By Mike Fitts
mfitts@scbiznews.com
Published Dec. 15, 2009
The state budget was cut by 5% on Tuesday, with members of the state Budget and Control Board projecting that economic news and tax revenue will continue to be grim.
The Board of Economic Advisors had recommended a 2.6% cut, which would have trimmed $124 million. The Budget and Control Board, on a 3-2 vote, went almost twice as far, cutting about $238 million from the current operating budget.
Agencies will have to absorb the cuts between now and the end of the fiscal year, on June 30. For many agencies, that will mean more furloughs and other cutbacks.
The latest cut moves the state’s general fund budget to about $5.5 billion for this year, compared to $6.7 billion in fiscal year 2008-09.
In a rare victory for Gov. Mark Sanford on the board, he was in the 3-2 majority. Sen. Hugh Leatherman and House Ways and Means Committee Chairman Dan Cooper wanted a cut of 4%. Leatherman said he was cognizant that the cuts have immediate effects on categories such as education and human welfare.
Members debated whether the board could legally cut more than the Board of Economic Advisors had recommended, with an explicit plan of keeping the cash on hand at the end of the year for expected deficits. In the end, the board made the 5% cut without specifying its reasons for exceeding the recommendation or specifying a reserve.
It’s better for agencies to get cuts while more than half of the year is left, Sanford said. “We don’t want to wait until later in the cycle,” he said. Sanford again made his call for a state spending limit for the longer term that he said would prevent such boom-and-bust cycles.
The board held off on a requirement that the Corrections Department do a second five days of furlough for employees. The agency asked the board to let it run a deficit and to hold off on requiring the furloughs because it would be bad for morale, Director Jon Ozmint said.
Corrections employees likely would resent that they have taken more furlough days than others, he said.
Given the 5% cut, Ozmint’s department is likely to have plenty of company in the furlough arena, Leatherman said. So far, 12 state agencies, including Corrections, have done some kind of furlough this fiscal year.
In other action, the board allowed more time for the sale of the State Port Authority’s Port Royal facility, despite Sanford’s objection that the process has dragged on for years.
The Ports Authority is close to receipt of a letter of intent from an interested bidder on the property. Under state law, the property was to revert to the Budget and Control Board’s ownership at year’s end if unsold.
Residents of the area have been hoping for years that a new buyer would take over and revitalize the local economy, but the Ports Authority hasn’t been able to get it done, Sanford said.
“People are really, really disheartened,” he said.
