The Palmetto Insider

A shrinking labor force and increased government hiring are making the job numbers look better than they really are, according to a new policy brief from the South Carolina Policy Council.

Despite a decline in the state unemployment rate from May to June (11.1 percent to 10.7 percent)—something typically viewed as a good thing—there were fewer people actually employed in June than in May. As of June 2010, there were 1,919,404 persons employed in South Carolina, compared to 1,920,479 as of May.

Workers who have dropped off the unemployment rolls are not included in unemployment figures. The pool of potential workers (i.e., those looking for work) shrank once again from May to June 2010—from 2,159,200 to 2,149,600—a contraction of 9,600 persons.

While private sector employment is shrinking, total public sector employment in South Carolina increased 2.27 percent from January to June 2010:

• Federal: 15.5 percent increase (31,500 to 36,400)
• State: 1.71 percent decrease (99,000 to 97,300)
• Local: 2.16 percent increase (221,900 to 226,700) 

Since the beginning of the recession in December 2007, private sector employment in South Carolina has declined by 124,100 jobs, or 7.71 percent. By comparison, public sector employment has increased by 19,600 jobs, or 5.75 percent.

SCPC President Ashley Landess was quoted in Sunday’s edition of The State in the story USC nixes bids; donor chooses architect- ‘Unprecedented’ move comes in late stage of bidding process. (this same article also appeared in the Rock Hill Herald, The Post and Courier) Landess said:

And one frequent critic of the university called it “an end run around the procurement process.”

“People shouldn’t deal with the university if they don’t play by the rules,” said Ashley Landess, president of the S.C. Policy Council.

If private money is mingled with public money, the project should have to follow public rules, Landess said.

“There will be public money involved in this project,” she said. “And a lot comes from other government sources. It’s a symptom of a bigger problem: the university blurring the line between private and public money.”

The Policy Council’s newest website The Nerve recently published a story that highlights the university’s continued unsuccessful participation in the economic development game. Also, this isn’t the first time the Darla Moore School of Business’ financial situation has been questioned.

In a budget year where House legislators ignored the opportunity to make targeted cuts to a number of nonessential services of government – State Museum, Arts Commission and Human Affairs to name a few – at least one fund is seeing a sizeable reduction.

Local aid to subdivisions – tax dollars shifted directly to localities – has been cut from $244 million to $216 million.

And while some localities will likely cry foul about the reduction – the reality is many local budgets have continued to grow despite the state cuts.

Moreover, discouraging localities from depending too heavily on state revenue is a good thing, just as the state should not be as dependent as it is on federal funds.

If municipalities are growing beyond the revenue they bring in, the appropriate response would be to scale back on spending. As the Policy Council has written, it is irresponsible to fill recurring spending holes with nonrecurring money – like federal dollars at the state level or state appropriations at the local level.

House Ways and Means Chair Dan Cooper defended the cut during the House’s recent budget debate, arguing that localities did not need the state funding – as evidenced by a 3 percent increase in government hiring at the local level during the previous year.

But why not apply the same logic to  the rest of government? For instance, by lowering fines and fees that result in excess revenue for agencies. Or, even better, implementing zero-based budgeting with the aim of reviewing the effectiveness of each appropriation.

About 500 people showed up for a March 18 debate in New York that addressed the notion, “Do Not Blame the Teachers Unions for Our Failing Schools.” The debate, sponsored by IQ Squared, asked the audience to vote electronically for or against the concept—once before the debate, and again after.

In other words, if you think the unions are to blame, you would vote against the motion. Two teams of three addressed the issue, for and against.

Before the debate, 24 percent of the audience agreed with the idea that teachers unions are not to blame for our failing schools, and after the debate, 25 percent thought unions are blameless.

Strikingly, however, while 33 percent of audience members were undecided at the beginning of the debate, and 43 percent did blame unions, the number of undecided fell to only 7 percent by the end of the debate, and 68 percent of the audience blamed unions for failing schools.

Not a great result for the teachers union side—it appears that most of the undecideds decided that teachers unions look out for union members first—kids a distant second. If you’d like to see the debate, it can be found in its entirety here.

There are solutions to the problems we face in our schools, many articulated by panelists at the debate, including greater school choice and weighted student funding.

WBTW News 13 in Myrtle Beach reported today that Myrtle Beach city leaders are trying to find ways to address what is apparently a severe budget crisis. The story quotes Myrtle Beach public information officer Mark Kruea as saying that “we are looking for every possible way to save a dollar.”

The story mentions city leaders will be discussing this year’s budget at their annual budget retreat. This year’s retreat will be held from April 7-9, 2010, at the Wampee Plantation Conference Center in Pinopolis, S.C., on the shores of Lake Moultrie. We wonder if its dawned on city leaders that cutting this year’s three-day, overnight retreat might be a good place to start when looking to cut nonessential services.

It’s unclear how much the retreat is costing taxpayers, or why city leaders cannot meet at a location in Myrtle Beach. What is clear is that holding an overnight retreat to discuss possibly cutting city services does not pass the smell test.

This is just another example of government failing to prioritize spending. Check out The Nerve and SC Policy Council for more news on politicians misusing your tax dollars.

It should come as no surprise that the House easily let pass a new budget proviso (89.112) that takes $15 million from the Insurance Reserve Fund to pay for a new economic incentives plan for the airline industry … that is, via regional economic development entities.

After all, the plan (H 4343) has already passed the House – on an unrecorded vote – and is currently awaiting review by the Senate Transportation Committee.

In fact, Ways & Means Committee Chairman Dan Cooper insured passage of the proviso by separating it from a much more controversial proposal to also take $10 million from the Insurance Fund to pay for tourism promotion (read: “The Heritage Golf Tournament”) in Beaufort County.

