South Carolina’s general fund revenue grew by 2.8 percent in August, leaving the state slightly ahead of its predictions and making a first-quarter budget cut unlikely, according to the chairman of the state Board of Economic Advisors.
Through August, S.C. officials have collected $18 million more than they had predicted in the state’s general fund — which includes state income and sales taxes. So far, the state is about 1 percent ahead of its revenue estimate. But state economists say $10 million of that surplus was the result of a quirky accounting issue, meaning the state is really only 0.5 percent ahead of the estimate.
If state revenues are off by more than 2 percent, it would force the State Budget and Control Board to find some money to make up the difference or else risk an automatic across-the-board budget cut.
“At this point with two of the three months in the quarter behind us, and we’re about a percent ahead, things would have to really fall precipitously in the next month for us to not reach our first quarter threshold,” said Chad Walldorf, chairman of the Board of Economic Advisors, which sets the state’s revenue estimates. “I’m optimistic that there won’t have to be any quarterly adjustments.”
After years of budget cuts because of the economic downturn, South Carolina lawmakers had an extra billion to spend in this year’s budget — a sum that led to one of the most contentious budget fights in years as they fought over how to spend the extra money.
But some state agencies already have had to deal with a $14.7 million budget cut this year because the state’s end-of-the-year surplus was less than officials predicted. That means some things — like $500,000 in arts grants, $600,000 for a Darlington County watershed project and $600,000 for market operations at the State Farmers Market — won’t be paid for.
South Carolina’s economy continues to send mixed signals. Builders are building more homes, and home values are increasing. But foreclosure rates are still high, and the state’s unemployment rate is above the national average.
More worrisome is the growth of personal income in South Carolina. S.C. officials expected personal income to grow by 4 percent. Instead, it grew by 3 percent.
“The charts are starting to show some weakness in the economy, and personal income numbers are showing that weakness as well,” said Robert Martin, a state economist.
But Walldorf said he is not concerned with how close the state is to the board’s revenue projections.
“Our job and our charge is to be as accurate as we can and so, you know, if we were dramatically ahead of growth then we hadn’t done our job as well as we would have liked to,” he said. “Our goal would be to be right on the estimate throughout the year.”
Reach Beam at (803) 386-7038.