Posted on Mon, Aug. 29, 2005


Lawmakers, comptroller general differ on plans for budget surplus


Associated Press

South Carolina's chief budget writers are upset the state's top bookkeeper used some budget surplus money to pay off the state's long-standing deficit without legislative approval.

Senate Finance Chairman Hugh Leatherman, R-Florence, said any decision on how to spend surplus dollars should be left up to lawmakers, not Comptroller General Richard Eckstrom.

"He has absolutely no authority to do that," Leatherman said. "He's not in the business of appropriating money."

Earlier this month, Eckstrom said the state took in $118 million more than expected at the end of the fiscal year. Typically, that surplus money is held over until the General Assembly returns in January and decides how to spend it.

But Eckstrom said he used $105 million to correct the deficit problem, which recently received the attention of outside credit-rating agencies that scrutinize the state's finances.

The deficit was cited before Standard & Poor's downgraded the state's rating a notch from its top Triple-A status in July.

"I didn't appropriate money by any stretch," Eckstrom said. "I felt I had a duty and professional responsibility to correct an accounting mistake that the state has carried for years and years."

The deficit is a result of money that was borrowed from future tax revenues during previous budget cycles.

Unless corrected, Eckstrom says the continued use of those "phantom revenues" equates to permanent deficit spending.

"The question of whether the surplus should be used for (deficit reduction) should be up for debate in the Senate," Leatherman said. "And it will be."

Senate Democratic leader John Land of Manning said the extra cash should be spent on more pressing needs, such as purchasing new buses for school districts.

"It's not like we're in debt to someone else; this is money that we owe to ourselves," Land said. "We need to look at what would be the wisest investment for the state of South Carolina."

House Ways and Means Chairman Dan Cooper, R-Piedmont, said he expects the House agree with Eckstrom's move.

"Since everybody pretty much agrees that it should be done, I don't think it'll be a big deal," Cooper said.

Nonetheless, Cooper suspects Eckstrom overstepped his legal bounds by earmarking the money.

As a result, an opinion from Attorney General Henry McMaster might be needed to clarify the issue, Cooper said.

Trey Walker, a spokesman for the attorney general, said leaders in the General Assembly have expressed concern, but none has yet asked for a formal opinion.

Eckstrom said the state was performing "accounting gymnastics" and misstating finances.

"It really makes the state a lot stronger," Eckstrom said of paying off the deficit. "I think I had statutory authority to do that."

University of South Carolina political science professor James Douglas says Eckstrom's decision was solid, even if the legal grounds were a little fuzzy.

"In terms of budgeting, the comptroller is doing the prudent thing," said Douglas, who specializes in state budget analysis. "The (state) constitution forbids the state from having a deficit in its operating budget, but that's what we've been doing."


Information from: The State, http://www.thestate.com/




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