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COLUMBIA -- A blunder in setting up an account and transferring money from the state's tax agency has turned into $120 million in budget cuts that threatens jobs, the state Board of Economic Advisors chairman reported Wednesday.

The mistake stems from current state budget law. It requires the state Revenue Department to crack down on tax scofflaws and put the cash collected into a special account that would pay for redistricting, indigent defense, retirement benefits and a shortfall in covering tax breaks on homes.

"For some reason the Department of Revenue got the money, and their position is the account wasn't set up over there so we didn't transfer it," board chairman John Rainey said. "Maybe they should have called the treasurer and said 'Why didn't you set up the account.' But nobody did that."

"This is one of those things that shouldn't have happened," he said, without specifying how many jobs could be threatened.

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Because the account wasn't set up, the extra cash inflated the state's general revenue figures, and Rainey's board issued overly optimistic reports used to set the state budget. The board corrected those estimates Wednesday, cutting $60 million from the current budget year estimate and $60 million from the estimate for the budget now being written in the Senate Finance Committee.

It's another round of bad news for a state budget that's plunged from $7 billion two years ago to just over $5 billion in state cash during the past two years. The spending plan the House passed last month sets per student public school spending at 1995 levels.