The South Carolina House on Tuesday passed a compromise bill that calls for a public referendum on whether or not to increase the amount of revenue required to be held in the state’s General Reserve Fund. The current minimum amount to be transferred from the General Fund to reserves each year is three percent. The legislation would raise that to at least five percent.
House Speaker Bobby Harrell says the measure may not sound like much, but in reality it’s much more than a detail that the budget office has to worry about.
(Harrell on Reserve Fund MP3 1:16)
Harrell on Reserve Fund
The change in the reserve fund would take place beginning in fiscal year 2011 and end by 2015.
Some House leaders have complained that the real budget problem is not as much the percentage of the reserve fund as it is the overall drop in state revenues. But Harrell argues to the contrary. He says it’s true that the recession did slow down the state’s revenue. But says the extra reserve fund will give agencies more room and help them to avoid nasty across-the-board cuts in rough times.
But Harrell says even if the Senate overrides the veto, and he hopes it does, there is one more stop before the legislation becomes law, since it involves a constitutional change: Voters will have to approve it on the November ballot.