COLUMBIA, S.C. (AP) – The board in South Carolina that predicts how much the state will collect in taxes and fees so lawmakers can know how much they can spend wants to be as conservative as possible without hampering government during the COVID-19 pandemic.
The Board of Economic Advisors met Monday to get a briefing from economists and advice from leading health and businesses leaders. They will meet again in one week to predict revenues for the 2020-2021 budget year that started July 1.
Typically, that final prediction takes place roughly in May so lawmakers can finish their spending plan before the budget year starts. But the pandemic led the state to delay tax deadlines to mid-July so officials did not know how much money the state received in the 2019-2020 budget year.
They still haven’t closed the book s on the past budget year with tax revenues still tricking in, state Revenue and Fiscal Affairs Office Executive Director Frank Rainwater said.
The state should end up with somewhere around $300 million above the $9.4 billion lawmakers spent last budget year, Rainwater said Monday.
Then comes the even harder task of predicting what will happen to South Carolina’s revenues in the next 10 months.
Will consumers regain confidence and keep spending? Will more federal money come to the state for COVID-19 costs and individuals who are out of work? Can the restaurant and tourism industries that drive so much of South Carolina’s economy recover? Will the combination of flu season and a possible resurgence in COVID-19 cases overwhelm hospitals or cause manufacturers to shut down again?
“There are so many unknowns,” Board of Economic Advisors Chairman Edward Grimball said.
The board’s decision is critical. Lawmakers scrapped a budget with nearly $2 billion in extra money to pay for salary increases for teachers, tax cuts and other items when the virus started to spread in March.
Then, the General Assembly delayed writing a new budget until a September special session to better gauge COVID-19’s impact on the economy, choosing instead to keep spending based on last year’s $9.4 billion budget.
The Senate Finance Committee will take the board’s estimate on Aug. 31 and meet to discuss changes to the budget. The House Ways and Means Committee will also likely take a crack at the spending plan. The Legislature’s special session for the budget is scheduled to start Sept. 15.
Gov. Henry McMaster suggested last week that lawmakers just copy and paste the 2019-2020 spending plan into this year’s budget and told state agencies to prepare plans in case estimates are too high for either a 1%, 2% or 3% cut.
Several lawmakers said they want to see the board’s estimate before committing to anything.
Rainwater said his employees will be working long shifts over the next week to finalize their budget estimates.
“Just stay by your phone,” Rainwater asked the board members. “We have a lot of work to do.”
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