Carolina Redesign · The Palmetto Ledger · Issue 2
One year, two budgets, and not a single agency cut
South Carolina law requires zero-based budgeting: every appropriation justified from scratch, every year. We compared the enacted FY2024-25 budget with the enacted FY2025-26 budget — all 115 agencies, line item by line item — to see what actually happened. The answer: not one agency's general-fund appropriation went down. A hundred and one went up. Ninety-one cents of every general-fund dollar is last year's number, carried forward. This is what the base looks like when nobody re-argues it.
Issue 1 of this series mapped where South Carolina's money comes from. This issue asks a different question: how does the budget change from one year to the next — and how much of it is ever actually re-examined?
Zero-based budgeting has a simple premise: start every agency at zero, and make it justify every dollar it requests. The opposite of ZBB is incremental budgeting: start every agency at last year's number, and argue only about the increase. South Carolina's statute calls for the first. The best way to test which one the state actually practices is to hold two consecutive enacted budgets side by side and measure what moved.
That is what this analysis does. We compared the recurring appropriations in the FY2024-25 Appropriations Act against the FY2025-26 Act (H.4025) for all 115 agency sections — $12.42 billion in state general funds growing to $13.25 billion — and then went a level deeper, matching roughly 2,400 individual line items across the two years by agency, program, and line description. The result is a precise anatomy of one year of budget change: which agencies moved, by how much, and how many numbers were simply carried forward untouched.
All figures are verbatim extractions from the enacted FY2024-25 and FY2025-26 South Carolina General Appropriations Acts, processed through the Palmetto ZBB Suite. Agency-level comparisons use each act's official Section Recapitulation. This analysis covers recurring Part IA appropriations; one-time surplus and Capital Reserve Fund spending is excluded (it is the subject of a future issue). "General funds" is state tax money the legislature appropriates directly — the third of the budget it fully controls.
Of the 114 agency sections that appear in both years' budgets, 101 received a general-fund increase and 13 stayed exactly flat. None — not one — was reduced.
In a genuinely zero-based process, some agencies would win and some would lose in most years — priorities shift, programs end, one-time needs expire. In an incremental process, the distribution looks exactly like this one: everyone's base survives intact, and the argument is only ever about the size of the raise. The median GF-funded agency grew 7.5% in a single year. Statewide, general funds grew 6.6% — well above the pace of inflation or population growth.
The increases themselves are not the indictment; many fund real cost growth in salaries, health plans, and caseloads. The indictment is the shape of the distribution. When 101 agencies move up and zero move down, the floor under every agency is last year's appropriation — which is the one thing a zero-based process is not supposed to guarantee.
Note: the Capital Reserve Fund and Debt Service appear here because they are appropriated in Part IA; both grow by statutory formula rather than agency request.
Plot every GF-funded agency's one-year growth rate and the picture is unambiguous: the distribution starts at zero and only goes up.
Among the 104 agencies that receive state general funds, the single most common outcome was a raise of 5–10%. Eighteen agencies grew 10–20%. Fifteen grew more than 20%. And at the bottom of the distribution, the floor: three agencies flat to the penny, zero agencies below it. A budget process with a hard floor at 0% and no ceiling is a ratchet — it turns in one direction only.
The fastest movers were mostly small and mid-sized agencies: the Department of Archives & History nearly doubled (+95.8%, $6.4M → $12.4M), the Department on Aging grew 64% ($22.5M → $37.0M), the Department of Employment and Workforce grew 59% ($8.2M → $13.0M), and the SC Conservation Bank grew 46% ($16.3M → $23.8M). Among large agencies, the Department of Public Safety (+22.1%), Department of Environmental Services (+24.9%), and Department of Veterans' Affairs (+27.2%) posted the steepest climbs.
And the flat 13? Ten of them receive no general funds at all — they simply have nothing to cut. The other three are the more interesting story: the Department of Transportation's general-fund appropriation was $123,057,270 in both years — identical to the penny. So was the Public Employee Benefit Authority's, at $112,368,739. Numbers that repeat to seven significant figures were not re-derived from zero. They were copied.
| Fastest-growing agencies (>$5M base) | FY2024-25 GF | FY2025-26 GF | Change |
|---|---|---|---|
| Dept of Archives & History | $6.4M | $12.4M | +95.8% |
| Dept on Aging | $22.5M | $37.0M | +64.0% |
| Dept of Employment & Workforce | $8.2M | $13.0M | +59.1% |
| SC Conservation Bank | $16.3M | $23.8M | +46.2% |
| Dept of Insurance | $7.7M | $10.9M | +41.4% |
| State Museum Commission | $7.4M | $10.5M | +40.6% |
| Dept of Veterans' Affairs | $74.8M | $95.1M | +27.2% |
| Dept of Environmental Services | $82.4M | $103.0M | +24.9% |
| Dept of Public Safety | $178.0M | $217.3M | +22.1% |
The Division of Aeronautics grew +222% ($2.6M → $8.2M) from a smaller base. Growth percentages for agencies with negligible prior-year GF (e.g., the Public Service Commission, which moved from about $1,300 to $543,000) are excluded as bookkeeping artifacts.
