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Subject: 2008 SC Club for Growth Budget Priorities – “A Common-Sense Plan for Change”

March 11, 2008

SCHotline received the following letter sent to S.C. House Members yesterday outlining S.C. Club for Growth’s agenda on spending.

March 10, 2008

Dear Friends in the South Carolina House of Representatives,

On behalf of our Board of Directors and over 600 members around South Carolina, thank you for your continued service.  I want to briefly take an opportunity to let you know our thoughts and goals for the 2008 state budget, and further, the legislation that we’ll be scoring on behalf of our politically active membership.

But first, I’d like to commend your efforts on restructuring last week.  We firmly believe that South Carolinians deserve to decide on this important issue and hope the Senate will pass similar legislation.  We’re also hopeful the House will move on Department of Administration legislation, due to the potential for huge savings, improved service and more accountability.

Your efforts last week were a great start in creating a modern, streamlined state government.  The government model created by our 1895 Constitution has led to little accountability and huge financial waste, and needs structural changes for the realities of the 21st century.  Inefficiencies have led to a total cost of government that is above the national average and in the past few years, studies show that hundreds of millions of dollars could have been returned to taxpayers’ pockets.

The South Carolina Club for Growth is a homegrown organization of fiscal conservatives and small-business owners dedicated to protecting those taxpayers.  Our state’s small-business owners work every day with certain truisms that we think have been missing from the state budgeting process, and I’d like to share them with you:

A Common Sense Approach to Spending

No business would hugely increase spending in consecutive years and cut it the next.  The previous three budgets raised spending by over 40% and some may argue over the numbers, but the National Association of State Budget Officers ranks South Carolina’s recent spending increase as well above the national average.  Especially given the recent economy, we ask that you pass a proviso to limit spending at population plus inflation for sustainable but reasonable growth.

Don’t Spend One-Time Money on Recurring Items

Most responsible households wouldn’t receive a one-time windfall and spend it on a ten-year lease of something like a Rolls Royce.  But that’s exactly what previous state budgets have done.  The 2007-2008 budget contained $270 million in annualizations, effectively creating a $270 million hole in the 2008-2009 budget.  In the current economic conditions, this is a risky scenario.  We ask that you greatly reduce annualizations.

Spend Money on Core Functions

Whether in good times or bad, it’s critical that any business invest in core functions.  Parks and festivals undoubtedly improve quality of life, but it is now apparent that the Competitive Grants Program, according to newspaper editorials, has become a slush fund for political influence.  The program, under the Budget and Control Board, continues to lack any reasonable measure of oversight and the program’s $18,500,000 in carry-forward funds should be used to address unfunded liabilities or returned to taxpayers.

Voters are tired of wasteful pork spending at both the state and federal levels and the Competitive Grants program only reinforces their suspicion of government spending.  We call on the South Carolina House to end the competitive grants program.

Don’t Borrow Beyond Your Means

South Carolina’s $20 billion in unfunded liabilities pose a serious threat to the fiscal stability of our state.  Currently, we have a $10 billion retirement system liability and a $10 billion retiree health insurance liability (OPEB). Combined, these liabilities are greater than the state’s annual general fund collections and could be passed on to future generations through higher taxes or reduced benefits.  Baby steps were taken last year, but we call on the House to put even more recurring and non-recurring revenue toward unfunded liabilities.

Be Smart About Raising Prices (As A Last Resort)

We support efforts to lower South Carolina’s uncompetitive top marginal income tax rate of 7%.  Governor Sanford’s 3.4% flat-tax proposal to reduce personal income taxes with an increase in cigarette taxes is a great start, but too modest.  The House should consider across the board tax decreases in order to spur economic growth and in turn, create jobs.  These reforms would be especially important as the state’s economy follows national slowdown trends.

The South Carolina Club for Growth believes any proposal to raise cigarette taxes must be accompanied by a reduction in taxes elsewhere, as it is simply unbelievable that one year after $1.3 billion in new revenue, the state would need even more.

Don’t Help Your Competition

No intelligent business would send money to a competitor.  But with incentives for “extraordinary retail establishments” that’s exactly what’s happening.  It’s outrageous to ask locally owned and operated South Carolina businesses to subsidize out of state corporations.  Businesses like Cabela’s are certainly welcomed to invest in South Carolina, but they should compete without a state handout.  We call on the House to end these unfair incentives.

Never Over-Pay for Services

Even when state coffers are flush, we need to be more prudent with tax dollars.  Paying for a benefit without limits, like our unlimited chiropractic service with no medical criteria, is simply wrong.  Last year, over 125 patients (out of over 300,000) spent over $10,000 costing the state over $23 million.  We’re not against chiropractic care, but no responsible business owner would subject his operation to such high variable costs.  Any accredited chiropractors willing to join the state health network should follow a specific set of guidelines in order to receive state business.  We call on the South Carolina House to reform this broken system.

***

We hope you agree with these common sense approaches to government.  On behalf of our members, we’ll be closely monitoring these items as well as other tax and spend issues.

The South Carolina Club for Growth will continue to push for better government, increased economic growth and more money for families and small businesses whose budgets are not growing nearly as fast as our governments.’  I hope you’ll join us.

Please feel free to contact me any time at Matt@SCClubForGrowth.com or by phone at (803) 454-1134.  You can also learn more about our mission at http://www.SCClubForGrowth.com.

Cordially,
Matt Moore
Executive Director
South Carolina Club for Growth

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One Comment leave one →
  1. March 14, 2008 10:12 AM

    Excellent article. Keep up the good work and hopefully when I’m in Cola. next legislative session I can aid you in the cause.

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