Legislators hotly debated that giveaway – because, to paraphrase Rep. Ralph Norman, they might not want to see newspaper headlines asking how lawmakers could cut education funding, but still use state insurance funds to back a golf tournament. In the end, though, lawmakers overcame their fear and the proviso passed anyway by a vote of 69 to 43.

No doubt, Norman is right that it’s not the state’s role to bail out a golf tournament.

So how about the airline industry? Why not a peep asking whether it is the state’s role to “provide more flight options, more competition for air travel, and more affordable air fares for the State of South Carolina”?

Consider that 16 percent of South Carolinians live in poverty – that’s about 716,000 people.  Let’s ask these folks – as well as the taxpayers bankrolling the Insurance Reserve Fund – how they’d like to use this money? How about to fund more charter schools? Or to lower taxes on the working poor? Or to lower taxes for everyone?

It is doubtful that many South Carolinians agree with using taxpayer funds to prop up the airline industry.

But if we’re going to pay for a golf tournament, the same logic dictates that we subsidize the airfare for folks to attend.  And that we also subsidize the planes they fly in (Boeing); as well as the places where they shop (Sembler and Bass Pro Shops).

It seems there is no economic activity – and recent legislation passed by the House may well insure that fact – that is not subsidized by the state government.

State government, though, is not an entity unto itself; it’s not a productive enterprise. So, if everything we do is already being subsidized, why not just cut taxes for everyone and take the politicians out of it?

More to the point, a government with the power to subsidize every economic activity also has the power to tax and license every economic activity (more on that, here). In short, it is a government with the power to control all economic activity.

On Tuesday, Richland County joined the growing list (19 so far) of city and county governments that have put their check registers on line. Nice job Richland County!

We wondered in our Tuesday blog when the City of Columbia’s long awaited promise to post its check registers would be fulfilled. That day, interestingly enough, is today. Coincidence?  The immense power of our blog post? Sure, why not?

Welcome, Columbia, to the ranks of more-transparent governments.

Yet much more needs to be done. The state still has not enacted several important transparency reforms, including the Truth in Spending Act, which would require every state agency and local government to post their check registries online.

South Carolina has been doling out incentives at a rapid rate – more than $1 billion over the past 10 years.

But what do we have to show for it? It’s hard to say, given the lack of transparency and accountability that overshadows such deals.

As indicated by a new SCPC report, Three Steps Toward Transparency, “Economic development legislation should be crafted in a deliberative manner subject to full public review and debate.”

Among the white paper’s recommendations is the creation of a unified economic development report, released annually by the Department of Revenue. The report would detail all state and local expenditures for economic development, including targeted tax credits; and list all uncollected state and local tax revenues resulting from any tax credit or exemption provided by state or local governments.

While transparency opponents are likely to balk at releasing such information, several states have already created economic incentives transparency websites. According to a report by the Washington, D.C.-based organization Good Jobs First, Illinois, Iowa, Minnesota and Pennsylvania have the best disclosure websites.

As for South Carolina … we scored an “F.” When it comes to incentives transparency, the Palmetto State is the 4^th worst state; only Alabama, West Virginia and Wyoming score worse than South Carolina.

Some of the Good Jobs First report’s findings and recommendations:

“Many of the states disclose only projected costs but not actual benefits. That is, they provide information about deals as they have been awarded, but they do not report outcomes of the deals over time (such as jobs actually created).

“In addition to moving toward full transparency about the subsidies awarded, states should do more to monitor the performance of subsidy recipients—the outcomes of the deals— and disclose those results to the public.

“Given how much easier it has become to post information on the Web, we also recommend that state disclosure data be updated quarterly, instead of annually.”

Many of those similar proposals are outlined in the Policy Council white paper. But they are ideas you won’t find in the massive economic development bill, H 4478.

The question, though, is why not? If state-driven economic development is such a good idea, then our political leaders should have no qualms showing the public just how well their money is being spent. Transparency is a win-win, Unless, of course, the powers that be already know that economic incentives are not working – except to benefit themselves and their friends.

It seems the South Carolina General Assembly has had no problem thinking up wacky ideas this week.

First is a proposal “that would mandate that gold and silver coins replace federal currency as legal tender in this state.”

First talked about in the SC blogosphere, this idea made its way into the national news and surely provided many folks across the country with some good laughs.

Next is a bill that would ban alcohol sales on Christmas and Thanksgiving Day.

This idea will likely anger eggnog drinkers and those who enjoy spirits on these two holidays. But it’s a good complement to another proposal that confirms that while it should be illegal to sell alcohol on Sundays, paying a fee to sell alcohol on Sundays makes it OK.

And just yesterday, the House of Representatives passed a bill that would ban secret compartments in cars. That’s right, no compartments or fuel tanks other than those installed by the car manufacturer.  This bill was introduced last session, as noted in our Best/Worst review of property rights legislation. The intent of the bill is obviously to discourage drug smugglers, but the act of creating a secret compartment in itself should not be illegal.

These three ideas kicked around by the General Assembly this week may be humorous, but there is nothing funny about lawmakers playing around with our personal freedoms. To read more, click here.

From South Carolinians for Responsible Government:

“The annual list of South Carolina’s most persistently failing public schools has been released and is now online:

http://www.voiceforschoolchoice.com/2010/02/03/south-carolinas-worst-public-schools-2009-10-edition/

In late January, it was announced that hundreds of local public schools failed to meet minimal improvement goals set by state and federal officials, known as Adequate Yearly Progress (or “AYP”).

This list of the most persistently failing schools details those schools which have consistently failed to meet their annual goals, some for up to six years in a row.”