Take the Stimulus or Not

As I write this Governor Mark Sanford is debating whether to accept the stimulus money from the federal government. Sanford wants to use the money to pay down debt, but the money, as with all things from the federal government, comes with spending requirements that do not allow debt reduction. The legislature is divided on the issue as well they should be.

The problem of the budget in SC is a complex one with the major issue being the high unemployment (one of the highest in the nation). Tax revenue is down, but spending on government spending is up. South Carolina is a microcosm of the economy in total. As Governor, you want to help the people of SC that have lost their jobs, but Sanford is unwilling to help them at the expense of their children.

The stimulus money is for two years. If the money is added to the the revenue stream in SC and budgeting is done in the normal baseline budgeting manner, in two years, when the stream dries up, the income must be replace with instate money. Unless the economy booms, that will not happen.

South Carolina is a diverse state with manufacturing areas in the upstate, rural agricultural communities in the Pee Dee, and the tourist areas along the coast. While the upstate counties and areas around Charlotte and Columbia are prosperous with good schools, the rural counties have fewer resources and job opportunities. The coast is heavily populated, but many of the jobs are service or construction type and not the higher paying technical jobs of the upstate.

The areas most hurt by the current recession are the areas that were already below the state average. While manufacturing job losses are high, this recession has really hurt the tourist and small construction business. Taking the stimulus money and spending it on the prescribed education would be helpful to those hurting the most. The issue is complex.

The solution to a complex problem is a series of simpler solutions. First, Governor Sanford has to make his point politically that we need to exercise extreme caution in taking the money from the federal government with the strings attached. Help should not come with such strings.

Second, rather than let the budgets balloon based on short term money, use the money for short term projects where needed and define the spending as outside of budget spending. Use the money for capital spending that helps infrastructure, but does not require extended maintenance.

Third, seek to outsource and privatize some state agencies. Prisons seem like and easy start. With some basic rules and oversight, long term prisoners could be kept anywhere in the world less expensively than here.

Fourth, promote growth in rural areas. Offer tax incentives to companies to locate in and hire workers from rural areas. Give companies tax incentives to locate in any county with unemployment below the average of the 46 counties. If any company in the state hires workers that are currently receiving unemployment benefits for more than 3 months, they can deduct the cost of the employee including salary, benefits and training costs from their profits before taxes for two years.

Fifth, to help people get back on their feet now, people that have been on assistance for more than 3 months will pay no state taxes for one year. No withholdings will put more money in their checks every week to get them out of any debt accrued quicker.

Sixth, reduce property taxes now. Prices on real property are falling and with foreclosures, will continue to fall for several years. Taxes are not being revalued based on these reductions in value. Reduce the property taxes to rates below the national average. Based on income and cost of living, SC taxes should be in the lower 4th of the nation. It is not.

These solutions each come with a price. State expenditures have to be controlled. State employees will become part of the unemployed, but if the administrators are allowed to cut employees based on the same criteria as private businesses, government will operate more efficiently. We cannot continue to support a bloated state government, an oppressive federal government, an dependent population and and aging workforce. If we don't react swiftly and decisively, our children and grandchildren will call us the weakest generation.