Disappearing bailout funds will leave big gaps

COLUMBIA -- South Carolina public schools and colleges will lose huge chunks of their budgets when their share of more than $923 million in federal bailout money disappears next year, according to details of the state's proposed budget released Tuesday.

The spending plan the Senate Finance Committee approved last week shows the state's share of spending to keep government operating falling to nearly $5 billion with federal budget stabilization money sparing lawmakers from making huge spending reductions in the budget year that begins July 1.

It's the scenario that Gov. Mark Sanford predicted last year when he fought a losing battle in state and federal court against using the federal cash in the budget.

The state's public schools would be funded at 1995 levels with state cash. But they're also dependent on $174 million in federal bailout money that disappears in July 2011.

"We have made certain that school districts understand that that money is a one-shot deal and it's going away," state Education Department spokesman Jim Foster said.

State Education Superintendent Jim Rex has been pushing plans to raise the state's cigarette tax to the national average and eliminate some state sales tax exemptions in an effort to raise cash for schools.

South Carolina's 7 cents-a-pack tax is the nation's lowest. The Senate and House have passed different versions of legislation calling for a cigarette tax increase of 50 cents a pack, but that's far short of the $1.34 a pack Rex wants. Meanwhile, a panel studying the state's tax laws won't produce a report until later this year.

The state's colleges lose a fifth of their $413.7 million state budget. But $86.6 million in bailout cash covers that for now. For instance, the University of South Carolina in Columbia loses $27 million in state cash, but picks up that much in federal stabilization money.

The federal economic recovery law required states to agree to maintain their spending levels for education and health care programs to be eligible to get the cash. That's why they're getting so much of the federal cash.

Other agencies didn't get the federal bailout cash and take hefty spending reductions.

For instance, the State Ethics Commission gets no bailout cash. It loses 30 percent of its $364,221 state budget.

The Department of Parks, Recreation and Tourism loses more than a fifth of its $23.9 million budget.