Sanford, GOP leaders propose deficit plan

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The Republicans' proposal, which would have to be approved by lawmakers, also would cap state spending for the next five years at a growth rate of 3 percent per year and require any revenues in excess of 3 percent be applied first to the deficit and then to the reserve funds.

"We've said from the beginning that uncontrolled spending played a huge part in creating the unprecedented budget crisis we're currently up against," Sanford said. "This plan goes a long way toward reining in that spending - in addition to getting us out of a fiscal hole that could have cost us our Triple-A credit rating."

Democratic lawmakers attacked the proposal, arguing it is not substantive because the reserve money has to be replenished.

"I think it's borrowing from Peter to pay Paul," said Sen. John Land, a Clarendon Democrat who sits on the Senate Finance Committee. "It's a shell game."

Said Sen. Darrell Jackson, a Columbia Democrat, "It's robbing Peter and killing Paul."

Rep. James Smith, a Columbia Democrat who leads House Democrats, said, "They're doing nothing but moving liabilities around."

Rep. Robert Harrell, chairman of the House budget-writing committee, said the money to replenish the reserve funds would be a designated budget item that could not be changed by lawmakers under the plan.

The $155 million deficit was publicly disclosed in August. Both Sanford and Comptroller General Richard Eckstrom charged then that the red ink had been "swept under the rug" and called for immediate action by the state's five-member Budget and Control Board.

Instead, the board, which includes the chairmen of the House and Senate budget committees, voted 3-2 to deal only with the current year's deficit of $22 million.

The state's constitution requires lawmakers each year to pass a balanced budget. Sanford had argued that running a deficit not only was unconstitutional but also jeopardized the state's prized credit rating.

The plan unveiled Tuesday would require lawmakers next year to add $1 million to the General Reserve Fund, then take the resulting $50 million from the fund and apply it toward the deficit. The following two years, lawmakers would remove $50 million and then $55 million from the Capital Reserve Fund, normally used to fund building projects.

Sen. Hugh Leatherman, chairman of the Senate Finance Committee, said the plan "passes the common sense business test."

"This plan will not disrupt agency services," he said.

Land disagreed.

"The $155 million will have to be taken from some state supported service," he said. "To pay these funds back, some agency will not be able to have that money to spend. It's just that simple. I just don't see how the state is going to function with this borrowing to pay deficits."

But Harrell said the plan "puts our fiscal house in order." He said he also would file legislation that will "automatically" prevent the state from running future deficits.

"It will be difficult in hard budget times to carry this out but we can do this," he said.

Sanford estimated Tuesday that lawmakers would begin budget debate next year with at least a $350 million shortfall.

He said the 3-percent revenue feature of the plan will give the state an added financial cushion and also allow lawmakers to pay off the deficit in as little as one year if the economy turns around.

State economists have projected a rate of growth of 2 percent this year.

State Sen. Gerald Malloy, a Hartsville Democrat, called the plan "extremely optimistic."

"We're relying on a contingency and the contingency is the economy," he said.

Smith said Democrats would soon release their own plan to deal with the deficit.