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South Carolina’s Board of Economic Advisors lowered next year’s budget estimate by $58.3 million at a morning meeting on Friday, May 8. When combined with the BEA’s projection from early April that revenue estimates should be reduced $643.5 million, the shortfall stands at $701.8 million.
As a result of the significant disruption on the economy from the COVID-19 pandemic, state general fund revenue declined by $400.1 million for April, which is more than was anticipated. While all tax categories experienced significant declines, some are in part due to extensions to tax filing deadlines.
It was on April 9 that the BEA agreed to lower the projected revenue estimate by $643.5 million for FY20-21.
Friday’s move ensures the previously passed House version of FY20-21 in no longer valid. It is expected the General Assembly will return to Columbia in September to adopt the FY20-21 state budget.
Now that economic restrictions are easing sooner than was expected, adjustments are being made to previous estimates. Recent GDP data show larger corporate losses than expected, which resulted in the board agreeing to reduce the estimate for FY20-21 by $58.3 million. The state general fund growth estimate was reduced from 2.3% to 1.7%.
The current fiscal year estimate was not adjusted. It was noted the state will have a much clearer picture of FY20-21 staring in July after the state’s books are closed at the end of June.
Prior to the pandemic, the BEA had projected $888 million in new recurring revenue. That amount is now below $200 million. The estimated surplus of $567 million is now estimated to be $40 million.
The state currently has $305 million in its Contingency Reserve Fund.
The BEA’s 22 pages of meeting handouts can be found here. The Board is statutorily charged to provide the General Assembly with the official revenue estimate for lawmakers to draft the annual state budget.