This is something of a state issue, but one that continues to get bigger and bleeds into Washington as well.

New accounting rules — and the propsect of huge retirement liabilities showing up on local government balance sheets — is helping spur a new constituency to agitate for pension reform in South Carolina. Cities, for the first time, have a motive to weigh in.

At issue are moves at the national level to make pension liabilities more clear, but that could divvy up shares of South Carolina’s statewide pension system in ways not calculated before.

From our story about it:

Government transparency advocates such as the Institute for Truth in Accounting say the rule change will clearly show the cost of public retirement systems to the public.

The Government Accounting Standards Board, which is weighing the new rule, said it will offer “significant improvements” in the usefulness and accountability of public pension information.

But Greenville, with its newly minted AAA credit rating, is representative of cities worried that the added paper liability could hurt their credit, said Heather Ricard, chief financial officer for risk management services at the Municipal Association of South Carolina.

…

The upshot is that cities are wading into the state debate over pension reform for the first time, pushing for action that could end up changing retiree benefits, Greenville administrators say.

Click here to be taken to the article.

2009 South Carolina Financial State of the State

“With a global recession forcing belt-tightening across the board, we sensed a growing recognition among many in the House and Senate of something we’ve advocated for years – namely, that government cannot grow faster than the underlying economy, and that tough decisions must be made now and not kicked down the road to next year,” Sanford said in a statement.

Of course, none of that money will ever make it back to the taxpayers of South Carolina. Instead, lawmakers will apply the money to an anticipated $1 billion shortfall in next year’s budget.

Also, despite this $261 million in “savings,” the total state budget for FY 2010-11 is approximately $20.8 billion – making it the largest spending plan in state history.  S.C. lawmakers appropriated $20.8 billion two years ago and $20.6 billion last year – although revenue failed to keep up and they were forced to trim back both of those budgets to just over $20 billion apiece.

Juanita Banks was one of many advocates for people with disabilities and special needs who showed up at the State House for a rally Wednesday. Her daughter, Tammy Lamb, needs services that total more than $52,000 per year.

“Tammy was born with Cerebral Palsy, mental retardation. She weighed one pound, 13 ounces at birth,” Banks said. Banks is a single working parent who does not get child support.

“Who is going to pay for that? I mean, I can’t,” she said.

Marielena Petruski was also there, representing the Disabilities and Special Needs Board.

“The need doesn’t stop just because the money stops,” Petruski said. “There are no services for these folks. They are going to sit at home. They are going to be bored. There’s going to be problems. We’re going to tax already strained services in government, law enforcement, and the medical field.”

Representative Seth Whipper said, “We don’t want to see children of families that are struggling now under the unemployment situation not being able to get medical care.”

Senator John C. Land III said the cuts are cruel. “It’s one thing to push around somebody who can help themself, but it’s another thing to push around someone who is mentally retarded, can’t work, can’t get out here in society and hold a job.”

South Carolina’s Comprehensive Annual Financial Reports can be found at: http://www.cg.state.sc.us/

South Carolina is required to pass a “balanced budget”. Article 10, Section 7(a) of the 1895 Constitution requires a “budget process to insure that annual expenditures of state government may not exceed annual state revenue.” In addition, Section 11-11-345 of the State law requires that if the year-end GAAP audit shows a deficit, any appropriation of surplus funds is suspended, and is used to offset the deficit. Regardless of these requirements, the State reported budget deficits (negative net transactions) on its Budgetary Comparison Schedule for the three years reviewed. South Carolina law forbids the carrying over of a deficit from one year to the next.

Governmental funds include the General Fund, several (nine plus a tenth aggregated fund) Special Revenue funds, a Capital Projects Fund, and two Permanent funds. State law does not precisely define the State’s basis of budgeting. In practice, however, it is the cash basis with some exceptions that are explained in Note 4 to the Required Supplementary Information–Budgetary. As seen in the State’s data sheet, budgeted and actual revenues are reasonably in sync. The same cannot be said about expenditures. The State budgets the General Fund and Other Budgeted Funds. The State’s CAFR does not reveal what funds are included in “Other Budgeted Funds”.

* The GAAP Basis balance is not an accurate representation the State’s financial condition, because significant liabilities are not included. These liabilities for the pension plans and for other post employment benefits, such as health care.