State Comptroller General Richard Eckstrom says a drop in state revenue in recent months has alarmed him. Eckstrom says income tax receipts showed a 48 percent drop($175 million) below those of last year.
He says the the long-term implications are frightening. “It’s just an old question mark over state government right now, the fact that our individual income tax receipts from last month were about half of what they were the same month of the prior year. It’s frightening . And they were really down the previous month as well.”
Eckstrom says individual income tax receipts over the past fiscal year are 16 percent below the prior year, amounting to $476 million less.
The state’s Board of Economic Advisers will meet Thursday to decide on revenue projections for the month. That information is used by the Budget and Control Board and government budget writers. Eckstrom says that the Board members will have to face the music. But he says since there are only a few months left in the fiscal year, that no recommendations for cuts in revenue projections could come early enough for state lawmakers to respond with more spending cuts.
The Republican Comtroller General says it’s a scenario that calls out for the state to keep greater financial reserves in place. He says trying to fix the situation right now is problematic. “It’s like dealing with a fire when it’s burning hot. You do fire drills before the fire breaks out. We’ve talked for years about dealing with situations like this but unfortunately we can’t get past the talk stage. State government just has to development spending caps and put them in place.”
Eckstrom also repeats what he has said before, and echoes the words of Governor Mark Sanford, encouraging lawmakers to reduce state debt. “We simply have to pay off some of our high debt. That debt is strangling us. And that debt is most dangerous at times like this when the money dries up. And we have to service debt. We ought to be avoiding borrowing and should try to pay our debt down to more reasonable levels.”
Eckstrom says he sees the current financial dilemma potentially leading to deficit spending, and the state isn’t allowed to deficit spend, according to its constitution. He says he believes that state lawmakers will look to the Budget and Control Board to make across-the-board cuts. Eckstrom, who is one of five members on the board, says that’s unfortunate. “All the Budget and Control Board can do is to make across-the-board cuts to all agencies. And I think that’s the wrong approach. I think elected officials ought to come back into session and go back through the budget, and determine which are the high-priority programs, and protect those as much as you can, and which are the low-priority programs, and cut those out completely.”
Eckstrom asserts that those who said that South Carolina government has a great credit rating were just putting a political spin on the issue. He points out that the state lost its AAA credit rating from Standard and Poores. The state still has aAAA rating from the other two rating agencies.