SC mulls spending cuts due to budget shortfalls
South Carolina agencies may be told to cut spending by up to $120 million because of budget shortfalls expected later this year due to the weak economy, the state’s top four financial officers said.
The members of the state’s budget oversight board on Wednesday told The Associated Press they’ll call on the agencies next week to find ways to save the money. Treasurer Converse Chellis, Comptroller General Richard Eckstrom, Senate Finance Committee Chairman Hugh Leatherman and House Ways and Means Committee Chairman Dan Cooper said they agree the action is needed to head off expected shortfalls in the state’s $7 billion budget.
But the Budget and Control Board members don’t agree on details.
They include how much needs to be saved and whether agencies should be warned to start looking for places to trim - or whether the money will be set aside right away.
Chellis says a warning may be enough. The board may only need to tell agencies to “be prepared so that you start looking now for things you can maybe do without or reduce.”
Eckstrom said a firm hand is needed.
“I’m not sure the state’s ever asked agencies to just be nice and set aside money,” he said. “The sooner the board takes action, the easier it is on agencies to continue delivering services and not have to interrupt those services. … It’d be prudent to tell agencies to set aside that money now.”
The potential for cuts was hinted at a couple of weeks ago when the state’s Board of Economic Advisors reported revenue collections for the state fiscal year that began July 1 would fall $140 million short of estimates.
Eckstrom said he won’t settle on details of spending cuts until July tax collection figures become available later this week.
“We’ll be suggesting that they set aside money. The question is whether it’s going to be 1 percent or 2 percent,” Leatherman, R-Florence, said. That would take between $60 million and $120 million out of agency spending.
Gov. Mark Sanford heads the budget board and his office said he is still looking at recommendations.
“Obviously some cuts are going to have to be made,” Sanford spokesman Joel Sawyer said. “We haven’t made up our minds about what action needs to be taken.”
Board members also said they expect to reserve the money in one of the state’s rainy day funds to offset budget gaps created by slumping revenues. Eckstrom said that capital reserve fund has $133 million in it.
By JIM DAVENPORT
Forbes.com
08.07.08
