BRADENTON, Fla. - The South Carolina General Assembly today convenes for what is expected to be a week-long special session focusing on cutting the state's $7 billion fiscal 2009 general fund budget.
Lawmakers called the session in response to an Oct. 8 report by the state's Board of Economic Advisers predicting that general fund revenues would fall 6% short of estimates.
Under that scenario, lawmakers would need to cut approximately $420 million from the current budget.
House Speaker Bobby Harrell and Senate president pro tempore Glenn McConnell, both Republicans from Charleston, said they plan to recommend cuts beyond 6%, or reductions that could reach upwards of $500 million.
"Our budget plan will go an additional percentage point and addresses a 7% reduction in spending to better secure this budget and future budgets," Harrell and McConnell said in a joint statement.
Legislative leaders met late last week and began preparing a list of targeted cuts designed to protect "funding for some of the most critical areas of government." No details were made available, but the House is expected to begin debating the budget bill today.
The funding predicament fostered renewed calls by Republican Gov. Mark Sanford last week for state spending reforms and other measures that would increase government transparency. Sanford, in a whirlwind public relations trek around the state, blamed the current shortfall on year-over-year overspending worsened "by an inefficient and unaccountable government structure."
During the regular session of the General Assembly next year, Sanford said he would push bills that would limit legislative spending increases to the growth in population plus inflation, create a Department of Administration giving him additional financial responsibilities, require more on-the-record voting and better disclosure of earmarks, increase local government spending disclosure, and expand open records laws.
The state's total fiscal 2009 budget is $20.9 billion, of which $6.7 billion makes up the general fund. In August, the state used all of one of its two rainy-day funds, $140 million in the capital reserve fund, to make up for the first downward revision in revenue estimates in August.
The fiscal 2009 budget had been based on a projected 3% increase in revenues.
So far this fiscal year, the state has seen sales tax revenues decline by 12.5%, corporate income decline by 16.7%, documentary stamp taxes on real estate decline 33.4%, estate taxes decline by 57.6%, motor vehicle licenses decline by 60.4%, and workers' compensation taxes decline by 635.7%.
The state had $8.5 billion in outstanding bonds and notes, including $2.57 billion of general obligation bonds, according to its fiscal 2007 annual financial report.
The state's GOs are rated AAA by Fitch Ratings, Aaa by Moody's Investors Service, and AA-plus by Standard & Poor's.