide array of trust funds to deal with these budget shortfalls. In addition to the deficit that accumulated, roughly half a billion dollars was also borrowed from these trust and reserve accounts. Last year, we were able to completely extinguish the $155 million unconstitutional deficit, and the question before us now is, given $600-800 million of new money coming into Columbia, what do we do with the trust funds? I think we ought to pay them down substantially while we have the opportunity.

Unfortunately, the House and Senate budget writers see this issue differently. They both allocated about $117 million of the $600-800 million of new money coming into Columbia to repaying that half billion owed to South Carolina trust funds. In our revised budget, we proposed repaying $362 million. The difference shows up clearly when you look at new spending, wherein I allocated $250 million to new spending while House and Senate budget writers both allocated more than $500 million.

This leaves me with two thoughts. First, if you think our government budget should not grow at a faster rate than people’s incomes here in South Carolina, I ask you to contact your representative or senator. I particularly ask you to contact them about repaying trust and reserve funds. These funds are there to help us on rainy days, and there are plenty of storm clouds on the horizon. Gas has never been above $2.00 a gallon in my life, interest rates are rising and I don’t know what is next for the economy. I do know that, on the coast, you get ready for a hurricane before it starts raining, and in that same vein, we have been granted a golden opportunity to get our financial affairs in better order. I hope we take it.

Mark Sanford is governor of South Carolina.

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