Pew's Fiscal 50 analysis, which includes interactive tools allowing for state by state comparisons, can be found at pewtrusts.org.
South Carolina is among 26 states that still haven't recovered from the Great Recession - judging by state government revenues.
Also, the Palmetto State's employment rate among 25- to 54-year-olds - those most likely to work - still is below where it was seven years ago, and below the national average.
Those are two findings from an analysis of all 50 states by The Pew Charitable Trusts.
Barb Rosewicz, who directs the Fiscal 50 project, said the analysis was done to spotlight states' long-term fiscal health, including how they have weaned themselves from the 2008 federal stimulus - a massive wave of federal income that helped shore up state budgets.
"South Carolina's tax revenue collections actually peaked 21/2 years before the recession and were on a downward trend," she said. "All states had declines, but several states had double-digit declines, and South Carolina was one that did. At its lowest, it was 26 percent below what that peak has been."
The state's income has rebounded but still is 11.2 percent below its peak, when adjusted for inflation. She said that affects lawmakers' decisions on what they can spend on education, health care, roads and other services.
The report's other numbers paint a mixed picture: South Carolina actually has among the highest reserves in the country, but like many other states, it faces challenges from pension and retiree health care liabilities that are not paid for.
"The state stands out in some good ways," Rosewicz said, "and there are other ways that it's not doing as well as other states."
Only seven other states were even further below their peak in tax revenues than South Carolina.
However, some of 24 states that have passed their peak include Illinois, which raised taxes, and North Dakota, which was helped by a shale oil boom.
"When I look at South Carolina, Georgia and North Carolina, it looks as though South Carolina is performing more like Georgia on tax revenues," she said. "North Carolina seems to be doing relatively better, though it also is below the national benchmark."
Tax revenues account for about half of all state dollars, and about a third comes from the federal government.
South Carolina was receiving a relatively greater share of its revenue from federal dollars, but that sum peaked after the stimulus and since has dropped to 32.4 percent.
"South Carolina is in the middle (as far as reliance on federal dollars)," Rosewicz said. "The challenge ahead for states is what happens when the federal government starts doing belt tightening - and what will the trickle down effect be on South Carolina?"
Frank Hefner, a College of Charleston economic professor, said tax reform in the state, like on the federal level, would help, but he is not optimistic.
"In making the sausage, it's not easy to do. I recognize that," he said. "We tend to do patchwork stuff (with tax reform), and in doing patchwork stuff we create other problems."
Spending and reserves
South Carolina was among 20 state governments that spent less money - as a share of personal income - in 2011-12 than it did two decades earlier, the analysis found. But the drop was minimal over that span: spending as a share of the state's economy declined only 0.2 percentage points.
And the state has relatively impressive reserves of almost $1 billion, the report said.
South Carolina is projected to have $986 million in reserve funds - or enough to fund state government for 58 days. The 50-state average is 23 days.
"This is money you could fall back on for emergencies," Rosewicz said. "South Carolina has done a lot of rebuilding of its reserves and balances" during the past four years. "There are only eight states that are expected to have a greater financial cushion at the end of last fiscal year."
Hefner said it's good news that South Carolina's revenues and spending are just about back to pre-recession levels, but the state still has to grapple with the legacy of the last seven years, where revenues weren't as high.
The looming debate over how to maintain the state's roads and bridges is one symptom of that.
"Seven years of expenses have accrued without the revenue," he said. "What we have - and it's not unique to South Carolina - is a 'kick-the-can-down-the-road' mentality. There are some big bills looming."
The Pew analysis focused on adults ages 25 to 54 because they are most likely to be working rather than attending college or in retirement.
This year, there was a lower percentage of people those ages working in 29 states, including South Carolina, than in 2007 - a decline that means less revenue for state governments from personal and business income taxes and sales tax.
The other 21 states cannot be measured because the survey data isn't enough to surpass the margin of error.
South Carolina's employment rate among 24- to 54-year-olds was 79 percent and is now at 74.7 percent. "South Carolina, according to this indicator, is doing worse than the national average," which showed a bigger decline: from 79.9 percent in 2007 to 76.2 percent this year, Rosewicz said. "It tells me there are people on the sidelines in that prime age working group that aren't part of the economy. That's a negative."
However, she said that also can be seen as a positive, showing the state has potential. "There are people on the sidelines who, if we got the economy growing again, are available to work," she said.
Hefner said South Carolina's employment as a percentage of the nation's employment hasn't changed for several decades.
"Some people who are not in the workforce may be left out permanently, if we're not careful," he said, "but that is not unique to South Carolina."
Like most states, South Carolina must balance its budget each year, but it still has future spending commitments without a pre-determined way to pay for some of them.
And like 34 other states, South Carolina's largest unfunded liability is its pension debt, which was $15.6 billion as of fiscal year 2012 - the most recent year with comprehensive numbers.
That's more than South Carolina's other debt, $11 billion, and its unfunded retiree health care obligation, $9.7 billion.
Nationally, all 50 states have $915 billion in unfunded pension benefits; $757 billion in outstanding public debt; and $577 billion in unfunded retiree health care and other benefits. But considering the total debt pie, states have done a better job saving for pensions, which were 72.3 percent funded, than retiree health care, which was only 6.1 percent funded.
Rosewicz said while South Carolina's biggest long-term financial challenge is pensions, it also is among many states grappling with retiree health care.
While many states fund retiree health care costs each year - rather than setting aside a savings account - "this does show you there is another bill that is coming due in South Carolina," she said.
And Hefner said that bill does not include the need for road, bridges and school repairs.
"There's a huge government debt down there. It's not debt in the sense that we've already borrowed the money. It's debt in the sense we've got a lot of stuff to do," he said. "We'll either fix the roads and bridges or not. We'll either fix the schools or not."
Reach Robert Behre at 937-5771.
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