SOUTH CAROLINA BUDGET - NOT FINALIZED

Good morning,

I wanted to take a moment to offer an update on where we are in the budget process.

Well, we finally have a conference committee budget. At the time I am writing this email, the full House and Senate chambers have not yet scheduled when they will reconvene to vote up or down on the finalized budget.

This budget is structured differently from previous state budgets. Typically, the House and Senate reach an agreement on one final budget bill, which is then sent to both chambers for an up-or-down vote. This year, however, House and Senate negotiators were unable to reach an agreement on which earmarks should be included in the final budget.

So, the conference committee's solution is to create a review committee to evaluate the proposed earmarks. The earmarks will then be placed in an entirely separate bill, which will also go before both chambers for an up-or-down vote. This is atypical from a legislative-process standpoint and, at best, raises serious constitutional questions.

The state is reporting that the total amount of earmark spending will be approximately $377 million. It also says that the additional $150 million requested by Scout Motors will come from that same pot of money.

Scout Motors: the gift that keeps on giving.

One day, perhaps, South Carolina will finally understand that giving billions of taxpayer dollars to corporations is not in the taxpayer's interest. The Scout Motors bailout alone is reason enough for every member of the General Assembly to oppose the separate earmark bill.

Now, let's discuss property taxes.

The initial Senate draft of the budget included a property tax exemption for seniors that would have exempted the first $150,000 of a property's value. Under the proposal approved by the conference committee, that exemption will be reduced to $75,000.

That is still an increase on the current homestead exemption. However, it is being funded through one-time allocations, also known as nonrecurring revenue. The earmarks are also being funded with nonrecurring revenue.

Lawmakers allocated $81 million toward this property tax proposal, then went on to spend more than four times that amount on earmarks. Scout Motors alone is receiving nearly twice as much.

For full transparency, we at SCPC do not generally support specialized tax exemptions, but prefer broad-based tax cuts that apply equally to every taxpayer without discrimination.

But a property tax cut for seniors should obviously be prioritized over earmark spending . Especially when those earmarks provide taxpayers with limited information and is decided through a process that lacks transparency. In many cases, taxpayers cannot even clearly see where the earmarked money will ultimately be spent.

All of this is to say that lawmakers need to be reminded that this money is not given to them to spend on whatever project they want, in whatever county they choose.

This money belongs to the taxpayer.

When the state collects more revenue than it needs, that money should be returned to the taxpayer. Tax dollars should be spent on core government services. State tax dollars should be used for state responsibilities. If counties want money for a project, they should find a way to raise that revenue themselves rather than relying on the state to subsidize local projects.

Finally, SCPC is working on a full analysis of the budget, which we ideally plan to release next week. Stay tuned for that.

Thank you for your continued support of the South Carolina Policy Council.

All the best,

Sam Aaron
Research Director
South Carolina Policy Council