Th South Carolina Board of Economic Advisers elected Tuesday not to change the revenue estimate for the year. It remains at $6.263 billion, meaning that additional state job losses are not as likely before June 30th, the end of the fiscal year.
Board Chairman John Rainey: “We think it will be close. We think we’ll make it if unemployment stays on the trajectory it’s on now. We have unemployment reaching 14 percent by June 30th as one of the factors getting to our revenue estimate.”
The state currently has an unemployment rate around 12 percent.
Raineysaid the board is hesitant to lower revenue estimates this late in the fiscal year, withonly a few months left. He says this time of year, agency reductions have names attached to them, meaning there would clearly be a major loss of jobs. “I’m saying that anytime you cut an agency with two months to go, they have absorb the cut over just two months and it’s huge. So unless we felt strongly about making a cut in the estimate this late, we wouldn’t do it. We believe it will be a close call but that we will make it. If not, there’s still $75 billion in the general reserve.”
Rainey says he’s not sure what the economy is going to do. He says there is a clear connection between current unemployment and how long it takes to stabilize and get back on the right track.
Rainey calls unemployment a lagging indicator that will linger for a while. “To put things in perspective , one-percent unemployment in this state is 20,000 jobs. To get from 12 percent to nine percent unemployment we would have to add 60,000 jobs. That’s a tall order in good times and that only gets you back to nine percent unemployment. I think it’s helpful to put it in that perspective. This is a tough, gut-wrenching recession.”