$238.2 million more cut; effects to be widespread

BY YVONNE WENGER,

Wednesday, December 16, 2009

COLUMBIA -- South Carolina's budget woes got even worse Tuesday when government spending was slashed by another 5 percent, leaving agency directors to decide between layoffs, employee furloughs and turning away the state's downtrodden.

The Budget and Control Board voted 3-2 to cut $238.2 million from the state budget, which has fallen from $6.7 billion to $5.1 billion in less than two years.

Senate Finance Chairman Hugh Leatherman, R-Florence, and House Ways and Means Chairman Dan Cooper, R-Piedmont, voted against the 5 percent cut. They said it was more severe than necessary.

This is the third budget cut since the spending plan took effect in July because of dramatically falling tax collections.

Dire times

The consequences are grave for most state agencies. The Department of Education took the largest dollar cut, while higher education institutions each felt a smack, including $592,433 for The Citadel and $1.25 million for the College of Charleston.

Officials at Trident Technical College said the school would lose 5 percent as part of cuts to the state's 16 technical colleges.

Social services and crime-fighting efforts also will suffer.

Bill Byars, director of the Department of Juvenile Justice, said the

backsliding economy will likely begin to erase victories in the fight against violence in South Carolina.

"It's been a cycle going in the right direction; my fear is that cycle is going to reverse," Byars said. "I am worried."

In the seven years since Byars took the department's top post, youth crime dropped 20 percent.

Byars' plans to put gang-prevention programs in every county were stomped out when he lost 17 percent of his budget in the last fiscal year. Tuesday's cuts make a total of 9 percent from the current spending plan that began in July, or 26 percent in less than two years.

The average age of a gang member in South Carolina is about 16 years old. With the right intervention, teens can cut their ties with gangs and violence, Byars said. But those plans will continue to be on hold until at least next summer.

Nearly 300 employees were laid off from the Juvenile Justice Department last year. Byars said he had to cut after school programs, closed a wilderness camp and shut down five group home and two dorms.

Now he is considering top-down furloughs, among other measures.

The scene is grim across all state government.

Services down; need up

Kathleen Hayes, director of the Department of Social Services, said the latest budget cut comes after the agency has cut services to families and children, required its workers to take unpaid time off, laid off others, eliminated vacant positions and kept a freeze on hiring.

The 5 percent reduction means the agency might not be able to meet its ongoing obligations, Hayes said. At the Social Services Department, a 5 percent cut equals $6.25 million. The agency is down $48 million since July 2008.

Those cuts, in turn, affected the agency's ability to secure matching federal funds. And in September, Hayes said the agency was notified that it would lose $16 million for welfare services.

Meanwhile, the need for welfare services is up 46 percent since 2007. The number of families who have qualified for food stamps increased by 31 percent in the last two years.

"Families in South Carolina are hurting," Hayes said in a statement. "We are seeing people who have never sought the services of DSS before."

Medicaid services are expected to stay intact, according to Jeff Stensland, director of public information for the state Department of Health and Human Services. Because the Legislature and federal government have put so many restrictions on how Medicaid services can be reduced, the impact on the rolls will be minimal.

"For beneficiaries this year, there will be very little if any short-term impact, but next fiscal year is more dicey," Stensland said.

The agency will lose more than $38 million in revenue with the 5 percent cut, but it will dip into additional stimulus funds to cover the loss. However, the federal stimulus funds run out next year, and the Health and Human Services Department, like some other agencies, will face possibly severe cuts at that time.

Education takes a hit

For public schools, the cut Tuesday means $101.5 million less. Education funds were reduced by $85.4 million in September, on top of $513 million in cuts since last year.

Dorchester District 2 school leaders said they were anticipating a 3 percent cut from the state, so they responded last month by opting to furlough teachers for three days and administrators for six.

But that won't be enough to cover the $2.5 million they're expecting to lose from this 5 percent cut, said Allyson Duke, the district's chief financial officer.

She is anticipating that the district will need to make $500,000 in additional cuts to make up the difference, but she won't know for sure until she sees final numbers from the state.

Furloughs could be an option, and she said the board likely will take up this issue at the start of next year.

Pat Raynor, the district's spokeswoman, said the district already has absorbed $8 million in cuts since August.

"The really frustrating thing is we're running out of places to cut," she said.

Ray Greenberg, president of the Medical University of South Carolina, said he anticipated further cuts, although not quite as deep as 5 percent.

"This continues to be a challenging environment for us to maintain all of our services, but through the hard work and dedication of our faculty and staff, we will enter 2010 with considerable positive momentum," he said in a statement.

Going forward

Economists have declared an end to the recession in South Carolina, but with an employment rate of 12.1 percent, many residents are still waiting for a reprieve.

The high unemployment rate is directly responsible for part of the state's revenue problems because the state collects less in income taxes when residents are out of work. And when people are out of work, they spend less. That means less in sales taxes to fund government services.

John Rainey, the state's chief economic forecaster, said the Board of Economic Advisors will monitor all the benchmarks when they meet Thursday to decide if the revenue projections should be further reduced.

Reductions in the revenue forecast trigger across-the-board cuts by the Budget and Control Board, unless the Legislature meets to target cuts.

Rainey said he is hopeful that the Board of Economic Advisors won't have to drop the revenue forecast, at least not this month.

"The number we're tracking is not far off our estimate," he said.

Diette Courrégé and The Associated Press contributed to this report. Reach Yvonne Wenger at 803-926-7855 or ywenger@postandcourier.com.

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