Economists hold steady predicting big revenue loss in SC
COLUMBIA, S.C. (AP) — Economists who predict how much money South Carolina will have to spend didn’t make massive adjustments to their estimates that the state will lose $700 million in next year’s budget in large part because of the coronavirus.
But they also warned Friday with the due date for payments for personal income tax and corporations delayed until July and questions about how the economy might rebound as things reopen as COVID-19 is still spreading, their predictions have much more uncertainty than usual.
“We are still at a loss for a lot of details and information,” said state Revenue and Fiscal Affairs Office Executive Director Frank Rainwater, whose agency is responsible for predicting how much money lawmakers will have to spend.
The money that the state collected in fees and taxes fell almost 43% or some $400 million in April as the economy shutdown from restaurants, hotels, manufactures and other businesses closing during the peak of the isolation because of COVID-19, the agency said.
But taxes and other revenue for this year’s budget was running more than $500 million ahead of schedule, so Rainwater said he still thinks there won’t have to be any immediate cuts.
The figures Rainwater presented at Friday’s telephone meeting of the agency board showed a snapshot of the effects of South Carolina’s shutdown. Liquor taxes, paid by the drink, were down 92% last month.
Sales tax collections were down $72 million, or 26% in March even though Gov. Henry McMaster didn’t start issuing emergency orders closing restaurants and other businesses until the middle of the month. Those figures would have been even worse if a U.S. Supreme Court decision two years ago and legislative action had not allowed South Carolina to collect sales taxes for online purchases, Rainwater said.
Attention will soon turn to the 2020-21 budget. At the beginning of the year, economists estimated the state would have nearly $10.3 billion to spend. Friday’s meeting lowered that estimate to less than $9.6 billion.
That means the budget passed by the House days before the virus shutdown started is predicted to lose a good chunk of the additional money it had when first written.
That flush spending plan included $213 million to give every public school teacher in South Carolina a $3,000 raise, $100 million for repairs to rural highways, $100 million to improve safety at state prisons and $248 million in income tax relief and credits.
The General Assembly returns next week and is expected to pass a resolution allowing the state to keep spending after June 30 without a budget, then return in the late summer once economists have a better idea of delayed tax collection and the economic impact of the coronavirus and work on the new spending plan.
Follow Jeffrey Collins on Twitter at http//twitter.com/JSCollinsAP.