Senate Judiciary Approves State Spending Limit Legislation And Creation of a Budget Stabilization Fund

March 26, 2008 by senatormcconnell

Columbia, SC - The Senate Judiciary Committee today gave unanimously approved legislation establishing a new formula limiting state spending. Senate President Pro Tempore, Senator Glenn McConnell (R-Charleston), introduced the historic legislation as a way to curb state spending and stabilize the budget in years of economic downturns.

“The Budget Stabilization Fund will take the State off the financial roller coaster that affects the budget on an annual basis and prevent run-a-way spending,” says Senator McConnell. “This spreads the money out so that our growth and the handling of finances represents the 10 year average of annual growth increases. I’d also like to point out that there is nothing in the legislation that would prevent the General Assembly from spending less money.”

The Constitutional Amendment (S.718) establishes a formula limiting annual spending to the amount of money received during the prior fiscal year increased by the average revenue growth rates from the previous ten years. Any money available above and beyond the spending limit would be placed into a Budget Stabilization Fund, which could not exceed fifteen percent of the prior year’s actual revenue collections.

The implementing legislation (S.1220) outlines the conditions under which the General Assembly could withdraw funds from the Budget Stabilization Fund. In order for money to be taken out of the Budget Stabilization Fund, except for revenue stabilization and declared emergencies, the General Assembly would need to give approval by a two-thirds majority vote of the House and Senate members present and voting, but not less than three-fifths of the total membership of both the House and the Senate.

“This is perhaps the most important piece of legislation, in regards to the budget, that I have seen in the 24 years that I have been here,” says Dr. William Gillespie, chief economist for the state’s Board of Economic Advisors.

The legislation passed today is a result of more than 12 months of work by a special bi-partisan Spending Caps Study Committee, which has worked closely with Dr. Gillespie to create a spending limit that will create real financial accountability for state government. The two bills will now head to the full Senate for consideration. The constitutional amendment could be on the ballot in November if the House gives the bill priority status and moves it through the legislative process.

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