Board of Economic Advisors
COLUMBA -- State economists cut $229.5 million from state revenue estimates Wednesday, citing dire economic projections through the end of the budget year in June.
In making the additional 3.5 percent cut, the Board of Economic Advisors said the state unemployment rate could reach 14 percent between now and July. That would mean an additional 130,000 people looking for work -- 20,000 already are -- and no longer paying state income taxes.
Wednesday's cuts, coupled with a November cut creating a $138 million deficit, mean a state budget panel meeting this morning could be forced to slash $367 million or more from the state budget. Since June, revenue estimates have been reduced by $797 million, or 11.2 percent.
In the process, hundreds of temporary and full-time state workers have been laid off, and health care, K-12 education, colleges, public safety and other services have been limited.
"People are just starting to understand the states are in deep trouble," said John Rainey, chairman of the Board of Economic Advisors. "The unemployment, we're just on the cusp of that.
"We all hope we're wrong. I know what those cuts mean in terms of people's lives."
Doug Woodard, an economic researcher at the University of South Carolina, said unemployment will rise, but he expects a peak rate of 9 percent or 10 percent by July. Currently, South Carolina has an 8 percent unemployment rate, the highest in 25 years and fourth worst in the nation.
"It's getting worse by the day, there's no question about it," Woodard said. But to reach a 14 percent unemployment rate, Woodard said, would require "massive wide-scale layoffs that would be unprecedented."
Gov. Mark Sanford said the revenue news reinforces his call Tuesday to eliminate the state's corporate income tax and lower the top individual income tax rate.
He also chided lawmakers for large budget increases the past four years.
"This is again unfortunate, but not unforeseen given the run-up in spending over the past few years," Sanford said.
But Wednesday's cuts mean the budget Sanford proposed for this year would be more than $470 million out of balance.
When the State Budget and Control Board meets today its members will debate how best to deal with the projected revenue shortfall.
The board's two legislative members, Sen. Hugh Leatherman, R-Florence, and Rep. Dan Cooper, R-Anderson, have said they prefer issuing across-the-board cuts.