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HOT ISSUE
State
budget woes loom for 2 more years
By Andy Brack
S.C. Statehouse Report
JULY 21, 2002 - - The state's fiscal hangover isn't over yet, but
you don't hear a lot of politicians talking about it. Maybe it's
the election year. Maybe it's because they're still tuckered out
from all of the cutting they did this year.
"You're going to see another austere year," Comptroller
General Jim Lander predicts.
Analysts forecast at least two more cycles of lean times following
$200 million in agency cuts last year and another $300 million in
cuts by lawmakers in the new current budget.
While those slashes were tough, lawmakers face an even more daunting
budget next year. This year, they were able to achieve savings by
trimming fat, raiding some funds and refraining from a state employee
pay hike. Next year, there won't be a lot of fat to cut.
"If there are cuts - - and I'm not saying there will be -
- it's going to mean more jobs [will be lost] and more services
[cut]," Lander said.
Bottom line: next year, lawmakers will start off behind
because they already have more new expenses than revenues. Here's
what they'll face:
Balancing the books. Before the state can close out last
year's budget, it probably will have to find up to $163 million
to make the books balance. That's because sales and income tax revenues
have been lower than budget writers predicted. Look for the state
Budget and Control Board to take up this sticky issue in its August
meeting.
Medicaid increases. Next year, like this year, the state
will have to shell out millions to keep the Medicaid program at
its current service level. Why? Because there are about $170 million
of increased costs of delivering health care and rises in annualized
costs as more people will receive the benefit.
State employees' health. Inflation also will boost the cost
of health insurance for state employees by $20 million to $60 million.
Education financing. The state's mandated portion of funding
salaries for teachers will cost an extra $30 million to $60 million.
Scholarships. Because most of the state's colleges and universities
raised tuition this year, there won't be enough money in the current
budget to pay for LIFE and Palmetto scholarship obligations. The
state likely will be short about $21 million.
Annualizations. The annual cost to pay for new programs
from this year translates into a recurring new need of another $170
million in next year's budget.
Retirees. Pending the outcome of a lawsuit, the state might
have to foot a $300 million bill to refund pension taxes taken from
state retirees.
Growth. While the sluggish economy is perking up, growth
won't return soon to levels of a few years ago. Budget experts hope
for at least 4 percent growth in revenues, which would mean about
$200 million in new money. But those revenues won't be enough to
cover the laundry list of needs outlined above.
"The money is going to be ultra-tight next year," says
Republican Rep. Adam Taylor of Laurens. "The General Assembly
is going to have to take a tough look at the feasibility of raising
taxes or doing cuts in services in state government."
Regardless, one thing is clear: taxpayers are going to feel some
real effects a year from now because they'll be paying more in taxes
or higher fees for government services. Or, there may be fewer government
services available. More than likely, they're not going to like
whatever happens.
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