SC POLICY COUNCIL.ORG'S SAM AARON CHECKS IN WITH LIZ AND NICK 8/11/26

Transcript

SPEAKER_01 0:25

We are doing well. It's been a whole month since the last time we spoke. A lot has happened. And you recently wrote an article about the new fiscal year budget, and you broke it all down the good, the bad, and the ugly. I'll share that article on our Facebook page. But maybe you can give us a little bit of what we need to pay attention to.

SPEAKER_02 0:48

Sure. Yeah. So at a glance, the total budget is $44.4 billion. $15.7 billion of those dollars are coming out of what's called the general fund, which is essentially tax revenue. So that's how much taxes South Carolinians have paid, and then the state is going to spend that. You mentioned, you know, we we kind of did a little clinic split here with uh the good, the bad, and the ugly. So, you know, let's start on a positive note here. Uh tax relief. There is some tax relief in here. We've got um upwards of $300 million going towards tax relief, which is great. Um, we've got $189 million going towards uh infrastructure investment in terms of transportation. Uh most of this is about fixing uh bridges in particular. Uh the total Department of Transportation budget is going to be $2.5 billion. So their budget has increased yet again. Uh in the education side, uh there is $90.5 million that are going towards teacher salary increases. So that's all that's all good stuff, you know, that's investing in stuff that South Kwany's benefit benefit from. Uh now on to kind of the bad. The bad is that we're we're spending more than population growth and inflation. Uh this is a little disheartening because previously in earlier drafts of the budget, we were we were under that that figure, um, but that is no longer the case. We're $160 million above that framework, uh, which is negative. It means that essentially the spending growth is growing faster than the taxpayer can actually afford. Um additionally, there's $29 million in tuition mitigation, which, you know, this is one of these policies that, you know, there's there's noble intentions behind it, but it it doesn't actually address the issue. It kind of just takes the cost that students would have to pay, you know, in increased tuition and shifts that to the taxpayer, um, which is, you know, not really all that fair. Um additionally, overall, we just had a growth, uh, a large growth in state government. There's uh 1,018 new state employees this year. Um, so there's there's a lot of there's a lot of stuff in there we don't like. Now the the ugly, as we kind of alluded to, uh that's mainly just been in the procedural way that this budget has played out. Um as I'm I'm sure you guys are kind of aware, but this budget, for the first time that I've ever seen in my time, you know, kind of working in stuff, Carolina Football's policy, uh, there's they're splitting the budget into two different pieces that is is is unique. Uh they're taking what are what are the earmarks? You know, the the politicians like to call that the community investment, but it's an earmark, you know, it's they get to pick where X million dollars goes. Um and they've split that separate from the budget. So the House and Senate are gonna be in today to vote on the budget, but in the master document that has all of the line items throughout the budget, anywhere where an earmark is, instead of a dollar amount, there's just a one, which you can only assume is a placeholder. Um so they're gonna pass that into two pieces. But my main objection to this is right now, if you look at that master document I just referenced, it has $378 million that are unallocated. If you pass a budget with unallocated money, I don't think you should be able to go back and appropriate it. That doesn't seem right to me.

SPEAKER_01 4:11

Yeah, yeah. Have they done this before? And why are they doing it this way?

SPEAKER_02 4:18

Well, uh, so I couldn't find it done. I've heard that it was done once before in uh, I want to say in like the 90s. Um, but the the gist of it is is that they couldn't come to an agreement on you know what the what the earmarks were gonna be. Um, you know, we had this kind of conference committee where there was negotiations between the House and the Senate, and the the Senate was saying, well, we don't want you guys to have all these earmarks, and the House was saying, but we need them, we we really want to invest in the community or whatever. And um there ultimately just wasn't an agreement that anybody could come to. So the solution was uh we're going to form a separate review committee, and that review committee is then going to essentially just make a new bill in that committee that's gonna have all the earmarks in it, and then we're gonna send that to each chamber to vote up or down.

SPEAKER_01 5:12

So that much did you say overall is for the earmarks?

SPEAKER_02 5:17

It's we're not a hundred percent certain. The figure that was thrown around during the conference committee was $309 million in earmarks, but in the budget, there is $378 million that's unallocated. So I imagine it'll be somewhere in between those, but we we don't know because at this point we don't know who's on the committee and when the committee's gonna meet or anything of the like.

SPEAKER_01 5:41

And how much higher is this budget over last year?

SPEAKER_02 5:45

Over last year? Um I would have to I would have to check. Okay. I don't want to give you a wrong figure off the top.

SPEAKER_01 5:51

Yeah, I'm I'm just curious about how much it's gone up and how it's and you mentioned how it's outpacing the population growth. Um you know, we're not spending uh a a measurable amount amount that you know that pertains to the number of people. Um and I don't even know how much we officially grown over the year and and what I'm just curious how much are we paying collecting per person, you know, if you do the breakdown. I'm just curious.

SPEAKER_02 6:23

Sure. Yeah, so it kind of depends on which which figures you're looking at. The figure that we use for the responsible budget framework, that is um we use what's called the recurring base and then the recurring surplus on top of that. So if you're looking at those two factors, uh we are spending about almost six hundred million dollars. Just about six hundred million dollars more than we did last year.

