State revenues are meeting projections

State economists said Thursday S.C. revenues were meeting expectations, heading off the need to reduce budget projections.

Two days after a budget panel cut $238 million from state agencies, the Board of Economic Advisors saw no need to become the Grinch a week before Christmas.

November revenues increased by 5.8 percent, or $25.5 million, from November 2008, the first month-over-month increase this calendar year. Overall revenues are down 6.5 percent, or $165.8 million, from the previous fiscal year.

"We're pretty much dead on it," said BEA chairman John Rainey of the panel's budget estimate, revised downward last month. "The trajectory is at best flat."

Among the high points was a $1.4 million increase in document taxes for home sales, which economists credited to a federal first-time home buyer tax credit. South Carolina home sales increased 62.9 percent in November over the same month a year ago, but are still down 7.4 percent from November 2007.

Economists said the state is still dealing with the effects of the national recession.

South Carolina has the fifth-highest jobless rate in the country, at 12.1 percent, which has impacted income and sales tax collections - the two single-largest sources of state revenue.

Income tax collections were up 14.5 percent in November, or $36 million, but state economists said seasonal and other layoffs over the next few months could change that trend.

"The economy is really moving sideways," said BEA analyst Robert Martin. "It's not really going up or down."

But no news from the BEA is good news for lawmakers, who will return to Columbia in January facing massive budget questions, including what to do with millions in new spending requests with likely no new money to fund them. In addition, the state must repay $98 million borrowed from reserves to cover a budget shortfall for the year ending June 30 and an estimated $125 million to fully fund the 2006 bill that covers the school operating portion of owner-occupied property taxes.

Tuesday the State Budget and Control Board cut all state agencies by 5 percent, anticipating those costs and a continued decline in revenue.