SC budget loses $120 million as recession drags on

AP News
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Posted: Nov 10, 2009 4:36 PM

The long recession is cutting more money from state revenues and expected to force spending cuts of nearly $120 million from South Carolina schools, colleges and prisons.

That reduction, paired with $328 million slashed from estimates this summer, means state _ just a third of the way through its budget year _ already has slashed nearly a half billion from revenue estimates that are now just over $5.6 billion.

The cuts are being driven by unemployment and cautious consumers who have stopped or reduced spending on everything from cars to vacations and homes to appliances.

South Carolina's 11.7 percent jobless rate in September was the nation's sixth highest. As troublesome as that number is, it doesn't include hundreds of thousands of people who have given up job searches, noted John Rainey, the chairman of the state Board of Economic Advisors.

"This is really a sobering meeting when you say that half a million people in this state ... are out of work," Rainey said.

He and others on the board see a fundamental reshaping of the salaries, the work force and employment in the making. For instance, more men who had higher wage jobs losing paychecks, while women earning on an average of three quarters of a men holding onto jobs. Meanwhile, they expect employers to squeeze more productivity from remaining workers and avoiding hiring.

Bringing that outlook to the state's operations left the board expecting revenue to grow by no more than 2 percent a year during the next five years _ less than half the average of 4.5 percent the state saw for years before the recession. It leaves legislators and other leaders needing to decide how to run government with less money.

"The next governor is really going to have to want the job because it's going to be tough to provide the leadership to get us not only out of it, but through it to the next level," Rainey said.

The board's action Tuesday means legislators and Gov. Mark Sanford will start writing a budget with revenues locked in at current levels. Sanford had already asked agencies to tell him how they would handle a 15-percent budget cut after most agencies have lost more than a fifth of their budget to reductions last year.

Public schools are the largest single spending item in the state's budget with more than $2.8 billion in state funds. Education Superintendent Jim Rex told Sanford his budget plans would ultimately cost schools $900 million and devastate local school districts.

Corrections Department Director John Ozmint said a 15 percent reduction would slash $49 million from his $330 million budget. He said he could handle that by closing prison facilities and releasing inmates.