SC lawmakers to face road, school, pension issues with only $440 million more to spend

S.C. lawmakers will have roughly $440 million in added money to spend next year — about a third of the added money they spent this year, the state’s chief economist projected Thursday.

That could throw a roadblock into efforts to repair South Carolina’s crumbling roads, fix its poor rural schools or shore up its underfunded pension system for public employees.

This fiscal year, which started July 1, lawmakers had $1.2 billion in new revenues to spend in the state’s $7.5 billion general fund budget, made up largely of S.C. income and sales taxes.

Even with that added $1.2 billion, the GOP-controlled Legislature did not spend as much on schools or local governments as state law says they should. In addition, lawmakers only approved a temporary fix — spending roughly $200 million a year — for road repairs.

Starting in January, legislators will face the same roads-and-schools issues and a new priority: filling the state’s unfunded $16.75 billion obligation to its pension system for public workers.

But they will have fewer new dollars to spend, chief economist Frank Rainwater told the S.C. Board of Economic Advisors Thursday. That board will estimate exactly how many new dollars the state will have to spend when it meets in November.

With fewer new dollars to spend, S.C. House budget writers will take more time analyzing the long-term cost of programs and infrastructure when deciding priorities, said Ways and Means Committee chairman Brian White, R-Anderson.

Lawmakers also should not offer extreme proposals to cut taxes or spend more, advised state Sen. Darrell Jackson, D-Richland.

Last year, Jackson, who represents a district where many S.C. state employees live, pushed for those workers to get a 3.25 percent raise this year. Next year, those workers should not expect as large a raise, he said.

S.C. assistant Majority Leader Gary Simrill, R-York, said the added $1.2 billion that lawmakers had to spend this year was an anomaly.

Much of this year’s added money actually was money left over from previous budget years. The added money for next year reflects only growth in state revenues because there was no surplus in the budget year that ended June 30.

Simrill noted the state just is starting to get back to pre-Recession spending levels.

But, he added, “As a growing state ... there are more demands on the system.”

Those demands include more money for education and to repair roads and bridges.

Simrill, who sponsored a proposal to raise the gas tax to repair the state’s roads that passed the House in 2014, said paying for road-repairs out of the state’s general fund budget — as legislators did last spring — or paired with an income tax cut — as Gov. Nikki Haley wants — is not practical.

“We recognized the fallacy of trying to pay for roads with general fund revenue, and we understood fully that a fee-based system is the only true way and long-term funding mechanism that will work.”

This story was originally published August 25, 2016 at 12:33 PM with the headline "SC lawmakers to face road, school, pension issues with only $440 million more to spend."