BIG STORY: S.C. set to see largest surplus in history

UPDATED with correction, 2/15/20

By Lindsay Street, Statehouse correspondent  | The state expects to see its largest surplus in history as revenue projections from last year are off by more than 15 6 percent, or about $567 million more than originally forecasted. 

While the excess money is rooted in missing the mark on revenue forecasts — something that caused the state to have mid-year cuts at the start of the Great Recession —  some lawmakers say they aren’t worried and even expect at least one more surplus adjustment before the end of the fiscal year in June. 

“This is the best look forward you can get,” Bonneau Republican Sen. Larry Grooms said of the quarterly projections. Grooms is a member of the Senate Finance Committee. “When the economy is going good, they missed the revenue estimate because it’s going really quickly.”

Columbia Democratic Rep. Todd Rutherford, a member of the House Ways and Means Committee, said surpluses show a conservative estimation that bodes well for state finances. 

“I don’t think their goal is to be dead-on accurate; I think they would rather be under,” Rutherford said. “One of the things that South Carolina does right, amazingly enough at least, is the budget. Now priorities in the budget? I would make them different, but in terms of only spending what we have, I wouldn’t have it any other way.”

• South Carolina’s revenues have grown, on average, by $407 million for the last 11 years. Read more. 

On Thursday, the S.C. Board of Economic Advisers said the state can expect an additional $60 million in state revenues on top of the already projected $507 million surplus for the 2019-2020 budget year. The board’s revenue guesses are made more than a year in advance, directing legislative budget writers as they craft state spending.

According to the board’s parent agency Revenue and Fiscal Affairs, the bulk of the projected $567 million surplus results from a continuation of the growth that created a $350 million surplus in 2018-2019. 

If that makes your head spin, think of it this way: Grandma sends you money every year for your birthday. Most years, she sends $10. But last year, she slipped in an extra $5. This year, she sent an additional $5 on top of sending $15 again. So you could say you got a $10 surplus this year, which “includes” last year’s surplus. And, of course, you still have the extra $5 from the previous year. 

Revenues for 2019-2020 were originally projected at $9,309,931,430. $3,294,414,000  Meaning that so far, the projection has missed its mark by more than 15 6 percent. To put that in perspective, state revenues shrank by 12.5 percent from the 2007-2008 budget to the 2008-2009 budget, which alarmed many as the Great Recession began taking its toll. 

In response to the growing surplus, the BEA also increased its revenue estimate for 2020-2021 by $25 million, which means lawmakers now will see about $840 million in recurring funds and more than $1 billion in non-recurring funding. The previous estimate already created a buzz at the start of session, with many — including the governor — identifying teacher pay raises as a top priority, costing as much as $240 million.

The House will base its budget on this revenue estimate. The Ways and Means committee seeks to print the budget before Feb. 27 prior to House floor debate in mid-March.  

EDITOR’S NOTE:  A previous version of this article stated that the surplus had grown to more than 15 percent over the projected revenues. That percentage was based on only part of the total revenues projected, specifically the sales tax revenues that were forecasted at $3,294,414,000. The real estimated total of revenues was $9,309,931,430.

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