Politics & Government

State economists say revenues on track

State economists left revenue estimates unchanged Tuesday, saying revenues were meeting the state's $5.7 billion budget plan. But the Board of Economic Advisors noted that a small surplus in July's revenues - a glimmer of an improving economy - had disappeared in an August decline.

After a year in which state agencies had to trim more than $1.1 billion from their budgets because of month after month of declining revenues, no news from the BEA was good news for state agencies.

"There's just not much to talk about. Everything is right on plan," S.C. chief economist Bill Gillespie told the panel.

State economists said next month's meetings will include all first-quarter data and should provide a more accurate picture of state revenue performance.

The BEA cut about $200 million from the state budget in July, and chairman John Rainey cautioned South Carolina would likely still feel effects from the national recession.

"We're running right where we should be," said BEA member Don Herriott.

The BEA also announced that two months of declining unemployment meant South Carolina was borrowing less federal money to pay for jobless benefits.

In March and April the state, whose unemployment benefits trust fund is broke, was on pace to borrow more than $1 billion from the federal government per year. But a declining number of claims means South Carolina is now borrowing about $880 million annually.

Those federal loans are a looming problem and will likely have to be repaid by increasing taxes on businesses, reducing jobless benefits or some combination of the two.

A panel is meeting next week to discuss the issue, and Rainey thinks unemployment will spike again.

Unemployment "will trend back up by the end of the year," Rainey said. "I wouldn't be too optimistic right now."

Earlier this month, the Budget and Control Board cut state spending by 4 percent to deal with a projected $200 million budget hole.