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A Parable for Responsible Budgeting

By S.C. Senator Shane Massey
web posted May 25, 2011

GUEST COLUMN – Recently, while searching the internet for new books for my little girl, I came across a story about a family of squirrels. The mother and father squirrels prodded their offspring to gather nuts during the Fall, when the nuts were plentiful, and store them for the Winter months when food would be scarce. The young squirrels were reluctant, of course, because they didn’t understand the lesson. But you and I recognize the parable: it’s important to save during good times so we can survive the difficult times that will inevitably come. 

I remembered this story last week as the Senate debated a proposed state budget.  Like most budgets, South Carolina’s budget is based on projected revenue. Legislators rely heavily on the Board of Economic Advisers (BEA), a committee that meets at least quarterly to review economic trends and project tax collections based on those trends. 

At its most recent meeting on May 12, the BEA determined that the state would have $105 million more than we had expected for the budget year that begins July 1.Those estimates are great news for South Carolina, as the trends indicate more of our citizens are working, making money, and spending their earnings. The result is a recovering and growing economy.

Although the new numbers represent great economic news, you can imagine the scene in Columbia when politicians discovered there was more money in the kitty. It was a feeding frenzy that resembled a buffet line after church on Sunday! 

The plan that emerged was to spend all the money, putting an additional $105 million toward K-12 education. Although the budget would already increase education spending by an average of $158 per student over last year, this plan would add an additional $171 per student, increasing last year’s spending by $329 per student. That’s real money: the additional increase would add more than $686,000 for Edgefield County’s schools.

I’ve had several difficult votes over the past 4 years in the Senate, but this wasn’t one of them.  When the amendment came up, I knew pretty quickly that I would vote “no” to spending all the extra money. 

So why did I vote “no”?  Simply put, I thought it more responsible to save nuts for the Winter. South Carolina has not had the most responsible track record when it comes to budgeting. Historically we tend to spend all the money in good times and cut deeply in bad times. Those steep cuts have resulted from the state not having enough in reserve accounts to weather downturns in the economy. The best examples are the most recent:  2006 and 2007 were record revenue years for South Carolina. The legislature saved only the required minimum and spent the rest of the money. When the recession hit in 2008, we didn’t have enough in reserves to get us through the remainder of that year; we certainly didn’t have enough to get us through the challenges of 2009 and 2010. 

Education is consistently the top budget priority, and rightfully so. In fact, total education spending accounts for more than 50% of all General Fund expenditures. Despite significant cuts the past few years, that is still the case. I have no quarrel with that allocation, but I do object to spending every dollar that comes in the door. So when the amendment to spend all $105 million on K-12 came up last week, I argued that we should save the money. I proposed that we have a gradual increase, hopefully provide another increase next year, and maintain adequate reserves. My greatest fear is that we significantly boost funding this year and have to slash it next year because our projections were wrong. 

Rather than continuing our tradition of peaks and valleys in the budget process, I propose a more stable approach. But stability requires discipline. It means we can’t spend every penny the taxpayers provide. It requires us to have a sufficient reserve account. It compels us to save money in good times so that we will not have to endure massive cuts in tough times. Let’s heed the parable of the squirrels. It’s the responsible thing to do.

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