Drop below the agency level to the roughly 2,400 individual line items in each act, and you can decompose the entire $13.25 billion general fund into what was inherited and what was decided.
Matching this year's line items to last year's — same agency, same program, same line description — accounts for 89% of the current budget's line structure. Within those matched lines, 1,410 carry the identical general-fund amount in both years; 747 of them are non-zero appropriations worth $1.71 billion, entered in the new act at the exact same dollar figure as the old one. The rest of the matched lines moved: $917 million in increases against just $186 million in reductions — five dollars added for every dollar trimmed. New line items contributed $286 million; discontinued ones removed $191 million.
Add up the money that reflects an affirmative new decision — the increases plus the new lines — and you get $1.20 billion, about 9.1% of the general fund. The other 90.9%, $12.04 billion, is last year's base riding into the new act at or below its prior level, overwhelmingly at it. That is the increment in incremental budgeting, measured: the annual appropriations debate is, in dollar terms, an argument about nine cents on the dollar.
"Seven hundred forty-seven line items — $1.71 billion — appear in the FY2025-26 Appropriations Act at the exact dollar figure they carried the year before. A number that repeats to the penny was not justified from zero. It was inherited."
Here is the twist that makes this year's comparison unusual: while general funds grew 6.6%, the total budget — all funds — actually fell 2.7%, from $40.23 billion to $39.16 billion. Both things are true, and the gap between them is the story. Non-general-fund money, mostly federal, dropped by roughly $1.9 billion, and state tax dollars rose to backfill part of the hole. The state swapped federal money for its own.
The swap is concentrated where the pandemic-era federal money was. The Department of Education's total budget fell $615 million as federal relief funds rolled off — while its general-fund appropriation rose $171 million. The Department of Social Services lost $306 million in total funds and gained $22.5 million in state funds. The pattern repeats at Disabilities & Special Needs, the Office of Resilience, and Employment & Workforce. One bookkeeping change amplifies the headline decline: the $801 million Tax Relief Trust Fund, carried as its own budget section in FY2024-25, does not appear as a section in the FY2025-26 act at all.
| Agency | Total funds change | General funds change |
|---|---|---|
| Dept of Education | − $615.3M | + $170.7M |
| Dept of Social Services | − $306.0M | + $22.5M |
| Dept of Disabilities & Special Needs | − $66.7M | + $7.7M |
| Office of Resilience | − $30.6M | flat |
| Dept of Employment & Workforce | − $30.6M | + $4.8M |
| Dept of Public Health | − $24.3M | + $9.3M |
| Attorney General's Office | − $19.6M | + $1.3M |
| Adjutant General's Office | − $19.3M | + $2.2M |
This is the dependency map from Issue 1 in motion. When federal funding recedes, the question of what the state actually chooses to fund stops being theoretical. In FY2025-26, the legislature's revealed choice was to replace a meaningful share of the departing federal dollars with recurring state money — locking pandemic-era spending levels into the permanent base. Every dollar of that backfill is now protected by the same ratchet documented above.
A 6.6% general-fund growth rate, sustained, doubles the state-funded budget in about eleven years. Because the base is never re-justified, each year's increment becomes the next year's floor. The $826 million added this year is not a one-time expense — it is a permanent enlargement of the base that every future budget will inherit by default.
None of this means South Carolina's appropriators are careless. It means they are doing what every legislature does when the tools only make the increment visible: they debate the increment. The $1.2 billion in new decisions gets hearings, amendments, and floor votes. The $12 billion base gets carried forward — 747 of its line items to the exact penny — because no process exists that forces it back onto the table.
Zero-based budgeting, done honestly, is the process that puts it back on the table. Not all at once — no legislature can re-derive 2,400 line items in a session — but on a rotation, with real decision packages: what does this line buy, what would 80% of it buy, what happens at zero? The data above suggests where to start. The three agencies whose appropriations repeat to the penny are carrying numbers nobody has recently derived. The agencies that grew 40–95% in a single year have, by definition, bases that no longer describe them. And the $1.7 billion in copy-paste lines is the purest inventory of unexamined base in the budget.
Every figure in this analysis comes from the Palmetto ZBB Suite, which holds both years' appropriations acts at line-item resolution for all 115 agencies and can generate this comparison — agency by agency, line by line — on demand. The same engine produces structured ZBB decision packages and analyst reports per agency. Future issues of the Palmetto Ledger will examine the federal-match multiplier (where a state dollar cut forfeits several federal ones) and the $1.86 billion in one-time money appropriated outside the recurring base.
Issue 1 ended by observing that serious reform begins with a map of where the money comes from. This issue adds the second coordinate: where the money came from last year. A state that knows both — and that can see, to the penny, which of its numbers are decisions and which are habits — has everything it needs to start budgeting from zero in fact and not just in statute.