To Our Friends in the Legislature,

On behalf of our Board of Directors and nearly a thousand members around South Carolina, I want to take a moment to inform you of our goals for the 2008 legislative session.  First, however, I would like to give you a quick recap of our involvement in the 2006 election cycle, where the SC Club for Growth PAC endorsed candidates in 23 primary and general election races.  Thanks in part to the electorate’s desire for change, as well as the generosity of our members who contributed hundreds of thousands of dollars, our endorsed candidates won 17 elections – an impressive 73% of the races in which we were involved.

With those successes in mind, we wanted to share our goals for 2008:

Restructure Government.
More than ever, South Carolina needs a modern, streamlined state government.  The government model created by our 1895 Constitution has led to little accountability and huge financial waste.  Inefficiencies have led to a state government that costs 130% of the national average.  In the past five years alone, studies show that over $1.5 billion could have been returned to taxpayers’ pockets.  We believe those taxpayers are demanding change.

One structural change should be the creation of a Department of Administration to assume the duties now handled by the Budget and Control Board.  South Carolina is the only state with a Budget and Control Board and the time has come for new ideas.  At a minimum, the new Department of Administration should administer state contracts and payroll. In just the past year alone, we’ve seen agency head pay raises with no performance reviews and uncovered $20 million in no-bid contracts.   As long as taxpayers’ hard-earned money is appropriated without true accountability, these kinds of waste will continue.

Few know that the typical state has four statewide constitutional officers.  Our constitution requires South Carolinians to elect nine.  Voters deserve the chance to change this outdated governance model.  That’s why the South Carolina Club for Growth supports giving every South Carolinian a chance to vote on whether constitutional officers should continue to be elected or instead, appointed by the governor.

Additionally, the South Carolina Club for Growth calls for more accountability at the Department of Transportation.  Since 2004, SCDOT’s budget has increased by 50% – from $860 million to $1.29 billion – yet continued stories about mismanagement show how badly the Budget and Control Board system needs reform.  We urge all reform-minded South Carolinians to support a cabinet level Transportation Department.

End the Competitive Grants Program.
The Club for Growth believes that parks and festivals improve quality of life, but it is now apparent that the Competitive Grants program has become a slush fund for political influence.  The program, under the Budget and Control Board, continues to lack any reasonable measure of oversight.  A recent investigation showed that grant recipients are improperly using money, and further, no accountability reports have been filed for 20% of programs. The Competitive Grants Program’s $18,500,000 in non-recurring revenue should be used more responsibly or returned to taxpayers.

Restrain State Spending.
South Carolina’s state budget has increased by a massive 40% in the past three years.  While most South Carolinians are fiscally conservative, that is one of the highest spending increases in the country and over four times the 9.5% national average. These spending levels are unsustainable.  Especially given these recent increases, we call for limiting the spending growth of our tax dollars to population plus inflation.  The FY 2009 rate of population plus inflation is expected to be 4%.

Address $20 Billion in Unfunded Liabilities.
South Carolina’s unfunded liabilities pose serious threats to the fiscal stability of our state.  We have a $9.7 billion retirement system liability, a $10 billion retiree health insurance liability, and a $38 million Tuition Prepayment Program liability.  Combined, these currently unfunded liabilities are greater than the state’s annual general fund collections and continue the state toward passing the liabilities on to future generations.  Although legislation must still pass to direct the funds, steps were taken last year when over $47 million in recurring funds were dedicated to reduce other post-employment benefit (OPEB) liabilities. More needs to be done, so we are proposing that at least $200 million in recurring funds is directed to unfunded liabilities.

We also believe requiring all new state employees to join the defined-contribution plan, which will lower current costs and future liabilities.  The defined-contribution plan, as opposed to our outdated defined-benefit plan, also allows state employees more flexibility and control as they plan for retirement.

Pass Comprehensive Tax Reform for All South Carolinians.
We support efforts to lower South Carolina’s uncompetitive top marginal income tax rate of 7%. While a great start, we think Governor Sanford’s 3.4% flat-tax proposal to reduce personal income taxes with an increase in cigarette taxes is too modest.  We urge the legislature to consider across the board tax decreases in order to spur economic growth and in turn, create jobs.  These reforms would be especially important as the state’s economy follows national economic slowdown trends.

Enact Real, Free Market Reforms in Education.
It is unacceptable that over one-third of our schools are considered failing and that half of our students don’t finish high school.  The time has come to address these failures with market choices and bold new initiatives rather than throwing more money at the old system.  We believe per-pupil funding, merit-based teacher pay, and school district consolidation are the path to success.  Market-based reforms can and will work if given the chance.

We will closely follow progress on these issues over the coming months.  We have a commitment to our members to track and report committee votes, subcommittee votes, and the full chamber votes on these issues.  The results will form the basis for our next legislative scorecard, which will greatly influence the actions of our members and our PAC in this year’s cycle.

We are very hopeful that we can make great progress on these issues and look forward to working with you to improve our state in the coming year.

Sincerely,

South Carolina Club for Growth