South Carolina's high unemployment and slow tax collections are likely to put more people out of work or cut paychecks as the state's budget oversight board decided Tuesday to cut 5 percent from state budgets to keep the state's $5 billion spending plan balanced.
The $238.2 million reduction ordered by the Budget and Control Board means across-the-board spending cuts, but the public schools, the state's colleges, health care, welfare and prisons take the largest total hits in spending. In September, the board cut 4 percent from the state's budget to head off potential deficits, but the economy has continued to lose steam.
State tax collections have fallen sharply. South Carolina's 12 percent unemployment rate in October was the nation's fifth highest, a leading cause of plunging state tax collections.
Tuesday's reduction means a $100.5 million loss for the state's public schools in the wake of an $85.4 million cut in September. Schools had lost $513 million in the previous fiscal year, depleting reserves and raising the specter of thousands of teachers losing their jobs. While federal stimulus cash blunted that, districts are again fretting cuts to payrolls and programs.
"This goes above and beyond what I think many districts were trying to plan for and sends them back to the drawing board," said Scott Price, the lobbyist for the South Carolina School Boards Association. It will translate into furloughs and unfilled positions.
"That leads to things like increased class size. Things that aren't core programs would be on the chopping block," Price said.
Meanwhile, the state's Department of Health and Human Services loses $38.3 million from its Medicaid programs. Agency director Emma Forkner said last week she might not be able to handle that reduction without breaking state and federal laws or running a deficit.
State colleges lose $23 million, with the University of South Carolina giving up $6.7 million and Clemson University nearly $6 million.
The Department of Corrections loses $15.8 million. Agency director Jon Ozmint asked the board to let his prison system run a $13 million deficit in an effort to avoid telling his guards to take five more days of unpaid days off on top of the five furlough days they've already taken.
"Taking another five days is going to leave a lot of posts vacant," Ozmint said. He noted it would affect morale because his workers will have taken more unpaid time off than people at other agencies. "It's a safety and fairness issue."
Gov. Mark Sanford, the budget board's chairman, said he'd be open to considering a general furlough of state workers to help the state avoid a year-ending shortfall.
"The administrations viewpoint would be you probably have to look at those kinds of things given the magnitude of the budget crunch that all of state government is in," Sanford said. "I think we recognize that we're all in this together." Sanford could order that with his Cabinet agencies, including Corrections. It would require an unanimous Budget and Control Board vote to cover all agencies.
Since the budget year began in July, 12 agencies, including Corrections, have furloughed workers. Five of those already have furloughed workers for 10 days.
"Somewhere we've got to stop the overspending," state Treasurer Converse Chellis said as he proposed the 5 percent cut that passed with a 3-2 vote. If the cut's too deep, it can be used to repay a $98 million deficit remaining from the previous fiscal year after the state exhausted reserve funds.
Sen. Hugh Leatherman, a Florence Republican and the Senate's budget committee chairman, and Rep. Dan Cooper, a Piedmont Republican and the House's budget chairman, said the reduction was too big.
Because the reductions come nearly half way through the budget year, they'll have the effect of a 10 percent cut, Cooper said.
And Leatherman said agencies simply can't cope with that.
"I think we're cutting agencies to where they're going to be in here before this board asking to run deficits," Leatherman said.
But Sanford said it had to be done. "Because I think the reality of where we are in the budget cycle and the economic cycle is that there is more pain to come," Sanford said.