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Web posted Monday, October
11, 2004
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Discipline helping fix state economy
By
Bill Herbkersman
From the House
My
friend and colleague, Richard Eckstrom,
Comptroller General of South Carolina, has
released his report on the financial health of the
state as of June 30, 2004, the end of our fiscal
year.
It is no secret that we have been
going through some tough times financially. The
last two budget cycles have been sometimes just
excruciating. We have had to make some hard
choices that we were only able to make because we
had, in essence, no choice.
Well, it looks
like we might be almost out of the woods, or at
least getting pretty close. The thing I've been
personally most concerned about is the
unconstitutional $177 million deficit we've been
carrying. According to Eckstrom, that deficit has
been completely eliminated.
In addition,
the state's General Fund Balance, it's "Rainy Day
Fund" has been restored to the tune of $75.2
million. This is more than half way to the
constitutionally mandated $150 million. Also, the
Capital Reserve Fund, which had been completely
exhausted during the fiscal year, closed the year
with a robust balance of $99.4
million.
Almost two years ago, I pledged to
work with Gov. Sanford in his aggressive program
to restore our state to financial health. He had
inherited not only a sluggish economy but a fiscal
mess, depleted trust funds and an unconstitutional
deficit. Under the governor's leadership, and with
bipartisan support, we passed the Fiscal
Discipline Act of 2004, which was a tool intended
to restore our depleted reserves as well as
establish stronger spending limits. One of the
principles articulated within the legislation was
that we could not expand the government faster
than the population. While this seems reasonable
and rational, when it came down to doing the
actual budget writing, it took a lot of work and a
lot of compromise from good people on both side of
the aisle to get us where the comptroller can give
us the good news we enjoy today. The intent of the
Fiscal Discipline Act was that we do in three
years what we have actually accomplished in only
one.
The mechanics of the turnaround are
also deceptively simple. We cut spending and we
collected more taxes. In fact, retail sales tax
was up a healthy 6.8 percent, while income tax
collections increased by 6.2 percent.
The
big surprise was corporate income tax, which was
up a whopping 47.2 percent.
Even with all
the good news, Comptroller Eckstrom warns state
budget officials of the continual need to restore
the significant balances borrowed from trust fund
earmarked accounts over the past few years. There
is also the matter of the state retirement
systems. If these obligations are not addressed
with appropriate urgency, we may not be able to
keep our promises to those folks who served the
state and now depend on us to take care of them. A
promise is a promise.
Well, we see there is
some good news in a recently bleak economy.
Whether it's good or not so good, it's my job to
get the real news to you. Expect nothing less.
There is a reason we call it the House of
Representatives.
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