The Palmetto Insider

The blog of the South Carolina Policy Council

Budget and Control Board Votes to Cut Agency Funding

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With a projected deficit of $328 million for FY09-2010, the S.C. Budget & Control Board voted to cut state agency budgets by 4 percent.

The S.C. Budget & Control Board voted today to cut state agency budgets by 4 percent. The cut is required by state law as a result of decreased tax revenue and overspending, both of which have left South Carolina with a projected deficit of $328 million for FY09-2010.

In addition, the state has a $98 million operating deficit for FY08-2009. This deficit is different from the state’s debt, which is $8.2 billion.

Although the Board was aware of the budget overrun at its last meeting on Aug. 13, it decided to postpone action until this month in hopes that revenue estimates would improve. They did not.

To address the projected $328 million shortfall for FY09-2010, the Board unanimously passed a motion to:

  • Cut agency budgets by 4.04 percent or $200,452,112;
  • Draw down the remaining Capital Reserve Fund by $7,847,888;
  • Prior to that, $120 million had already been taken from the Capital Reserve Fund to cover the budget shortfall.

In an attempt to cover the FY08-2009 shortfall, the Board will borrow funds from the General Depository Account of the State Treasurer’s Office. The Budget and Control Board is authorized to borrow money “from any department of state government any surplus … on hand in the Office of the State Treasurer.” The funds must be paid back with interest by June 30 of FY09-2010.

According to state law, unless the General Assembly takes action to the contrary, these reductions must take effect Sept. 18, 2009.

This past session, the legislature considered several measures that would have implemented spending caps and forced the state to save more in its rainy day funds. None of these bills passed.

At the beginning of FY 07-2008, the General Fund had a surplus of more than $1 billion, but instead of saving the money or refunding it to taxpayers, the General Assembly spent the funds.

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Written by Cotton Boll Conspiracy

September 3, 2009 at 4:40 pm

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