The state’s general fund revenue
(the money the legislature has control over) reached its $6.7 billion zenith in
2007, and this year will fall to $5 billion. That’s about the size of the
general fund in 2000. Adjusted for inflation, we’ve not seen so little revenue
since the early 1990s.
Let’s consider what we may no
longer get for that money: special-needs and mental-health workers whose home
visits allow the parents of disabled children to have jobs, jobs they’ll soon
have to quit without someone to watch their children. We’re going to let thousands
of nonviolent offenders out of jail - the “harmless” guys who only steal
lawnmowers or sell a little bit of drugs - and we’re going to have 100 fewer
probation officers to keep an eye on them. We won’t buy new textbooks for our
schools, and public-school teachers will be spend less time in the classroom.
What, in that list, is waste?
Higher education has been cut so
deeply that Coastal
budget now includes only 7 percent of state spending, $10 million and
dwindling. Our flagship school, the University
of South Carolina,
receives 12 percent of its funding from the state. In-state tuition at CCU is
$4,475 per semester; at the University
of North Carolina in Wilmington, tuition is $2,355, nearly half
that for a comparable education. The difference, of course, is how much of a
student’s bill each state picks up.
The budget must be balanced, which
in South Carolina
means that it must be cut. The other option - raising revenue through higher
taxes - is so politically unthinkable here that the state’s budget-writing
staff doesn’t even bother suggesting it. Instead, what is the legislature
planning to do? The House has passed an absolute cut in the corporate income
tax, notching it down by $17 million a year for 10 years until it disappears
altogether. The Senate, meanwhile, is on track to approving caps in total
spending that would only allow state government to grow each year by the sum of
inflation plus population growth.
And the next year, the problem will
be worse. Federal stimulus money (that our governor fought so hard against)
will dry up, sucking another $350 million out of the general fund. More cuts.
This is not a temporary problem;
it’s the expression of our state’s governing philosophy. We are striving
valiantly and intentionally toward less taxes and fewer services. This paradigm
is so dominant in South Carolina
that raising taxes just isn’t even on the table, except maybe - maybe - a
paltry increase in cigarette taxes. In fact, the most aggressive tax-hike
proposals getting serious consideration is simply a higher cigarette-tax hike,
and while it’s the right thing to do, it won’t solve our larger problems.
A large part of the reason this
thinking is so pervasive in South
Carolina is that we have such an effective spokesman
for it: Gov. Mark Sanford. Don’t laugh. Despite our governor’s now-notorious
personal foibles, he has an air of commanding the table when it comes to policy
issues. No elected official speaks more authoritatively about the budget, using
concrete data and robust economic theory, and no one else has the wherewithal
to carry that message around the state. Eight years ago, Sanford’s intellect-based approach to
government was refreshing, part of the reason he was endorsed by editorial
boards around the state (including this one) despite significant philosophical
differences with him.
Yet Sanford’s legacy for the state has been
backwards from what we had hoped for. His structural reforms - those that would
have ironed out the wasteful idiosynracies and redundancies in state government
- have largely failed in the Statehouse, while his vision of an ever-shrinking
government have taken deeper and deeper root. That’s not all his fault; the
Statehouse has taken the politically popular tax cuts without surrendering any
When you think about it, spending
caps - Sanford’s
crusade for years - could not come at a more ingenious time for proponents of
his philosophy, when state government has already been slashed to a shadow of
its former self. It’ll now be frozen at this tiny size.
As we examine our budget this year,
the prevailing argument (that we don’t want to hamper any recovery from the
recession with higher taxes) may be persuasive on its face, but it’s not
entirely supported by the facts. Last year, North Carolina
raised income and sales taxes, and yet every week, it seems, the Gov. Perdue’s
office is announcing new jobs somewhere else in the state: 825 jobs in Charlotte on Thursday, 500 in Catawba
County last week, 84 jobs in Johnston County
on Feb. 22, 346 jobs to Greensboro
Feb. 11, and on and on. From a statistical standpoint, the nonpartisan Center
for Budget and Policy Priorities (a national poverty-focused think tank) argues
that states that raised taxes during the post-9/11 recession did not see
significantly less growth in personal income, median wages or employment than
states that did not raise them.
Further, South Carolina has had plenty of tax cuts -
swapping sales taxes for property taxes and cutting income taxes, just in the
last few years. And yet the state remains at the top of the nation in
unemployment, just underneath Michigan, California and Nevada
- without any of those states’ obvious challenges. In fact, we’ve risen to the
top of the list over the years that these tax cuts have been implemented: in
the late 1990s, the state’s unemployment rate was a full 1.5 points beneath the
Only three other states - Georgia, Ohio
- are cutting services without raising taxes. South Carolina is truly becoming a
laboratory for a theory of absolute self-sufficiency, that the state has no
role in promoting a man’s prosperity, but should merely avoid reducing the
prosperity of those who already have it. The cartoon future of this project is
a return to Dickensian London, where the haves all wear top hats and the
have-nots toil for crumbs in the debtor’s prisons where they are born, and the
only way out is through the rare magnamity of anonymous, private benefactors.
But with no money for social workers, for higher education, for keeping
criminals off the streets - how inaccurate a caricature is it?
Our neighbors to the north are
taking a different route, one of trying to preserve the state’s role in its
citizens lives by sustaining vital services through marginal tax increases even
despite the recession. Time will tell which state got it right.
Background and readings: