Budget writers relying on revenue chief’s vow

Burnie Maybank made a bold promise to state legislators: Give me $9 million next year, and I’ll bring in 10 times that in new tax money.

“I said I would resign if we didn’t do it,” the state revenue director said. “There’s no question in my mind that we’re going to do it.”

House budget writers took him at his $90 million words.

In the tightest budget year in memory, the House Ways and Means Committee found the money for Maybank to hire about 110 new auditors, collectors and other staff members.

And, taking it a step further, the committee “spent” the $90 million Maybank promised as if it were already in hand.

“We believe him, so we’ve included the revenue,” said Rep. Bobby Harrell, R-Charleston, chairman of the Ways and Means Committee. “I’ve included $90 million, but, frankly, it could be more than that.”

Agencies are calling it the “Maybank” money — as in, they may bank on it, they may not.

The State Board of Economic Advisors has not certified the money. The state’s official revenue forecasters are not willing to guarantee the money will be there to spend.

Legally, that lack of certification means the House cannot spend it.

Harrell says that’s why legislators told agencies exactly where the money was to be spent, so they could be prepared to go without it.

William Byars, who oversees the state Department of Juvenile Justice, said he has no choice but to rely on the money for the core of his budget — guards and teachers.

No frills and no extra programs exist, Byars said, especially after three years of budget cuts.

“My budget is based upon what I absolutely have to have to stay compliant, to stay constitutional,” Byars said. “There is no fat, and that money is a substantial portion of our budget.

“We’re not able to operate in the manner in which we should without it.”

The Maybank money accounts for $5 million of Juvenile Justice’s $68 million budget.

HISTORY LESSON

In a recent interview, Maybank appeared calm about being at the center of so many hopes.

History is on his side.

In 2002, the state made a similar bet. The General Assembly gave the Revenue Department $1.5 million to rehire some auditors and collectors whose jobs had been lost in budget cuts.

From that investment, the department collected an additional $22 million.

Those employees also worked on the state’s tax amnesty program, which brought in another $60 million.

Most concerns about the money fall into two camps:

• How quickly can the state bring it in?

• Where is the point of diminishing returns? Or how much money is there that is not being collected?

Maybank said he will begin advertising the jobs late this spring, after the House finishes its deliberations and the Senate is well into its own.

He is not worried about diminishing returns.

First, his department has a roll showing that millions of dollars in taxes are outstanding. It just does not have the bodies to go out and collect the money, Maybank said.

“There’s no shortage of bills to collect or businesses to be audited,” Maybank said. “It’s not that they’re going to be doing anything differently.

“They’re just doing more of it.”

Also, budget cuts have forced the state to close tax offices in big cities. The state used to have 14 “foreign offices,” from which auditors would go to major corporations and audit their books to make sure they were paying their share of state taxes.

The department would immediately reopen some of those offices, Maybank said.

LOW BUDGET

Budget cuts have taken the Revenue Department back to historic employment lows. At the same time, the economy has grown astronomically.

“Obviously, there is a point of diminishing returns,” Maybank said. “But with 1969 employment levels, we’re so far from that point it’s not even in sight.”

Other states have run similar programs with success.

The Multistate Tax Commission surveyed its members and found that a dozen had bartered with legislatures to increase the number of collectors.

North Carolina tried a different tack. Its “Project Collect” program allowed that state’s tax department to assess a 20 percent collection fee on taxes that were more than three months overdue. Those fees were used to hire employees.

In the first two years, the department collected $187.5 million, surpassing its goal.

“The focus was to recoup money that was owed to the state,” spokeswoman Kim Brooks said. “We said that with the ability to add on ‘X’ amount of a fee, we can guarantee you ‘Y’ in collections.”

UNSURE PROJECTIONS

Some S.C. lawmakers are uncertain about spending money that is based on projections.

“We’re worried about this creative accounting,” said Rep. Joe Neal, D-Richland. “It obscures the problem a great deal.”

Gov. Mark Sanford said he supports Maybank’s efforts to make sure all taxpayers bear their fair share.

But Sanford is concerned that the money makes up as much as 10 percent of some agency budgets. He would like to see the Board of Economic Advisors confirm the projections.

“Given the painful midyear cuts that agencies have had to endure in recent years,” spokesman Will Folks said, “we must be very conservative in our budgeting practices.”

Some agencies are deciding to wait and see what happens with this spring’s budget deliberations.

The House begins debating the budget March 9. The Senate starts its work later this spring. Then Sanford will weigh in, all before the budget takes effect July 1.

The Department of Health and Environmental Control would welcome the $7.7 million it is slated to receive, spokesman Thom Berry said.

“But it’s early on with the budgeting process,” Berry said. “Who knows what’s going to happen between now and then.”

Reach Bauerlein at (803) 771-8485 or vbauerlein@thestate.com.