Legislators address flat revenue growth, combating driving under the influence

By JOHN O’CONNOR
joconnor@thestate.com

South Carolina will balance its budget by cutting state agencies’ funding and borrowing from savings accounts, according to a draft House budget released Wednesday.

It means state employees could get smaller raises and state colleges could get less money.

The $7 billion spending plan for the fiscal year beginning July 1 would trim most agencies by 2.5 percent. The House plan would cut $61 million when reducing costs for travel and information technology are included.

The cuts were necessary, House leaders said, because state revenue growth has flattened over the past year.

But to pay for new spending — $375 million total — the House would borrow more than $200 million from state savings accounts for health care, insurance, nuclear waste disposal and others.

“We set up (savings) years before to try and manage the downturns,” said Rep. Dan Cooper, R-Anderson, chairman of the House Ways and Means committee.

The committee will meet this morning to give final approval to the bill. The full House will debate it in two weeks.

Gov. Mark Sanford is reviewing the budget, said spokesman Joel Sawyer, but he said the House budget would pay for future promises with one-time money, known as annualizations.

“We’re in this budget situation we’re in now largely because we had $270 million in annualizations this year,” Sawyer said. “We are somewhat concerned with what we’ve seen so far.”

The budget patches a major hole by taking $105 million from savings at the Department of Health and Human Services, the agency that oversees the Medicaid insurance program. Sanford has criticized such borrowing in the past.

Jeff Stensland, spokesman for DHHS, said analysts expect Medicaid programs across the country to begin growing again.

“We do have serious concerns about the depletion of our Medicaid reserve funds and what that means for the future,” Stensland said. “Our ability to absorb growth will be greatly diminished.”

Cooper noted the agency still has $170 million remaining in savings.

The cuts will leave some agencies with difficult choices.

The Department of Corrections will have its current budget cut by $8 million, with new money added for facilities in Greenwood and Kershaw counties, as well as new communication equipment.

“Before we would make any reductions, we’d request to run a deficit,” said Josh Gelinas, Corrections Department spokesman.

Gelinas said he hopes the cuts won’t affect education, vocational or drug rehabilitation programs.

“Despite the possibility of a budget reduction, we’re optimistic we can avoid cutting any of our rehabilitative programming for inmates,” Gelinas said.

State employees will feel the pinch of the state’s sluggish economy. According to the House’s draft budget, state workers will see just a 1 percent raise for next year. State workers have received a 3 percent raise in each of the last two years. But they will not pay for an increase in health care premiums next year.

It is unclear how the budget could affect the cost of college at state universities. The University of South Carolina will have $4.3 million cut from its budget; Clemson University, $2.7 million.

“It’s way too early to look at what we may or may not do,” USC spokesman Russ McKinney said of cuts. The university, he said, would maintain its quality education.

“We understand when state revenues are off, hard decisions have to be made, and we have to live with them.”

But Rep. Chip Limehouse, R-Charleston and chairman of the higher education budget subcommittee, said he expected tuition “to increase a good bit.”

The state Department of Education escaped the 2.5 percent across-the-board cuts in the House draft, but will see little new money this year. In addition, lawmakers expect to collect less in sales tax and had to trim bonuses for teacher certification.

Reach O’Connor at (803) 771-8358.

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