SC Gov. McMaster tells cabinet leaders not to seek more money, COVID-19 cuts possible
South Carolina Gov. Henry McMaster directed his cabinet members Thursday to wait on making any additional budget requests and start drafting contingency plans in case of possible budget cuts next year because of the ongoing financial toll of COVID-19.
Recalling the 2008-’09 recession — which led to large, statewide budget cuts in 2009 and 2010 — McMaster directed his cabinet leaders to start drafting plans that would include a 1% to 3% budget cut in the 2021-’22 fiscal year that starts next July 1, a standard procedure every year though heightened this year because of the virus’ financial impact on the state.
“It is still unclear whether there will be any new money or how much there will be if there is any,” the governor told his cabinet directors on a virtual call Thursday. “The only thing that is certain about this new budget is the uncertainty.”
Earlier this year, South Carolina lawmakers were staring down a more than $10 billion general fund budget — a testament to the state’s economic growth — that included an added $1.9 billion, with plans to spend those dollars on additional teacher and state employee pay raises and fixes to S.C. prisons.
The S.C. House adopted its spending plan in March, sending it to the Senate. But the COVID-19 outbreak and financial uncertainty made lawmakers hit pause and instead adopt an emergency measure in May to keep state government operating at last year’s spending levels.
Now, S.C. economists project South Carolina will lose out on at least $1.2 billion in new money it had projected the state to have.
“Our revenues not looking good for South Carolina right now,” said House budget chairman Murrell Smith, R-Sumter. “It’s not from the standpoint of moving in the negative territory, but we don’t have any grasp of where we’re heading” due to COVID-19.
McMaster said Thursday he’d prefer the state continue to operate at current spending levels instead of passing a new budget.
“If the General Assembly had known in June ... 2008 that in October 2008 the country would collapse into a great recession, and that in 2009 and 2010 they’d have to make huge across-the-board state agency budget cuts in order to balance the state budget, would they have spent that $1 billion surplus that was forecast?” McMaster said.
“Well of course in hindsight, the answer is no.”
The Senate may have other plans.
A spokesman for Senate Finance Committee chairman Hugh Leatherman, R-Florence, said Leatherman plans to move forward with passing a new budget, as was originally planned, for the fiscal year that started on July 1.
In a memo this week, Leatherman told colleagues they’ll need to prepare for possible mid-year cuts because of uncertainty.
“We must plan for the worst and hope for the best,” he said. “Our focus will be on those items most important to prepare the state for any potential mid-year revenue shortfalls.”
Reporter Maayan Schechter contributed to this article.
This story was originally published August 20, 2020 at 4:27 PM.
