Posted on Mon, Nov. 29, 2004


Surplus money must be used to repay trust funds



IT’S HARD TO remember the last time South Carolina’s fiscal house was in order.

Long before the economy soured, legislators had fallen into the irresponsible practice of using surplus money that wouldn’t be around the next year to start new programs and dole out tax cuts.

Now that we are finally pulling out of the bad times, lawmakers are in grave danger of falling right back into that bad habit, which increased the pain of the shrinking budget and will do the same if it happens again.

When lawmakers return to work in January, they will have $99 million of this one-time money burning a hole in their pockets. The money is from an annual reserve fund, which was designed to help pay the bills in case of a mid-year budget shortfall. For the past three years, officials have had to tap that fund to keep the government running; but since there was no shortfall last year, the Legislature is free to spend the money.

Gov. Mark Sanford has signaled he wants to use it to start paying back $187 million that lawmakers raided from trust funds to pay the bills through the shortfall.

Of course, few people want to do that, because it doesn’t buy anything now. Meanwhile, the state needs new school buses and bridges and school buildings, and state buildings are crumbling under neglect.

Even more immediately, the state needs more Highway Patrol troopers and after-school and summer school programs and prison guards. Some legislators want to throw caution to the wind and spend the one-time money shoring up those programs, or giving pay raises to struggling state employees.

Any talk of using this pot of money left over from the 2004 fiscal year to pay for ongoing operations in the 2006 fiscal year should be a non-starter. That is precisely the kind of action that hastened and lengthened our fall into fiscal crisis; repeating that pattern will have the same results. There is no question that the economy eventually will hit another soft spot. The only question is how soon. We simply cannot afford to set ourselves up for a repeat of the recent crisis.

The more difficult question is whether to buy the buses and road repairs and buildings — all one-time expenditures — or to pay back the trust funds.

It’s tempting, looking at our growing infrastructure needs, to take the first approach. After all, as one legislator put it, the debts are money the state owes itself — money that will just sit unused in trust funds.

That’s true — just as it once was true in Washington, back when the Congress started “borrowing” money from the Social Security trust fund. And now we face the choice of breaking our promise to retirees who can’t survive if we do, or of raising taxes tremendously to pay the bill. Bills — even those the government owes itself — eventually come due.

Even more significantly, our government is built on public trust. Raiding trust funds, then refusing to pay them back, is a perfect way to erode that trust.

Yes, we have urgent needs in our state, and paying back trust funds rather than starting to meet those needs will cause pain. But if there’s no pain in having raided trust funds, then there will be nothing to stop legislators from doing it again when times get bad — or even when times aren’t so bad, but they just want to spend more money.

Use the surplus to pay back the trust funds. We can’t allow it to become easy to break with the public trust.





© 2004 The State and wire service sources. All Rights Reserved.
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