Budget panel not counting on federal money

For the second year in a row, S.C. lawmakers are drafting a $5.1 billion state budget uncertain whether the state will be able to tap federal money to help fill a half-billion-dollar budget hole.

If the money doesn't come, state workers and public school teachers are likely to have to take five days of unpaid leave.

The federal cash, an estimated $170 million to $200 million, is intended to extend federal stimulus health care funding through the end of the fiscal year beginning July 1.

The federal money was included in a U.S. House of Representatives jobs bill but removed from the U.S. Senate version.

S.C. House Ways and Means Committee members said they were not counting on the money arriving as they began drafting a budget Monday.

As a result, Ways and Means chairman Dan Cooper, R-Anderson, said the draft plan could mean cuts of up to 15 percent at agencies.

"We're not using it," Cooper said of the uncertain stimulus extension. "I'm planning contingencies in the event it does come."

State employee furloughs would yield a savings of roughly $30 million.

The committee begins debate facing an estimated half-billion-dollar gap between revenues, which have plunged $1.7 billion since July 2008, and budget obligations, according to state analysts.

A historic three-year decline in revenues has left lawmakers planning to cut K-12 education programs and health care, two areas typically spared from cuts.

The committee approved a five-day furlough on non-instruction days for teachers, for a savings of $100 million. Administrators would be required to take twice as many furlough days as teachers, but the decision to furlough would be left to school districts.

The draft House budget also would end a $7,500 annual bonus for National Board-certified teachers beginning July 1, as well as close the Teacher and Employees Retention Initiative program. A $275 reimbursement for teaching supplies would be limited to a district's available funds.

Schools could also suspend driver's education programs and some testing and send out report cards electronically to save money. Parents could still request a printed report card.

Still, House analysts believed a draft budget would increase K-12 education spending 4.3 percent overall.

But the toughest debate could come over health care programs.

Rep. Tracy Edge, R-Horry and chairman of the health care budget subcommittee, said worst-case scenarios could include reducing what hospitals and doctors are paid for services. House budget analysts said the stimulus extension could add $200 million to the state budget, while the Department of Health and Human Services estimates the six-month extension to be worth $170 million.

DHHS spokesman Jeff Stensland said the agency can "retain core Medicaid services" without the stimulus extension. "We may still have to make some targeted cuts, but no decisions have been made."

Last year the federal Medicaid boost allowed budget writers to defray agency cuts elsewhere. The money would have a similar effect for next year's budget.

The stimulus extension "will probably cover those cuts, but it won't leave much left over," Edge said. Edge has been warning colleagues that angry phone calls and letters are coming once residents learn the impact of the cuts.

"A lot of things are coming up that people don't like," Edge said. "But this is a different kind of budget, and people will have to support some things they don't like."

The committee will continue budget debate and is expected to approve a plan by the end of the week. Full House debate will begin the week of March 14.