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Article published Nov 6, 2003
State facing more budget cuts

JIM DAVENPORT
Associated Press

COLUMBIA -- A state revenue forecast adopted Wednesday likely means more agency budget cuts that could lead to layoffs for state employees and tax increases.The state Board of Economic Advisors adopted projections that anticipate the state generating an extra $108.9 million in tax collections in the fiscal year that begins July 1, 2005."I think we're being conservative here," John Rainey, the board's chairman, said. "This is a safe number."But that scant 2 percent growth rate in tax collections falls far short of the $400 million budget writers say they'll need to avoid deep agency spending cuts.The board's new projection will now go to the governor's office and legislators, where the process of writing the new budget already is under way.The numbers are "clearly within the realm that we anticipated," Gov. Mark Sanford's spokesman Will Folks said.Rainey said if his board's estimate is too low, it will be adjusted in February. That could forestall spending cuts."We've got four months to decide if we're too conservative," Rainey said.Last month, the House Ways and Means Committee projected a 2 percent revenue growth rate that could leave legislators with a gap of up to $631 million and force across-the-board budget reductions approaching 15 percent.But many of the spending items contributing to that gap won't be dealt with next year or will be trimmed in other ways, leaving legislators with a $400 million potential shortfall, Ways and Means Chairman Bobby Harrell, R-Charleston, said."We will have to cut the budget again this year in order to balance," hesaid. And that means agencies can expect to get about 7 percent less in their budgets.But if lawmakers agree with Harrell and spare public schools and health programs, other agencies will see deeper cuts.Harrell said he doesn't expect big layoffs will come as budgets shrink for the fourth year in a row. While the state's payroll is down about 5,000 people during the past three years, only about 1,000 of those people lost jobs to layoffs, he said.Some Democratic lawmakers have said the state will have to consider raising taxes to deal with an ongoing fiscal crisis. "We're not going to chop our way out of this," state Rep. Joel Lourie, D-Columbia, said Tuesday.The Board of Economic Advisors' news wasn't all bad.The board reported revenues between July and September were running 2.2 percent ahead of year-earlier levels, above the revised 1.4 percent growth rate the board adopted this summer, Rainey said. The revision this summer prompted the state Budget and Control Board to order agencies to spend less.