The state's healthy budget surplus is good news for South Carolina, showing a long-awaited economic upturn that is reflected in increased tax revenues for the state. Gov. Mark Sanford's insistence that state spending will continue to get the full scrutiny of his office is good news, too.
It was at the governor's insistence that the Legislature agreed to use the anticipated surplus to eliminate the state's $177 million deficit, rather than for new state spending. That decision kept the purse strings tighter than many legislators would have liked, but it was a welcome reaffirmation of fiscal restraint by elected officials. It also helped the state retain its AAA credit rating, which provides favorable interest rates on state borrowings.
Comptroller General Richard Eckstrom tells us that the state was able to eliminate the deficit early because of better than expected revenues and reductions in expenditures by several state agencies, including the Corrections Department and the State Election Commission.
"We're seeing economic recovery in almost all areas of the state," Mr. Eckstrom says. Retail sales tax collections, for example, are up 6 percent over the previous year.
As increased state revenue continues to flow into state coffers, legislators should adhere to the governor's plan to repay the trust funds that have been depleted since South Carolina began experiencing its budget problems three years ago. The Legislature has used some $186 million in trust funds to balance the budget, depleting dedicated funds for radioactive waste cleanup, hazardous waste cleanup, and several other environmental funds. The state's tobacco settlement fund and the State Health Plan reserve also were used to offset revenue declines.
It is encouraging that $25 million of the budget surplus from the last fiscal year, ending June 30, will be added to the general reserve fund.
Given the straitened financial circumstances of the last three years, an improvement in the state's revenue picture almost surely will be accompanied by plans for new spending, once the legislative session gets under way. A spokesman for Gov. Sanford, however, insists that his office will maintain "the same level of scrutiny you saw last year."
Keeping a close eye on tax dollars and state expenditures also will be required at the legislative level. Meanwhile, the Legislature should stay the course on repaying dedicated trust funds that were so badly depleted during the lean years.
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