"I have been here 10 years, and I've never seen a budget you could take and run state government with," said Chairman of the House Ways and Means Committee Bobby Harrell, R-Charleston. "You can do that with this budget. I am very pleased with the way he is going about this.

"We have some disagreements, but we will be using this as a starting point."

The state's total budget, which includes federal money, is about $15 billion. The governor's executive budget deals with the roughly $5 billion generated by state revenue.

The governor's $5.1 billion budget proposal, outlined in a 301-page document, relies on governmental reform, increased efficiencies and targeted cuts to save the state $344 million while not increasing taxes. For the first time in a long while, it would add funds to education and corrections spending.

South Carolina is roughly $350 million in debt, and for the fifth consecutive year, the state anticipates nearly zero revenue growth.

"We have a hole of basically $350 million," the governor said Thursday. "This budget plugs that hole, doing a couple of different things, based on the value system that we hold."

The governor said his value system focused on several factors, two key ones being not raising taxes and making education a top priority.

EDUCATION

Under the governor's proposed budget, K-12 education would receive $29.7 million more than the spending last year. It also raises the state's base student cost, the amount required under the state school funding formula to provide an adequate education, by $67 to $1,810.

"In an incredibly difficult budget year, a budget year where in you walk in $350 million short, we were able to hold education harmless and in fact add some to it," Sanford said.

State Superintendent of Education Inez Tenenbaum released a statement late Thursday. She was glad to see a slight increase in the BSC, but felt it was unfortunate the money came at the expense of some programs aimed at improving academic achievement.

"Early childhood education takes a hit, as do some excellent reading and writing improvement efforts," she said. "We're already not delivering the help to struggling schools that state law requires, and this budget proposes to cut those services even more. So those are definitely concerns."

Sanford's budget proposes a base student cost of $1,810. Tenenbaum said that while that may be higher than the current BSC of $1,743, it also is lower than 1997-98, before the mandates of the Education Accountability Act and No Child Left Behind.

"The base student cost is determined by a formula in the Education Finance Act, and for next year that formula calls for a BSC of $2,234," she said. "If we're going to follow precedent and follow state law, that's where it should be."

As for higher education, the governor's budget calls for reducing funding by 2.6 percent and recommends the elimination of two regional campuses of the University of South Carolina over three years.

The governor recommends closing the USC-Salkehatchie campus in Allendale and the USC-Union campus in Union. Statewide enrollment since 1993 has increased 7.1 percent while enrollment at USC-Salkehatchie and USC-Union has declined 14.4 percent and 22 percent, respectively, the governor said.

Still, according to Sanford, that's better than last year when higher education took a 10 percent cut.

"The governor's budget has several very intriguing proposals," Commission on Higher Education spokesman Charlie FitzSimons said. "He has been bold in his approach, and he has been consistent in his approach of leaving no stone unturned."

RESTRUCTURING

As expected, government restructuring played a large role in the governor's budget. Last year the Governor's Commission on Management Accountability and Performance proposed widespread reforms, including the elimination of three constitutionally elected offices: secretary of state, superintendent of education and adjutant general.

The governor's budget goes farther, proposing:

-- The governor and lieutenant governor run for office on a single ballot.

-- The following constitutionally elected offices would become appointed positions: adjutant general, commissioner of agriculture, comptroller general, secretary of state, superintendent of education and treasurer.

-- Duties of the election commission fall under the secretary of state's supervision.

In addition, the governor proposed reducing the number of state agencies from 87 to 72, consolidating or eliminating 15 agencies in an attempt to streamline delivery of services as well as saving money.

For example, Sanford's plan calls for changing the name of the Department of Health and Human Services to the Department of Healthcare Oversight and Finance. The Department of Alcohol and Other Drug Abuse Services would be eliminated and its duties rolled into the newly named DHOF.

The alcohol and drug abuse agency Director Lee Catoe welcomed the proposal, despite the prospect of losing $1.5 million in state funding and 20 to 25 jobs.

"I thought it was a responsible budget," he said. "Certainly we support it. One of the good things about Sanford's proposal is that delivery of services at the local level would not be affected. I applaud the governor for coming up with a progressive plan. We have to learn how to work smarter and harder and provide quality services with less money."

If the changes are approved by the Legislature, the agency likely will move into DHOF offices downtown, saving about $444,000 a year in rent on a building north of Columbia, Catoe said.

Bryan Kost, spokesman for Health and Human Services, said that department could easily accept the alcohol and drug abuse agency.

"They operate the same way we do," he said. "We both purchase, manage and oversee services."

In another change, a new department would be formed named the Department of Health Services, which would include the health programs at the Department of Health and Environmental Control (to be called the Division of Public Health) and the Department of Mental Health (renamed the Division of Mental Health).

Following the governor's press conference, Geoff Mason, DMH's chief of staff, said officials with the agency were still studying the proposal. The governor's plan, aside from calling for structural change within the agency, proposes a budget of about $8 million less than DMH received last year.

This would add to a string of cuts DMH has wrestled with over the past three years, roughly $37 million since 2001.

"Our agency's goal is to ensure that quality services will still continue with any budget and restrictions," Mason said.

According to Sanford's budget, the restructuring moves will save taxpayers about $26 million a year. Such moves would also lead to more lost jobs, though the governor could not say exactly how many.

"Will some people lose their jobs? Yes," he said. "That's the reality of a $350 million shortfall. But the bigger part of it, and it's something we must keep our eye on, is will taxpayers get a bigger bang for their buck and will they get better services."

TAX REFORM AND MEDICAID

One issue noticeably absent from the governor's budget was his proposal to cut the state income tax by 15 percent and replace the lost revenues with higher taxes on cigarettes and lottery tickets. The governor said he was still dedicated to the plan, but wanted little in his budget dependent on something else happening.

When he proposed the idea last year, some felt the governor had turned his back on a previous plan to use cigarette taxes to fund Medicaid. The governor said at the time that he planned to fully fund the health care program, which seems perpetually in danger.

In his proposed budget, Sanford has set aside $140 million in recurring funds for Medicaid.

Kost complimented the governor's budget for using recurring funds to pay for the service.

"It's nice to know that that will be there," he said. "For more than a decade, Medicaid has been funded using one-time money that is not there the next year. He's addressed a long-term need that everyone agrees needed fixing."

Harrell was not the only legislator impressed with Sanford's first budget. Senate President Pro-Tem Glenn McConnell R-Charleston, in a statement released by his office, said he was pleased with the governor's thoroughness.

Speaker of the House David Wilkins echoed his sentiments.

"I applaud Gov. Sanford for writing a workable, pragmatic budget that includes both bold changes and real solutions for meeting our state's fiscal responsibilities," Wilkins said. "For the first time in several years, we have a realistic executive budget that the General Assembly can truly incorporate in writing the state budget. While it will take time to review all of the proposals, and there will likely be some areas of disagreement, this is an excellent start."

Click here to return to story:
http://www.charleston.net/stories/010904/sta_09govbud.shtml