Increased spending on health care, mental health and infrastructure— along with slight tax cuts— are the highlights of Governor Nikki Haley’s executive budget for the 2013-2014 fiscal year.
The Governor’s Office released its proposed $6.3 billion General Fund budget ($22.6 billion in total funds) on Thursday. That is up from $6.1 billion in this current year. The total funds would decline gently from $23 billion.
In a press conference, the governor said rising healthcare costs accounted for much of the $181 million increase in General Fund money. Haley said the 2009 Affordable Care Act— which expands the number of people eligible to receive Medicaid benefits— is leading to higher spending in multiple agencies.
That includes more than $156 million extra for the state Department of Health and Human Services this year. DHHS is responsible for overseeing Medicaid in South Carolina. Besides $74.8 million in General Fund dollars, the agency is also requesting $61.6 million from the Tobacco Settlement Agreement’s annual payout and $20.1 million in cigarette tax dollars. However, that is still much less than the $194 million increase DHHS director Tony Keck said he needed in October to keep up with the growth in Medicaid.
“The more that health care goes up in all of these agencies, the more that states are going to have to control the costs in their budgets,” Haley said, adding she was confident Keck would keep the agency from running a deficit.
The governor’s budget also calls for an additional $11.3 million for the Department of Mental Health. About $8 million of that increase is meant to replace cost settlement funds the agency has been using to cover its operating costs during the recent, lean budget years.
“We’re essentially replacing one-time funds that are going away, so that we can maintain the current level of services,” the agency’s General Counsel Mark Binkley told South Carolina Radio Network, “The bad news is those funds are diminishing and are just about gone. We predict, at the current rate, they’ll be gone by 2015 if they don’t get replaced.”
Haley also made a point to note that her office was requesting additional funds to make security improvements at the Lee Correctional Institute. The prison outside of Bishopville has seen two hostage situations in the past six months. Haley said she visited the facility shortly after the second situation in September.
“That was not the fault of the guards. That was not the fault of the facility,” she said “That was the fact that we are sending them in there every day and not giving them the tools to protect themselves.” Her budget request includes money to build observation towers and to purchase metal wands that can detect contraband.
She said her budget also includes a 3 percent raise for “front-line positions” in the state’s maximum security prisons. Haley said she learned during her visit that Lee Correctional had not been able to fill 60 positions at the prison. “People are too scared to work there,” she said.
A Department of Corrections spokesman said he did not know how many positions, if any, had been filled since the governor’s visit. However, he said the number of open jobs is still high. “You’re talking about working in a pretty high-stress situation,” Clark Newsom told South Carolina Radio Network, “And the entry level salaries are not as high as they might even be in some of the sheriff’s departments.”
Haley also called for the elimination of the 6 percent income tax bracket, instead dropping the rate on the $11,400-$14,250 taxable income range down to a 5 percent. That would reduce state coffers by about $26 million, her office says. The governor also called on legislators to reduce the pass-through business income tax from 4.33% to 3.67%. Lawmakers trimmed 0.67 percentage points off the rate in June. The additional cut would reduce the General Fund by $21 million, her budget proposal says.
The governor also targeted the Arts Commission in her budget for the third straight year. For the past two years, Haley has vetoed the Arts Commission’s budget, but lawmakers overrode her by large margins each time. For the 2013-2014 budget, Haley instead asks lawmakers to merge the Arts Commission with the State Museum Commission. The State Museum would take over the Arts Commission’s duties, under this proposal.
That idea was met with criticism by at least one House Democrat. “(Every) year I am amazed at @nikkihaley’s lack of understanding of what the SC Art’s [sic] Commission does and how it benefits SC,” State Rep. Leon Stavrinakis (D-Charleston) posted on Twitter shortly after learning of the idea.