Budget Update

Current as of May 13, 2010

Dear Colleagues:

The Board of Economic Advisers met in Columbia this afternoon and recommended no change in the revenue forecast for the current and coming fiscal years. That is a good indication that the economy is stabilizing, although at a much lower level of activity.  Some signs of private sector recovery are becoming evident, but public sector revenues are not yet reflecting that yet, leading to continuing budget tightening for local government, school districts, universities and even our court system.

Earlier today, two key actions in the General Assembly indicated just how tight the state budget situation is:  the Senate joined the House in overriding Governor Mark Sanford’s veto of a cigarette-tax increase, but the House failed to override a veto of legislation increasing court filing fees necessary to pay for judicial operations in the absence of other state revenue.

That means that rather than being able to adopt an overall state budget for the fiscal year that begins July 1 without a conference committee, budget writers from each chamber likely will have to get together in conference to pare spending in other areas to insure the court operations can continue, even with layoffs that Supreme Court Justice Jean Toal has indicated will be made among workers in those operations.

It is unclear what impact this could have on the respective higher education allocations for next year that had been approved by the House and Senate. As I told you in the April briefing, we will have to await our final appropriation allocation from Columbia, then determine what tuition rates will be recommended to our Board of Trustees next month.  Our budget picture will not be completely clear until August, when we “count suitcases” and calculate to what extent tuition revenue and our own spending reductions can fill the ever-growing gap in state funding.

We will continue to keep you apprised of key developments via e-mail and web updates as the legislative session continues.

Sincerely,

Tony DiGiorgio