SPEAKER_01 6:52

Okay. And 378 of it is uh in in hanging in the balance right now. Right, right.

SPEAKER_02 7:00

And it it that's correct. And so it's technically it's not appropriate yet. So um it it's it's really just it's really just confusing to me. Uh if you want to know the truth, um I find it absolutely bewildering that you can call both of the chambers to Columbia and say we're gonna vote on the budget and have close to a hundred blanks on the document that shows you how much you're spending in the budget that are yet to be appropriated. I I just I I I find that.

SPEAKER_01 7:33

It's like writing a blank check to the government.

SPEAKER_02 7:37

Well, right, right. And I mean, I I just I don't think that you should be able to do a series of do-overs throughout the budget process. I think the budget process is designed in a way to where you're supposed to, you know, we we start off in the executive budget office, then it goes to the House, then it goes to the Senate, then it goes back to the House, then we have a conference, deliberate, and then we vote up or down, and then the governor signs in, and that's the budget. Um I I my question is like, where's the limiting principle, right? Okay, so you can do this with the earmarks, right? Why don't we start doing it with just like arbitrary other things? Why don't we just start taking other things, right? Why don't we just separate, you know, uh a tax reform proposal from the budget, right? And then say we're gonna we're gonna come back and adjudicate that. I just there's no limiting principle to it. So it I think it sets a dangerous precedent to just start ripping stuff out and saying we'll figure it out later.

SPEAKER_01 8:30

I don't know. It seems fishy. And you know, are there other are there politicians calling this out? Because I know that you were saying that the House really wants these earmarks. They it helps them bring money back to their district for pet projects that will really get them noticed because they have to run every two years, and maybe this helps them in that process. You know, repaving a road that really needs to be done. Or you know, we talked to our representative Val guest, one of the representatives here, and he said that you know his pet project was repaving the 544 bridge highway five. You know, people might be like, yeah, we need that. That's right, go fight for that. Um it makes them look good. So I I guess that's kind of why the House representatives are pushing for those type of uh earmarks. But in the long run, um, you know, how do we know that the representative in some other uh districts outside of our area is not, you know, totally uh dipping too much into it, you know, more than their share. I is it done by population? Is it done by the importance of the project? Uh you know, what is the measure they use?

SPEAKER_02 9:53

Yeah, and uh you know, at this point, because this review committee has yet to be established and we don't know who's gonna be on it, when they're gonna meet or anything, we don't really even know like the criteria that they're looking at. I know they want to kind of fund them at a lower percentage rate than the initial proposal, because initially they were proposing like $460 million in earmark spending. And I mean, while I have sympathy for you know the rep that wants to get the road repaid in their district, it's like ultimately that's not really how this is supposed to work, right? State government doesn't exist so that a lawmaker can come around come along and say, I'm gonna take out this million dollars here and use it for the thing that that I want here. You know, like that's not what the legislative process is designed to produce. So the the whole earmark system itself is broken. Because while while one, right, you have you have lawmakers individually picking beneficiaries, right? So uh before this, some of the proposals were for like random nonprofits, right? So you're throwing just a couple million dollars at some nonprofit that you know we don't really have a whole lot of information about. But the other issue is the transparency within the earmark process itself, right? So the document that you see, it says, you know, it says the the member that requested it, it says the location, right? Meaning like the county or town, municipality, whatever. And then it gives you a general description. So like that can be anything from community center to this road repaving, right? But like the problem is that you don't know who the beneficiary is. So like who's actually going to receive that that money? Who's going to receive that those dollars? You can't find that figure figure it um out until after it's already done. And after it's done, it doesn't matter. It's already done, you know? Um, so there's not there's no appropriate window for you know groups like the policy council and other members of the public to actually like scrutinize this spending and figure out who's going to benefit off of this. And is there some sort of conflict that you know the public should be made aware of? There's no way to actually find that out in the current system until after the money has been sent out.

SPEAKER_01 12:06

So crazy. Um, anything else that we need to know, Sam, before we go?

SPEAKER_02 12:11

No, I don't think so. We got that big election today, so I'd encourage all your listeners to, you know, go participate in that special primary election. It's important, you know, do all that good stuff.

SPEAKER_01 12:20

Absolutely. Um, and you know, it's probably gonna be a very low turnout, and we're gonna have an even lesser turnout for the for the runoff. I mean, I'm thinking that's going to be one. Um, I'm hoping.

SPEAKER_02 12:31

So I would guarantee there's gonna be one.

SPEAKER_01 12:34

Yeah. That would be great. Um right. Do you guys have a candidate preference at the South Carolina Policy Council?

SPEAKER_02 12:43

No, we don't issue endorsements, but we prefer, you know, small, limited government and individual liberties, you know. So speed into that however you prefer.

SPEAKER_01 12:52

And the pursuit of happiness.

SPEAKER_02 12:54

That's it. That's the one.

SPEAKER_01 12:56

Thanks, Sam. Sam Aaron over at FCPolicyCouncil.org. I posted a link to your article on our Facebook page. Thank you so much.

SPEAKER_02 13:04

Wonderful, thank you.