COLUMBIA - In about two hours Wednesday, the state's top financial leaders and most powerful showed how weak laws and loopholes leave the state unable to deal with its deficits.

While the issue was a $177 million shortfall left over from two years of budgets that ended in the red, the Budget and Control Board left its meeting with a larger question: Can a board charged with keeping the state's budget in balance overcome problems the General Assembly creates or doesn't address?

The answer will wait until January, when the legislature decides whether to fix loophole-laden budget laws or give the budget board more discretion in dealing with the state's fiscal problems.

"What's so frustrating about this issue is who's going to take action," Gov. Mark Sanford said after Wednesday's meeting.

A report on whether the budget is in the red or black arrives two months after legislators leave Columbia.

"But the legislature's the one that has the jurisdiction to take action," and that has to wait until it returns in January, Sanford said. By then, other priorities are "on the table and, all [of] the sudden, something that was going to be on the front burner ends up being on the third burner," Sanford said.

It could be worse.

A new loophole emerged Wednesday as the five-member board Sanford leads debated a $155 million deficit left from the 2002 fiscal year and $22 million deficit from the 2003 fiscal year, which ended June 30.

The members disagreed over exactly what was meant by the term "closing the books."

Three members of the board already had said they couldn't address the $155 million deficit because that year's books had long since closed.

If that was the case, Comptroller General Richard Eckstrom said they couldn't deal with the $22 million deficit from the previous fiscal year, either.

"General, have you closed the books for this year?" Senate Finance Committee Chairman Hugh Leatherman, R-Florence, asked.

"In my view," Eckstrom said.

"You closed them?" Leatherman pressed.

"In my view," Eckstrom said.

"If you closed them, then in my opinion we cannot deal with the $22 million," Leatherman said.

The board faced a similar situation a year ago, House Ways and Means Committee Chairman Bobby Harrell, R-Charleston, said. Then-Comptroller General Jim Lander handled the deficit by borrowing without consulting the board.

Along the way, he ignored a new law set up to deal with deficits, Harrell said.

Eckstrom, who along with Sanford pushed for the budget board also to deal with the $155 million deficit, told the board closing the state's books was a technicality and shouldn't prevent the budget board from taking action.

Afterward, Harrell said he was surprised there was no set time for the books to close because the board's authority to deal with deficits depends on it.

"We thought we had guidance on when the books closed," State Treasurer Grady Patterson, the board's lone Democrat, said.

Sanford said it was "indicative of much of the structure that does not work in South Carolina."

There's nothing in the law or elsewhere spelling out when the books close, Eckstrom said Friday.

"There's no standard use of that term. It's not a lock-and-key system," he said.

Ultimately, the board agreed 3-2 to reduce state spending by $43.2 million, or 1 percent, and hit one of the state's two rainy day funds to make up for the $22 million deficit and a $108 million reduction in the state's revenue projection.

The board also agreed to try to come up with changes to the law, including the one intended to help the board address deficits.

"It's probably in the best interest of the General Assembly to go back and tighten up that law," Eckstrom said.