By Andy Brack, editor and publisher | Days after passing an $8 billion state budget, key members of the S.C. House will meet Tuesday to figure out which projects from a $2.7 billion list of agency needs may be funded through borrowing while interest rates remain low.
The House Ways and Means Committee is scheduled to meet Tuesday afternoon to consider agency capital needs for a state bond bill of about $425 million in the coming year. Borrowing that amount would increase the state’s debt service – or annual payment to borrow the money – by about $42 million a year. State officials, however, say that cost can be covered without adding to the state’s overall debt service budget because lawmakers have been aggressive in recent years in paying off high-interest and other debt, which frees up hundreds of millions of dollars of borrowing capacity now without lots of budget pain.
Ways and Means Committee Chairman Brian White, R-Anderson, said earlier in the month that the state hasn’t done borrowing through general obligation bonds in the last 17 years. Before Gov. Henry McMaster took office in January, the two previous governors, Mark Sanford and Nikki Haley, opposed general borrowing, which White characterized as “penny wise but pound foolish” in a March 7 subcommittee hearing.
Even though state lawmakers are looking at borrowing a half billion dollars, they could go after much more. State law allows legislators to spend up to 5 percent of the state’s general fund budget to repay bonded indebtedness. Based on the state’s new $8 billion budget, the law would allow general borrowing of about $4 billion total. To figure out how much that amount of borrowing would require lawmakers to pay annually in debt service, they use a 1:10 general formula with $1 of debt service needed annually to pay back every $10 of borrowing until the debt is paid off. Bottom line: Debt service on $4 billion in borrowing would be about $400 million a year.
Currently, the state budgets about $191 million to pay for bonded indebtedness. About a quarter of the fund is used for past general borrowing. More than half of the current debt service fund goes to accelerated payments, which pays off existing debt obligations sooner than required, officials said. And that half of the current payments can be the source of where future new debt service could come from without much pain.
“A thoughtful process”
White said crafting a bond bill would be “a thoughtful process that is managed” that leans toward funding higher education capital needs that have been deferred through the years.
“We’re going to try to keep it to maintenance within higher education,” he said March 7. “Higher ed had a lot of capital needs, a lot of maintenance needs. The hope is not to do new buildings on college campuses. That is not the point of this.
“I will tell you if the hogs come out and try to get greedy on something, it will go away as fast as it appeared. “
White also said he supported returning to the days of comparatively small bond bills every two or three years to keep up with the needs of the state through responsible money management, suggesting that waiting 17 years for a bond bill created many of the multi-million-dollar maintenance issues seen throughout state buildings and on college campuses.
“Now that interest rates will start going up, we need to act now and use a bond bill as a management tool as it should be done, not in a grab to get what you can get,” White emphasized. “It needs to be used wisely.”
A look at the requests
The spreadsheet at the bottom of this story highlights all of the bond bill requests by agency. To see a 39-page document that explains the projects under consideration next week, click here.
Of the $2.7 billion in requests, higher education agencies account for $2.1 billion, or 77 percent of requests. Here are some of the top college requests:
- Clemson University: $298 million in core maintenance and repair projects, plus $39.5 million for renovations at three buildings.
- College of Charleston: $482 million for outstanding construction and repair projects, plus $97 million in renovation or conversion projects to six buildings.
- Coastal Carolina University: $79 million in maintenance, plus $5.8 million to renovate three buildings.
- S.C. State University: $13.1 million in maintenance, plus $22.23 million in renovations, infrastructure and other needs.
- University of South Carolina system: $50 million to renovate the old law school plus $81.6 million in various renovation projects across campuses in Columbia, Aiken, Beaufort, Spartanburg, Lancaster, Walterboro, Sumter and Union.
- Medical University of South Carolina: $153.3 million in “capital renewal for critical systems,” which the university said would bring a 1:1 dollar match.
- Winthrop University: $78 million in “critical maintenance needs,” $29 million for a science addition and renovations and $2.9 million for roof repairs.
- Technical colleges: The state’s technical colleges submitted similar lists totaling $194 million in maintenance requests, $240 million in capital facilities requests and $70 million in equipment requests.
All of the remaining state agencies have a total request of $594 million, including:
- Education: $95 million to replace old school buses.
- Rural Infrastructure Authority: $25 million for water and sewer projects.
- State Ports Authority: $50 million for projects to increase container capacity, improve traffic, build and expand inland ports, and more.
- Natural Resources: $29.5 million for multiple projects, including renovations, dam repairs and work at fish hatcheries.
- SLED: $24.7 million for a forensics lab replacement and $14 million for a helicopter to replace an old one.
- Judiciary: $20 million for a court case management system.
- Administration: $93 million for deferred maintenance on state buildings.
- Parks, Recreation and Tourism: $27 to maintain state parks and $12 million for Welcome Center renovations.
The committee is scheduled to meet in Room 521 of the Blatt Building 1.5 hours after the House adjourns Tuesday. Committee members are expected to cut about five out of every six dollars from the list of requests to develop a $425 million borrowing proposal to present to the full House before the first of April. If approved, the bill would then go to the Senate for consideration.
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