SC Governor Questions Spending

WNRR Augusta – (SC Press Release)

Governor: Retirement Bill, Corrections Deficit Show Need for Fiscal
Responsibility
GOVERNOR SAYS ISSUES SHOW MORE FINANCIAL RECKLESSNESS

Columbia, S.C. – May 13, 2008 – Governor Mark Sanford today highlighted
two issues that point to fundamental flaws in our state’s spending
practices, and urged people to make their voices heard on the budget as it
heads into its final stages.

“We’re heading into the final stretch on the budget, and now is the
time for people to speak up if we’re going to impact this practice of
borrowing from Peter to pay Paul,” Gov. Sanford said. “Whether it’s with
the Department of Corrections’ deficits or with passing on the cost of
retirement raises to future generations, today there have been two
unfortunate examples of poor budgeting practices – failure to set priorities,
and passing on unpaid for political promises for another group of
people to deal with.”

This morning, the Department of Corrections requested approval for up
to a $4.3 million deficit – a move needed because lawmakers have failed
to adequately fund the agency. The agency has repeatedly warned
lawmakers about their financial situation, but was told to run deficits rather
than getting more funding. Instead of addressing these needs, the
Senate budget leaves untouched an $18.5 million pet project fund and spends
$20.5 million to create “mini farmers markets” around the state. To
its credit, the House has already proposed eliminating and re-allocating
$10 million from the Competitive Grants program and $14.5 million from
the mini-markets.

Meanwhile, the House approved changes to the state’s retirement system
that promote a false image of stability when it comes to the woefully
under funded system, while at the same time adding $2.6 billion to the
state’s long-term retirement debt. The bill seeks to cover that
shortfall by simply changing the state’s assumed rate of return on retirement
system investments – a smoke-and-mirrors move that does nothing to truly
address the debt. In fact, the new assumed rate of return in the bill
would be 11 percent higher than the national median for public funds,
33 percent higher than Georgia’s retirement system, and 43 percent
higher than North Carolina’s retirement system.  When all retirement
benefits are figured in, South Carolina’s retirement system is under funded by
$20 billion – and when traditionally granted cost of living
adjustments are included, it jumps to $27 billion. This problem is compounded by
the Senate’s taking of money that was meant to address this liability
in an effort to balance this year’s budget.

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