Government efficiency is more important than ever, especially in South Carolina
Since taking office in late January, the Trump administration has emphasized slimming down the federal government and reducing its fiscal footprint. This renewed focus has cast a spotlight on a long-standing issue: the deep dependence of states on federal dollars.
Too often, state lawmakers view federal funds as “free money.” But that couldn’t be further from the truth. These dollars come from taxpayers across the country — including South Carolinians. Federal taxes are sent to Washington, pooled with borrowed money, and returned to the states through grants that come with strings attached—often advancing political agendas and imposing rigid requirements.
This disconnect allows state lawmakers to act as if the funds originate from some benevolent federal source, rather than acknowledging they come directly from their constituents’ pockets. Worse, these dollars come with strings attached through layers of bureaucracy, federal mandates, and program requirements that often compromise state autonomy.
In 2025, South Carolina was ranked the fifth most federally dependent state in the nation. These funds show up in areas like infrastructure, healthcare, education, and transportation. In the FY26 state budget, federal money accounts for more than a third of total spending. That level of dependence poses serious risks, especially in the face of potential federal budget cuts or economic downturns.
If a federal Department of Government Efficiency is going to be even mildly effective, federal funding will be reduced. Whether the cut is 1 or 50 percent, states must have a plan in place to ensure continued operations without federal dollars for essential services. That’s why a state-level DOGE is a necessity.
Too often, state lawmakers view federal funds as “free money.” But that couldn’t be further from the truth
If federal funds are reduced, states must be able to determine which federal programs should be absorbed at the state level and which should be cut. Additionally, they must be able to identify and reduce costs within existing state programs to help close the gap.
This year, both chambers of the General Assembly in South Carolina showed interest in the concept, with the Senate ultimately passing a proposal. However, South Carolina already has two oversight bodies aimed at promoting government efficiency: the House Government Efficiency and Legislative Oversight Committee, and the Legislative Audit Council (LAC).
Both entities do meaningful work, especially the LAC, which produces detailed reports identifying inefficiencies and offering pragmatic solutions. But even the best recommendations mean little if agencies and lawmakers fail to implement them.
In a conversation with a member of the LAC, I asked about their 300-page report on reforming the South Carolina Department of Transportation, an agency whose budget increases substantially every year with little to show for it. Despite the reports thoroughness, I was told that few of the recommendations have been adopted by either the DOT or the General Assembly.
My message to states considering a Department of Government Efficiency (DOGE) is simple: If legislators want to create another bureaucracy to address government waste, that’s fine—but they must ask two critical questions. First, does a mechanism already exist in the state that can accomplish the same goals? And second, will this new agency actually have the authority to implement cuts?
This concern is playing out both in South Carolina as stated above and federally where lawmakers are publicly advocating for DOGE-style reforms without including actual cuts in the budget. Recommendations are helpful, but if taxpayers are being asked to prop up an agency to identify inefficiencies and streamline regulations, then lawmakers must be prepared to act on those recommendations.
The bottom line: South Carolina and states across the country must take control of their fiscal health. That means planning now for potential reductions in federal support and ensuring state government can operate efficiently and independently when that day arrives.
Sam Aaron is research director at the South Carolina Policy Council.
