Dismal state economy whittles down services
COLUMBIA -- South Carolina's dismal economy and the Legislature's decision to slash the state budget are eroding basic programs that protect your health, safety and pocketbook every day.
Many of the agencies providing government services, such as food safety inspections and consumer fraud investigations, always have struggled for funding.
But the money crunch has become so bad that some agencies are scrambling to provide basic services. Other programs aren't at a crisis point yet, although another bleak financial year could change that, agency officials say.
Services feeling the pinch include:
--Food safety: The Department of Health and Environmental Control is conducting fewer restaurant inspections, even as the number of food service establishments increases, records show. DHEC has about 20 fewer restaurant inspectors than it had in 2008 and has brought in septic tank inspectors to help.
--Pocketbook protection: People ripped off by mortgage brokers, shady auto dealers and other businesses are not getting the same level of help from the S.C. Department of Consumer Affairs, agency officials say. The department is taking longer to answer complaints and returning less money to people who have been taken advantage of.
--Highway safety: The State Transport Police department is in jeopardy of losing federal funds to hire and retain officers who inspect overloaded -- and dangerous -- trucks, records show. The agency has a shortfall of more than $600,000 in funds needed to match federal dollars.
--Care for the disabled: The Department of Health and Environmental Control has changed the way it inspects residential care homes, which serve needy people with physical and mental handicaps, because it doesn't have enough money, records show.
--Protection of wildlife: The S.C. Department of Natural Resources isn't responding as quickly to calls about game-law violations because it is short one-third the officers it needs, officials say. One wildlife-rich county no longer has a state game officer working there.
--Fire Safety: The State Forestry Commission doesn't have enough people or equipment to fight multiple fires that could erupt. Since a fire smoked Horry County and gutted homes 18 months ago, the agency has lost 32 firefighters to budget-related retirements and resignations.
Service or savings?
While many legislators say service cuts can't be helped, others say it may be time to face reality: Taxes or fees need to be raised, or the state will not adequately fund programs that protect people's health, financial welfare and safety.
"South Carolina is in a fantasy land of believing we can have these services and not have it cost taxpayers,'' state Rep. Joe Neal, D-Richland, said.
Sen. John Land, a long-serving member of the Senate Finance Committee, said he hears regularly from constituents who notice the service cuts.
"I had somebody tell me the other day that he wants less government, and in the same breath, he said, 'Do you realize how underfunded the Forestry Commission is?'" said Land, D-Clarendon. "I said, 'You've got to choose between less government and the ability of the Forestry Commission to put a fire out in the woods behind your house.'''
State Rep. Chip Limehouse, R-Charleston, said the state has little choice but to cut services. It would be wrong to raise taxes during a recession, he said.
"General government has been feeling these cuts for three years, and the regulatory sector is just now starting to feel it,'' Limehouse said. "No one at the end of the day is going to be spared from these cuts.''
Outgoing state Rep. Rex Rice, who served with Limehouse and Neal on the House budget committee, said the state's financial challenges are real. But he also said some agencies tend to overstate their financial difficulties, making things seem worse than they really are.
"It's a shell game,'' said the Pickens County Republican.
How bad is the overall picture? The state is taking in $1.6 billion less in general revenue than it was in 2007. Revenue collections reached an all-time high of $6.7 billion in 2007, just as the economy began to sour. Today, collections are $5.1 billion.
South Carolina's budget crisis isn't unique, but statistics show the state isn't likely to rebound as quickly as some others. South Carolina -- where unemployment in some counties has topped 20 percent -- is one of about six states projecting flat revenue growth in the next year, according to the National Conference of State Legislatures.
And the crisis could get worse for some state agencies when billions of federal stimulus dollars run out in 2011, many predict.
South Carolina's financial struggles are partially due to a poor economy but also to a series of tax cuts approved by lawmakers in the past five years.
When the Legislature chose to eliminate the state grocery tax, reduce income taxes and cut taxes for small businesses, it put a hole in the budget that hasn't been plugged, records show. Today, those cuts are costing the state about $500 million a year, according to a recent budget presentation from the Senate Finance Committee that was based on state financial data.
Additionally, the state has lost more than $150 million in general fund revenue in the past two years because of a property tax relief effort, according to the Finance Committee report. That tax cut is expected next year to make the state an additional $126 million short for government services, the committee's report says.
Many state agencies pay for some programs by collecting from the professionals or industries they regulate, but still rely on money from the state's general fund. Those agencies are the ones more likely to feel the pinch in a down economy. Among those are DHEC, the Department of Natural Resources, the State Forestry Commission and Consumer Affairs. In contrast, officials at the state Department of Labor, Licensing and Regulation and the Office of Regulatory Staff say they have weathered the storm because their budgets rely heavily on fees.
Dukes Scott, executive director at the Office of Regulatory Staff, said most of his agency's $7 million yearly operating budget comes from assessments on major utilities, such as SCE&G and Duke Energy. Utilities are stable funding sources that are better able to withstand economic downturns.
"We are able to hold on a lot better," Scott said.
Closing the funding gap is difficult in cash-strapped South Carolina.
Already, most agencies, particularly those reliant on the general fund, have cut expenses by reducing public outreach programs, slashing administrative costs and limiting travel. But that hasn't increased revenues.
A tax increase could raise revenues but would be wildly unpopular in the Legislature.
Sen. Kevin Bryant, R-Anderson, said he would filibuster the Senate if a tax increase was proposed. Bryant is a member of the Senate Finance Committee.
"I'll take the floor and not let that happen," he said.
After 16 years in the Legislature, Rice said he thinks some government regulatory programs could be done privately. Restaurant inspections are among them, he said.
"We need to look more at getting the government out of the business, more so than getting into it," he said.
For government programs the state considers important, other types of revenues, such as increased fees or fines, are a possibility, lawmakers said. A state committee also is looking at state tax exemptions to see whether any can be removed to raise revenues.
Bryant said he likes the idea of raising fines and putting the money back into agency programs. Rice and Sen. John Courson, R-Richland, said fee increases are also a more palatable route for lawmakers.
"You show people, 'Here is the cost of doing this function and why it needs to be done,' rather than just burying it in the overall budget,'' Rice said.
DHEC expects to seek a fee increase for residential care homes next year, but even that has proven a tough sell. The Legislature last spring shot down a fee increase to regulate residential care homes, even though some have been cited for filth and lack of attention to residents.
The state Department of Labor, Licensing and Regulation may be too successful at collecting fees.
About 90 percent of the agency's $41 million budget is funded by fees the agency receives for licensing builders, dentists and other regulated professionals. The agency manages its money so that it keeps half of its fees collected in a year to fund the budget and it puts the other half in reserves, said Adrienne Youmans, the agency director.
But for the past two years, the Legislature has voted to take money out of LLR's reserves to fund other agencies' services, such as education and conservation. Youmans said it's a risky plan.
"Somewhere down the road, if you continue to take, there will be a shortfall," Youmans said.
She said people need to decide what state government will be and who pays for it.
"I understand agencies are suffering, and when agencies are suffering every dollar is on the line," she said. "There will come a time when a hard decision will have to be made."