Local officials hear bleak economic outlook
By JIM FAILE
DARLINGTON - The senior budget official for the Senate Finance Committee painted a sobering picture of what local governments in South Carolina can expect financially over the next couple of years.
Mike Shealy, budget director for the Finance Committee, said cities, counties and school districts will see more cuts in state funding for the foreseeable future.
“You’re probably going to be lucky just to hold your own,” Shealy told local government officials from across Darlington County, including county, municipal, school district officials and state lawmakers.
Shealy spoke at the quarterly combined meeting of Darlington County Council, the Darlington County Board of Education and the county’s four municipal councils Monday.
He told the local officials that local governments will see dramatic changes in how they are funded in the coming years. “And all of it is being driven by fiscal realities,” he said.
While state aid to cities and counties will likely continue to see cuts, particularly hard hit, he said, will be local school districts.
The Darlington County School District has seen the loss of nearly $18 million in state funding over the last 20 months, according to Superintendent of Education Dr. Rainey Knight.
Shealy said revenue growth for the state budget’s general fund is growing at only about a 2 percent annual average, a much slower rate than normal for years past. That is less than the anticipated rate of inflation and population growth, he said.
Shealy said that revenue growth rate is forecast to remain flat for the foreseeable future.
The state’s sales tax base and personal income tax base are shrinking because of the recession and high unemployment, Shealy said.
“This recession is more severe than any that we have seen since the postwar period,” Shealy said.
It is also the longest lasting recession since World War II, he said. “It’s been deeper and longer than any other since then.”
Most recently, state and local governments have looked to the federal government and stimulus funds to carry them through lean times. But Shealy noted that the stabilization funds the state received in federal stimulus dollars will run out this year.
“We’ve either got to take in more money or spend less,” he said.
Shealy said K-12 public education used to be one of the top budget priorities in South Carolina, but that, he said, has changed in recent years. “Sometime over the last decade, healthcare became the big dog on the block,” he said.
Sen. Gerald Malloy, D-Hartsville, said several bills expected to come up in the General Assembly next year will affect funding formulas for how state funds are distributed to local governments.
State Rep. Jay Lucas, R-Hartsville, said that while the outlook in South Carolina is not bright, the state has weathered the financial storm far better than many other states, some of which are running double digit deficits. “As bad as it is, we’ve done a fairly decent job of managing it,” he said.