State spending must be held to sustainable pace
By MARK SANFORD
Guest columnist
I appreciate Cindi Scoppe’s commitment to ideas — many of which have helped make South Carolina a better place. Nonetheless I must respectfully but very strongly disagree with her recent column, “Spending beyond arbitrary limits doesn’t equal risky spending.”
I base my disagreement on four premises:
One, it is at best a Columbia, or government-centric, viewpoint to say that attempting to tie the growth of government to the growth of people’s pocketbooks or wallets is “arbitrary.” We think it is common sense not to have government grow faster than the underlying economy. A glance at how unsustainable this is not only shows up in year-to-year spending around which budgets are based, but also shows up in the growth of our debt load. South Carolina’s debt is fourth highest in the Southeast on a per-capita basis and has more than tripled over the past five years.
Two, there has been much debate on how fast government is growing. On this point I think it’s most helpful to look outside of South Carolina, to someone with no particular ax to grind. The National Association of State Budget Officers recently released its “Fiscal Survey of the States” and in it said that South Carolina government will grow at 11.7 percent for the upcoming year.
This report showed that South Carolina government had expanded by roughly 25 percent over the last two years, which ranked us third in the nation! It also showed that state budgets, on average, grew 6.8 percent annually, about half South Carolina’s approximate 12.5 percent growth rate over the last two years.
On this point alone I think strong arguments could be made to show South Carolina is on an unsustainable spending course relative to other states. But as significant as those increases may be, they in some ways divert us from a stack of political promises not included in today’s spending.
Because of a new Financial Accounting Standards Board ruling, beginning next year we will have to start listing on our financial books $9 billion in unfunded liabilities related to the state employee health care plan, or about $500 million a year for the next 20 years. If we are not beginning to set money aside when times are good, what happens when times are bad?
If these numbers don’t point toward an unsustainable spending trend, then it is beyond my imagination what would be considered unsustainable. David Walker, the U.S. comptroller general, has traveled the country discussing the unsustainability of the growth in Medicaid, Medicare and Social Security. He’s said that if nothing is done, the future tax increases required to sustain those programs will cripple America’s ability to compete.
We have similar problems here in South Carolina because there is always unlimited demand to spend someone else’s money in the world of politics, particularly if you can deliver promises now and pay later.
Three, this budget opens the door to a relatively long list of new constituencies previously not served by state government, such as local libraries and museums. Again, this points to a pattern of unsustainable spending because it increases the appetite for future government expenditures because of the new constituencies served by government.
New constituencies, budget growth at rates faster than the underlying economy and unpaid obligations ultimately raise the question of which part of our economy will grow faster in the future — government or the private sector. I believe to have a vibrant and sustainable economy, and therefore budget, it is important that more resources go to the private sector, because it can be redirected and reallocated faster than money going into the public sector. Speeding our economy’s rate of change is vital to our state’s budget sustainability.
Fourth and finally, economic history suggests that our present rate of spending is not sustainable. People in the real world know that trees don’t grow to the sky, and I believe it is simply unrealistic to assume that the economy only moves in one direction — upward. To think otherwise is certainly at odds with the history of the business and economic cycle — going back to the time of Joseph interpreting Pharaoh’s dream of seven fat cows and seven skinny cows coming out of the Nile River.
So for the reasons outlined I think it’s prudent to do what we’ve been calling for the past couple of years and slow down spending in Columbia.
Or to put it in simple South Carolina terms, I maintain that it does not make good sense for government to be growing faster than the growth of people’s pocketbooks and wallets across our state.
Guest columnist
I appreciate Cindi Scoppe’s commitment to ideas — many of which have helped make South Carolina a better place. Nonetheless I must respectfully but very strongly disagree with her recent column, “Spending beyond arbitrary limits doesn’t equal risky spending.”
I base my disagreement on four premises:
One, it is at best a Columbia, or government-centric, viewpoint to say that attempting to tie the growth of government to the growth of people’s pocketbooks or wallets is “arbitrary.” We think it is common sense not to have government grow faster than the underlying economy. A glance at how unsustainable this is not only shows up in year-to-year spending around which budgets are based, but also shows up in the growth of our debt load. South Carolina’s debt is fourth highest in the Southeast on a per-capita basis and has more than tripled over the past five years.
Two, there has been much debate on how fast government is growing. On this point I think it’s most helpful to look outside of South Carolina, to someone with no particular ax to grind. The National Association of State Budget Officers recently released its “Fiscal Survey of the States” and in it said that South Carolina government will grow at 11.7 percent for the upcoming year.
This report showed that South Carolina government had expanded by roughly 25 percent over the last two years, which ranked us third in the nation! It also showed that state budgets, on average, grew 6.8 percent annually, about half South Carolina’s approximate 12.5 percent growth rate over the last two years.
On this point alone I think strong arguments could be made to show South Carolina is on an unsustainable spending course relative to other states. But as significant as those increases may be, they in some ways divert us from a stack of political promises not included in today’s spending.
Because of a new Financial Accounting Standards Board ruling, beginning next year we will have to start listing on our financial books $9 billion in unfunded liabilities related to the state employee health care plan, or about $500 million a year for the next 20 years. If we are not beginning to set money aside when times are good, what happens when times are bad?
If these numbers don’t point toward an unsustainable spending trend, then it is beyond my imagination what would be considered unsustainable. David Walker, the U.S. comptroller general, has traveled the country discussing the unsustainability of the growth in Medicaid, Medicare and Social Security. He’s said that if nothing is done, the future tax increases required to sustain those programs will cripple America’s ability to compete.
We have similar problems here in South Carolina because there is always unlimited demand to spend someone else’s money in the world of politics, particularly if you can deliver promises now and pay later.
Three, this budget opens the door to a relatively long list of new constituencies previously not served by state government, such as local libraries and museums. Again, this points to a pattern of unsustainable spending because it increases the appetite for future government expenditures because of the new constituencies served by government.
New constituencies, budget growth at rates faster than the underlying economy and unpaid obligations ultimately raise the question of which part of our economy will grow faster in the future — government or the private sector. I believe to have a vibrant and sustainable economy, and therefore budget, it is important that more resources go to the private sector, because it can be redirected and reallocated faster than money going into the public sector. Speeding our economy’s rate of change is vital to our state’s budget sustainability.
Fourth and finally, economic history suggests that our present rate of spending is not sustainable. People in the real world know that trees don’t grow to the sky, and I believe it is simply unrealistic to assume that the economy only moves in one direction — upward. To think otherwise is certainly at odds with the history of the business and economic cycle — going back to the time of Joseph interpreting Pharaoh’s dream of seven fat cows and seven skinny cows coming out of the Nile River.
So for the reasons outlined I think it’s prudent to do what we’ve been calling for the past couple of years and slow down spending in Columbia.
Or to put it in simple South Carolina terms, I maintain that it does not make good sense for government to be growing faster than the growth of people’s pocketbooks and wallets across our state.
posted by SCGOP at 1:03 PM
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