Much work remains before a state budget is possible

The South Carolina Statehouse
The South Carolina Statehouse AP

South Carolina legislators’ chief responsibility when they reconvene Tuesday for a special session will be passing a state budget for the fiscal year that starts just two weeks later.

But with parts of the budget still up for debate on both chambers’ floors, it appears highly unlikely a final spending plan will be possible before July 1.

A six-member committee of House and Senate members must reach a compromise on the chambers’ differing spending plans. Several steps must occur before the conferees say they’ll even hold another meeting. On Monday, the legislators concluded that trying to reach a compromise on the main spending plan is futile with two surplus spending bills unresolved.

With so much work remaining, legislators are preparing to keep state government running after June 30 with a continuing resolution.

What’s next?

The House will take up the Ways and Means Committee’s supplemental spending proposal, which includes $150million for roadwork and $70million toward incentives promised to Volvo. If the chamber approves the bill Tuesday, another vote is needed Wednesday to advance it to the Senate. Then that bill must go through the Senate Finance Committee before it reaches that chamber’s floor.

While the Senate’s waiting on that bill, it will continue debating the so-called “capital reserves” bill that spends other one-time money. The House passed its version of that bill in March. The supplemental and capital reserves are the two bills that will be wrapped into the overall budget package.

Meanwhile, senators will take up the resolution that would keep agencies open and employees paid if there’s no budget in place July 1. The House passed the measure May 28. Senate President Pro Tem Hugh Leatherman, R-Florence, calls it insurance in case the budget gets even further bogged down, but other legislators speculate the budget debate will continue well into the summer.

Even after legislators reach a compromise and send it Gov. Nikki Haley’s desk, more steps remain. By law, Haley has five days, excluding Sunday, to issue her line-item vetoes. The Legislature will then return to decide which vetoes to override.

Why so many budget bills?

For the first time in 14 years, the budget package consists of three separate bills. That’s because House leaders chose to deal with more than $300million in additional revenues in a supplemental budget bill.

State economic advisers didn’t certify that money as available to spend in 2015-16 until May 29, after both the House and Senate had passed their differing versions of how to spend $7billion in state taxes to be collected next fiscal year. That additional money reflects taxes collected through April 30 above revised estimates and how that affects next year’s projections.

The capital reserve bill spends roughly $100million of revenue above advisers’ original projections for 2014-15. The capital reserve usually moves in tandem with the budget, but this year it got stuck in the Senate.

What’s the holdup?

The capital reserve bill got stuck due to debates over borrowing and road funding. As proposed by Senate Finance, the bill included borrowing $237million, primarily for college construction, which Haley opposed. The borrowing portion ended up being killed on a technicality, with Lt. Gov. Henry McMaster ruling March 12 it wasn’t sufficiently related to the rest of the bill.

But it remained held up by senators who oppose funding roads through a gas tax increase. Sen. Tom Davis, R-Beaufort, spent the regular session’s final weeks filibustering the capital reserve to block senators from taking up the road-funding bill. Davis wants as much of the surplus as possible to go to roadwork.

How much the overall budget package designates to roadwork is the biggest hang-up for a compromise. Senate Majority Leader Harvey Peeler said Monday the budget likely can’t get Senate approval unless it includes at least $300million for roads.

Supplemental spending

The supplemental spending proposal the House will debate on Tuesday spends $302 million in additional general fund revenue that state economic advisers certified May 29 as available to spend in 2015-16:

▪ $150 million as a one-time distribution to counties to repair existing roads.

▪ $70 million to Commerce to pay for part of the infrastructure promised to Volvo for its future plant in Berkeley County.

▪ $50 million to the state’s Medicaid agency to cover part of rising health care costs to the existing system.

▪ $23.5 million to provide state employees a one-time bonus of $800. The budget contains no cost-of-living pay increase.

▪ $6.1 million for defense lawyers for suspects who can’t afford to hire their own.

▪ $2.6 million to the Department of Social Services’ child support enforcement system

The Associated Press