Budget writers say no one’s spared from deeper cuts
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News of South Carolina’s sputtering economy led the state’s top budget writers Friday to begin planning for targeted cuts in state agencies’ spending, with no promises to exempt public schools or health care for the poor.
Senate Finance Committee Chairman Hugh Leatherman and House Ways and Means Committee Chairman Dan Cooper told Gov. Mark Sanford in a letter that they are willing to work with him on plans to put the state’s finances back in order after weeks of arguments about whether the Legislature needed to do anything.
All agencies face the likelihood of cuts deeper than the 3 percent across-the-board slice they took last month. Read more
More budget cuts likely for South Carolina
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Economists see variety of troubling signs for state
South Carolina’s economy has worsened over the summer, and state economists said Friday further budget cuts are likely.
State lawmakers said they could return to Columbia to revise this year’s budget, which has already been cut once this year.
Among the troubling signs for the state, economists said:
• Unemployment has increased to 7.8 percent, a 15-year high.
• The state has lost 50,000 jobs since April.
• Sales tax collections are down 10 percent, mostly because of eliminating taxes on grocery sales.
• New construction and related taxes and fees are down 25 percent as fewer people are buying and building homes.
• Applications to receive food stamps are up 16 percent since December.
All are indications why the state is $42.6 million behind its revenue estimates only two months into the fiscal year — and down 5.5 percent from the same period a year ago.
“I think everybody ought to be on notice. … We’re looking at a substantial cut in our revenue forecast for this year,” said John Rainey, chairman of the Board of Economic Advisors. “The numbers have fallen off the cliff.”
This month’s figures mark a stark difference from prior reports.
Tax collections had been declining, but state businesses were still hiring workers and unemployment was steady. But that turned this summer, state economists said, as businesses stopped hiring.
There remain a few silver linings — rising exports and accommodations tax collections — in the state economy, economists said.
Sales tax and individual income tax are S.C.’s two largest revenue sources, and both are declining, according to data.
Rainey said that means additional budget cuts are likely.
The BEA already has trimmed its original estimate for the budget year that began July 1 by 2 percent, and Rainey said an additional 4 percent — or more — was possible when the board meets Oct. 8.
In July, a state budget panel cut spending by 3 percent — or $188 million — and set aside an additional 2 percent from a reserve account.
A further cut, as estimated by Rainey, could leave lawmakers with a roughly $70 million budget hole.
The chairmen of the House and Senate budget committees said Friday they would prepare to revise this year’s budget.
House Ways and Means chairman Dan Cooper, R-Anderson, said he did not know when — or if — the Legislature would reconvene, but they wanted to have a new budget ready in case. Cooper did not know whether the Legislature would rewrite the entire budget, or just make additional cuts to match the budget shortfall.
“We believe it is important for the General Assembly to prepare for spending adjustments,” Cooper and Senate Finance chairman Hugh Leatherman, R-Florence, wrote to Gov. Mark Sanford. “There are very difficult choices to be made, but we believe that making the tough decisions now will help our state adjust to the longer-term realities of diminished economic growth.”
Cooper and Leatherman asked Sanford to submit a list of suggested budget cuts.
Sanford spokesman Joel Sawyer said the governor had suggested cuts in his budget and vetoes. Sanford, Sawyer said, is willing to work with lawmakers.
Sanford has been calling on lawmakers to target cuts since July.
“The handwriting is on the wall that these cuts are going to need to be made sooner rather than later,” Sawyer said.
By JOHN O’CONNOR
The State Newspaper
September 27, 2008
Sanford-Legislature feud boils
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Lawmakers don’t trust governor, McConnell says
Senate President Pro Tem Glenn McConnell on Thursday called Gov. Mark Sanford’s latest suggestion to get the Legislature back in session a $50,000-plus gamble.
Using an example of how lawmakers could use creativity to return to the Statehouse and make discretionary budget cuts, the Governor’s Office raised the idea of taking up an outstanding veto Sanford issued in June.
“I am not going to waste the taxpayers’ money so he can have a political dog-and-pony show,” said McConnell, R-Charleston. Read more
Leaders feuding over cuts in budget
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Sanford, legislators bicker over how to meet
State Senate President Pro Tem Glenn McConnell and House Speaker Bobby Harrell are becoming regular penpals with Gov. Mark Sanford over South Carolina’s budget woes.
McConnell and Harrell, in an Aug. 29 letter, accused Sanford of “misleading the public” during a recent road show in which the governor called on lawmakers to return to Columbia to make targeted budget cuts in response to revenue shortfalls. Sanford’s tour across the state, and an Aug. 26 letter to McConnell, Harrell, Senate Finance Chairman Hugh Leatherman and House Ways and Means Committee Chairman Dan Cooper, came on the heels of the Budget and Control Board’s 3-2 vote for an across-the-board 3 percent cut to make up for a shortfall of about $188 million.
Sanford and Comptroller General Richard Eckstrom voted against the cuts, saying they favored the targeted cuts. Treasurer Converse Chellis joined Leatherman and Cooper in voting for the 3 percent reduction. Read more
