SC economists say state budget losses are growing due to COVID-19 outbreak
The financial hit South Carolina is taking from the ongoing COVID-19 outbreak continues to grow, state budget forecasters say.
The state’s budget forecasters on Friday reported that money coming into the state for the month of April was down — about $400 million, or nearly 43% — adding that decline is likely tied to tax filing extensions which both the federal and state government approved by back in mid-March. Approximately 19,200 fewer returns were filed, they said.
Sales tax revenues also took a hit because fewer people went out shopping or ate out at restaurants under Gov. Henry McMaster’s emergency orders. However, tax collections from internet sales increased, they said.
Frank Rainwater, the head of the state’s Revenue and Fiscal Affairs Office, said on a 24-minute teleconference call Friday they still do not have the full picture of what revenue projections will look like as a result of COVID-19’s impact on state coffers.
“We have a mixed bag, and we’re just trying to sort through the details,” Rainwater said.
Before COVID-19, S.C. economists had projected lawmakers would have an added $1.9 billion to spend in next year’s 10.2 billion general fund budget.
But now, budget forecasters project the state will miss out on $507 million it had expected to bring in during the current 2020 budget year, which ends June 30.
And it estimates lawmakers will miss out on another $701 million as legislators work to write a new budget this fall. That number is up about $58 million from an early projection state economists gave when the pandemic hit South Carolina, leading to business closures aimed at slowing the spread of the coronavirus and the COVID-19 disease it causes.
That means budget writers will only have about $9.5 billion to spend in the 2021 budget, cutting into earlier proposals that passed the S.C. House in March to pay for teacher and state worker raises and other major infrastructure improvements.
State lawmakers return Tuesday to the Capitol where they’ll pass measures to keep government operating at current spending levels come July 1, when typically a new state budget takes effect. They’ll leave Columbia with plans to return in September.
Rainwater said they expect a better revenue picture later this summer, when many of McMaster’s emergency orders have been lifted and more people return to work or shop at businesses and eat out at restaurants.
Revenue is “down significantly, (but) we think we’re going to recoup a good bit of that,” Rainwater said. “We just don’t have a lot of hard data to differentiate between what’s going on. We really wont know whats’ going on until July or August, when the books are closed.”
This is a developing story. Check back for updates.
