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At its meeting Tuesday afternoon, the Board of Economic Advisors recommended that the current year’s budget be cut by about $131 million, to $5.61 billion. This year’s budget already has been cut by more than $300 million because of declining state revenues in the recession.
By Mike Fitts
mfitts@scbiznews.com
Published Nov. 11, 2009
After hearing more gloomy numbers, the Board of Economic Advisors recommended Tuesday that the state’s budget for this year and next be cut by 2%.
The board recommended that the current year’s budget be cut by about $131 million, to $5.61 billion. This year’s budget already has been cut by more than $300 million because of declining state revenues in the recession. The advisory board’s recommendation will go to the state Budget and Control Board to consider at its next meeting; that body is empowered to make across-the-board cuts to make sure that spending does not overshoot revenue.
The state balance sheet took an unanticipated hit in October because of a legal case SCANA Corp. won regarding tax credits. The utility company was refunded more than $29 million, including interest, after the S.C. Supreme Court ruled in September that it had been incorrectly denied the right to carry forward some tax credits from year to year.
The cut in next year’s revenue projection means Gov. Mark Sanford will start with a lower number when he begins his executive budget, which he will present to the Legislature early in next year’s session.
The economic numbers discussed at Tuesday’s meeting offered scant proof that South Carolina will be moving out of a recession anytime soon. Board members focused on the state’s continuing high unemployment numbers. The unadjusted unemployment rate in South Carolina is 11.7%, but when those who are underemployed or have stopped looking for work are added, the number likely exceeds 20% of the work force, or perhaps 500,000 unemployed.
In counties with major unemployment, the numbers are, of course, worse, said board member Don Herriott. Seventeen counties in the state report unemployment of 15% or more. “Some of our counties are living in Great Depression times,” he said.
Companies will be slow to take up new hiring, even when they believe the recession has ended, Herriott said.
Accommodations tax receipts show that tourism has taken a hit, economist Robert Martin told the board. The number of travelers seems steady, but a discount of about 20% is reflected in tax receipts, he said.
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