Vetoes are key to fiscal discipline

There was much fanfare last year about pigs, pork-barrel spending and vetoes, yet lost in the commotion was what the vetoes were all about - the constitutional requirement of a balanced budget here in South Carolina. At the end of the day, those vetoes were not about individual spending items, but rather about using the only tool left to extinguish the remaining $16 million not paid of what had been a $155 million unconstitutional deficit.

Given the amount of new money coming into state government this year, the vetoes I just laid out are in the same vein - less about the underlying spending items than about two larger themes. First: Should our government grow faster than the incomes of the people who pay for it? Second: Should we pay back trust funds borrowed from when times were tough before we begin new and additional spending?

ON THE FIRST point, I think it is a bad idea for government to grow faster than the incomes of the people who pay for it. Working people across our state are sending $707 million of additional and new money to Columbia this year. If we do what's been proposed - spend all of it - it represents a 9.1 percent increase in spending from last year. But folks in South Carolina aren't getting a 9 percent increase in their paychecks. In fact, personal incomes are projected to grow by only 3.8 percent this year, and the five-year average is just 1.4 percent each year. Using a different measure - population plus inflation - annual growth has averaged just 3.6 percent over the past two years.

So, faced with a budget that grows government at more than double the rate of people's incomes, we pushed hard to give some of the money back in the form of a tax cut. Most in the House, and a few in the Senate, agreed with that notion. But our proposal got trimmed so that only $2.5 million of the $707 million in new money is being sent back to the taxpayer.

EVEN IF YOU disagree with the idea of spending less, our state's practice of simply spending whatever comes in creates an up-and-down pattern that many believe is harmful to state agencies, their employees and the citizens they serve. That's why it makes sense in years such as this one to limit our spending, pay back trust funds and allow for a more modest and sustainable rate of government growth.

On trust funds, I believe in the principle of doing first things first - which, in this case, means that we should pay back money borrowed when times were tough before we begin new and additional spending. Families across our state live by this principle, in that when times are tough, they may borrow from the proverbial cookie jar. Small businesses do the same, and in both cases, when times get better, the first order of business is to put that money back in the cookie jar. We should do the same in managing our financial affairs in Columbia.

Also, where money is spent is just as important as how much money is spent in any budget. Here, only 16.7 percent is dedicated to trust fund replenishment, while 83.3 percent is allocated to new spending. I'd credit the House and Senate for the way they funded education, health care and law enforcement. But here's the catch - even after you subtract our vetoes, this budget still keeps spending at the highest level approved by either chamber during the legislative process in education ($190 million more), Medicaid ($80 million more), law enforcement ($37 million more) - and still leaves $185 million available for any other items the General Assembly might wish to fund.

That's why I believe these vetoes very clearly reflect an attempt to meet in the middle on replenishing trust funds. We didn't propose what I would have liked to do, which is completely repay all trust funds. Instead, we proposed $96 million in vetoes, which would get us up to about $210 million in repayment - or about half of what is owed, with $226 million left to be repaid. Overall spending would drop from 9.1 percent to 7.5 percent, or roughly equal to what originally passed in the House and Senate budgets this year.

AFTER WE PAY back trust funds, it is certainly the General Assembly's prerogative to fund many of the projects that we vetoed. All we're asking is that we put 7 percent more of this money to paying down trust funds this year. That's important not only because I think it ought to be a first order of business, but because it makes common sense. Gas has never before been at $2 a gallon in my life, interest rates are rising and no one knows what happens next with the national economy - but if it does slow down, we'll be better off as a state having paid back more of the money we currently owe.

(Editor's note: The writer is governor of South Carolina.)