The state had a $18 million surplus during the first quarter of its fiscal year, a surplus that could grow by another $47.8 million once timing issues are factored in.
If that growth continues, there could be about $260 million more in the state’s general fund budget for lawmakers to spend when they return to Columbia in January. The surpluses would bring the general fund budget to about $7.9 billion.
Lawmakers will hear calls to spend the added money to resolve a school equity lawsuit, repair the state’s crumbling roads and pay for flood damage.
The state’s tax revenues are collected mostly from sales, personal income and corporate income taxes.
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Those revenues are running well above projected levels, chief economist Frank Rainwater told the state Board of Economic Advisors on Thursday. “We’re in a very good growth spurt, and we’re feeling very positive about what’s going on.”
Board chairman Chad Walldorf said the S.C. economy was growing at a steady pace through the spring, adding revenues have been exceptionally strong since the summer and continuing into September.
“Although we expect to see some negative impacts to revenues due to the recent floods, once we get past that, we expect the very strong, steady growth to continue,” Walldorf said.
The increase in state revenues is driven by more South Carolinians finding good jobs, said Walldorf, who is appointed by Gov. Nikki Haley.
Going forward, there might be a temporary dip in sales tax collections because of the flooding earlier this month, Rainwater said. But he expects the economy to recover fully. “We don’t anticipate any negative effects on revenue because of the storm.”
Once money from insurers kicks in to offset losses and rebuilding starts — with residents replacing furniture, carpet and appliances, for example — the state’s tax revenues will rebound, Rainwater said.
University of South Carolina economist Joey Von Nessen told the board that he expects economic activity will benefit from a boost in spending because of the flood. However, that burst in spending could mask losses in wealth. For example, flood victims could spend more to make repairs but, to do so, could spend some of their savings.
Five Southeastern economists gave the board their predictions for growth in the state’s economy.
The economists predict personal income in the state will grow between 4.3 percent and 5.35 percent during the current fiscal year, which ends June 30. They also predicted employment will grow by from 1.75 percent to 3.1 percent.
The board will consider those estimates as it revises its projections of how much revenue the state will have this fiscal year and makes a prediction for next year.
Reach Cope at (803) 771-8657.