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Article published Jul 23, 2004
Better economy doesn't relieve legislature of need for
thrift
The fiscal crisis felt by South Carolina and other
states is starting to ease, but that won't relieve the need to control state
spending.The National Conference of State Legislatures issued a report this week
declaring that states wound up their fiscal years with much more money than they
had at the same time last year.South Carolina is no exception. The state Board
of Economic Advisors announced Monday that the state's general fund revenue
increased by about $252 million over the previous year.That's good news, but it
shouldn't signal a new rush of state spending.After all, much of the increase in
state revenue is due to the economic recovery, but part of it is because of a
$20 billion bailout of state budgets by the federal government. That bailout
isn't likely to be repeated.State leaders need to go easy on the spending. They
need to remember the lessons they should have learned over the past few
years.The main lesson should have been to restrain spending during economic
growth.The seeds for the budget crises of the past few years were sown during
the economic boom. The General Assembly spent all the money that was coming in
to the state and even future revenue growth.They spent more than the state could
be expected to receive during a period of economic growth. When the economy
stopped growing, the difference between state spending patterns and state
revenue was severe.Lawmakers then had to cut the budget, sometimes severely. If
they had held the line on state spending during the growth years, if they had
not created so many new spending programs, they would not have been in as much
trouble. The core services the state must provide would not have seen cuts as
great as they experienced.That makes this economic recovery the time to make
sure a similar situation doesn't develop again. Lawmakers need to restrain their
spending to the level of funding that they can be reasonably sure the state will
receive each year."You hope governments will learn lessons from this," Marty
Stephens, the president of the National Conference of State Legislatures, said
in releasing the report. "They need to be very prudent in how they spend the
people's money."The actions lawmakers take in January will show whether they
have learned those lessons.