Tuesday, April 14, 2009

Cuts to Local Government Fund putting the squeeze on local governments

A little over a month ago, something happened in the South Carolina House that did not gain widespread attention. The South Carolina House voted to suspend the law related to the Local Government Fund for this budget year before passing the House’s version of the state budget. That act, if it holds in the South Carolina Senate, will pass the budget buck so to speak from the members of the General Assembly to local governments around the state.
Let’s look at what the Local Government Fund is. Back in the early 1990s, the money collected by local governments for the state were distributed back to local governments in various convuloted methods. The Local Government Fund was established to make the matter simpler and it did. The General Assembly determined that the Local Government Fund had to be at 4.5 percent of the previous state budget. That would be roughly $122 million for this budget year. The House voted to suspend that law, and cut the Local Government Fund by some $50 million in its budget. Other proposals still floating around have cutting the Local Government Fund by $70 million.
While these are difficult times, all the measure really does is shift decision making on taxes and budgeting to county and municipal governments. It smacks of classic political blame shifting. However, the state hamstrings county and municipal governments in how they deal with such cuts from the Local Government Fund. Millage can only be raised so much, even if the leaders and members of a local community desire it. Further, budgets can only be cut so much since the state requires this and that of county and muncipal governments. That leaves couny and municpal governments in a real bind.
The objective of the Local Government Fund legislation in the 1990s was to establish stability in expectations of state funds county and municipal governments could expect. It was meant for times like these most of all. However, the decision by the House was another illusion by politicians.
As it stands a member of the General Assembly can say to a citizen in a town that he did not vote to raise taxes or cut services. That member can blame the local town council. However, the South Carolina House broke its deal with local governments and shifted the political fallout to the local officials. Such smacks of the sleazy pass the buck mentality of used car dealers.
County, and especially muncipal governments, are where the “rubber meets the road” so to speak. It is where the essential services such as police protection, fire protection, water and sewer , and trash pickup are done. If your local fees happen to go up this year, before you blame the local leaders, take a look at the General Assembly. For, if the House has its way, it will cut the money due to local governments, and dictate how they can raise revenue or cut their budgets.
Think of it this way. Suppose you and I were in a compact agreement such as the relationship between state and local governments. Suppose I said to you, you have to spend $100 this way, and another $100 that way. Suppose I then said I would promise you $50 towards that. Then, out of the blue, I said, “Hey, this is a bad year for me, I can only give you $20, but you still have to spend the $200 and you had better not raise taxes more than $10.” You would be stuck scrambling for a way to find the other $20. All the while I would tell people in your town it was not my fault.

That is the situation the local governments in South Carolina, especially the municipal governments, are facing. The General Assembly is in the process of passing the buck and putting the squeeze on.

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