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Budget Update

Current as of April 1, 2009

Dear Colleagues:

As you likely know from multiple reports, the deadline for Governor Sanford to request federal stimulus funds for South Carolina is midnight on April 3.  Since those funds have not yet been requested, the Senate Finance Committee is in the process of building a budget for the next fiscal year without those funds.

Earlier today, Senate Finance subcommittees reported to the full Senate what the cuts to the appropriations bill in their respective areas would be if no stimulus funds are available for the fiscal year that begins July 1.  At this point, the Higher Education Subcommittee indicates that an additional cut to Winthrop’s appropriation of more than $1.3 million will be necessary if there are no stimulus funds available, given revenue shortfalls predicted for next year by the S.C. Board of Economic Advisers. Overall, higher education will lose an additional $44 million from state appropriations (in addition to the loss of the federal funds themselves.) The level of reductions at the K-12 level is expected to total $161 million.

Such a deep state appropriation reduction, on top of all the reduction we already have received, would certainly be difficult to absorb for the fiscal year ahead. It’s too soon to say how that could or would be done. The reality is that Winthrop already has removed from its spending the bulk of the non-salary dollars that we can, so we likely would have to reduce spending from the salary base by whatever we cannot make up because of the lack of stimulus funds in the year to come. 

The full Senate is expected to end the week’s session tomorrow without knowing what the governor’s final decision regarding the stimulus funds will be.  The Senate is scheduled for its own furlough week next week, so it will not return to Columbia to finalize its budget until the week of April 13, and there should be greater clarity by then. Meanwhile, the House is beginning to re-assess the plan it adopted last month, as it had assumed the availability of stimulus funds. The House will need to revise its plan accordingly, then a compromise will have to be worked out in a House-Senate conference committee.

Please know that key legislators are doing all they can to quantify the implications of the decision facing the governor, and in a bipartisan fashion. I will keep you updated on developments as warranted.

Sincerely,

Tony DiGiorgio 

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