South Carolina economy doesn’t slow; state now has extra $1B
COLUMBIA, S.C. (AP) — The amount of money in South Carolina’s state bank accounts continues to grow thanks to a quick recovery from the economic shock of the COVID-19 pandemic and people spending money much faster than experts predict.
The latest estimate released Wednesday said South Carolina lawmakers will have nearly $1 billion more to spend this budget year, according to the state Board of Economic Advisers.
That boosts the money that the General Assembly has control over to nearly $11 billion and doesn’t count at the roughly $3 billion in federal COVID-19 relief money coming to South Carolina.
It also doesn’t count about a $1 billion surplus after the state closed the books on the fiscal year that ended June 30. Predictions that economic growth would slow because supply chain issues, consumers slowing their spending or dwindling federal stimulus money didn’t come true.
The 13.2% growth in the 2020-21 fiscal year budget was the largest in at least 40 years, the board said.
South Carolina sales tax collections continue to soar, growing by $500 million to $3.8 billion in the past fiscal year. Corporate tax revenues have also risen sharply thanks to retailers benefiting from all that extra money being spent.
The state’s economic experts still think the rapid rise in revenue can’t continue. They predict the budget for next fiscal year starting on July 1 will also be about $10.9 billion.
But the board acknowledged being wrong before and said its prediction was more volatile than usual.
The experts also warned revenues could crash if U.S. lawmakers fail to increase the federal debt ceiling in December causing an unprecedented default that could decimated the economy.
All the extra money likely means plenty of debate in the South Carolina General Assembly on pay raises for state employees and helping out rural school districts that don’t have a big local tax base. There also will likely be lots of discussion about spending on infrastructure items, like crumbling, crowded roads, decades-old water and sewer systems or old buildings at state colleges and universities.
Gov. Henry McMaster has spent the fall making several suggestions on spending the federal pandemic relief money to jumpstart widening Interstate 26 to three lanes each direction from Charleston to Columbia; start building part of Interstate 73 in the Pee Dee; or repair or build local sewage and water systems.
The extra revenue could also revive debate on cutting taxes or reforming South Carolina’s tax system that was put on the back burner when the COVID-19 pandemic started in early 2000.
Follow Jeffrey Collins on Twitter at https://twitter.com/JSCollinsAP.