South Carolina Gets Initial OK for $5.6B Budget

WASHINGTON - A panel of South Carolina lawmakers gave preliminary approval Thursday to a $5.6 billion fiscal 2010 budget that would provide almost $1 billion in new spending for education and health care providers while cutting money for local governments by 42%, a move which may halt some capital projects.

The new education and health care measures are needed for the state to meet the requirements of the $787 billion federal stimulus package, local government issuers and advocates said. The draft budget increases K-12 spending by $323.2 million and higher education by $119.6 million. The balance of the new spending, $534.3 million, would go to health care providers.

But the budget would cut $122.4 million from the state's local government fund, which had $291.9 million as of December 2008.

The American Recovery and Reinvestment Act, signed into law last Tuesday, requires states to fund both K-12 and higher education at no less than the fiscal 2006 level in fiscal years 2009-11, though the Education Department would have some discretion to loosen this requirement. South Carolina spent $3.2 billion on K-12 education in fiscal 2006, said a spokesman for the state's Education Department. But the state cut $334 million in education spending in the first six months of fiscal year 2009, which began July 1.

The draft fiscal 2010 budget also cuts $28.6 million from debt service, which an official said would not be needed because the state has no plans to issue debt.

The full House is expected to vote on the budget in three weeks, an official said.

Richard Sparks, county administrator for Florence County, said that if the spending cuts are enacted, Florence stands to lose $3 million it receives annually from the state, representing a 5% cut in the county's general fund. He said the county is fiscally strong compared to many other areas of South Carolina, but the cut may affect how Florence prepares its budget next year.

"It would probably cause us not to consider a couple major capital projects now under consideration," Sparks said. "We're acutely aware that if that thing sticks, we're probably going to change our budget for next year and do some additional reigning in," he said.

Miriam Hair, executive director for the Municipal Association of South Carolina, said the Ways and Means Committee also passed legislation that would allow the General Assembly to make greater cuts to local spending in the future. Currently, the legislature is prohibited from cutting local government spending by more than a cut in the previous year. The new legislation would overturn that law, Hair said.

South Carolina is poised to receive $694 million in federal stimulus aid for grade school and college education aid in fiscal years 2009-11, according to the Center on Budget and Policy Priorities in Washington. The state is set to receive $372 million for supplemental and special education programs for fiscal year 2009-10.

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