COLUMBIA — South Carolina managed to finish the fiscal year with a surplus of $775 million despite the pandemic-caused economic crisis, the state's top accountant said Thursday.
That means more than 40 percent remains of the $1.8 billion surplus the state's economic advisers projected for 2020-21 before COVID-19 caused unprecedented waves of closures worldwide.
Precisely how much legislators will have available to spend when they return next month depends on how the advisers interpret the year-end data.
"This year has been like a roller coaster ride for state government," state Comptroller General Richard Eckstrom said in closing the books on the fiscal year that ended June 30.
But he urged restraint.
"We need to guard against being euphoric, given we started the year as strongly as we did," he told The Post and Courier. "The last four months of the year were pretty sorry months. That decline in revenue is very likely to continue."
The surplus includes $463 million in revenue collected above projections that legislators used last year to write the budget, as well as unspent reserves from the last two years.
Whether legislators write a budget at all in next month's special session remains to be seen.
Gov. Henry McMaster asked legislators last week to keep state government running at last year's spending levels and wait until at least January to write a new budget. He called on them to carry over any surplus in case it's needed to prevent mid-year cuts, should the economy worsen.
State government is still operating under the 2019-20 budget, as per a resolution legislators passed in May that ensured services continued and employees kept getting paid when the new fiscal year started July 1.
At the time, legislators said it was impossible to craft a new spending plan with no idea how the pandemic would affect tax collections or how long closures would last. They intended to write a budget in September, giving state fiscal experts more revenue data to make their projections.
The state Board of Economic Advisors plans to issue revisions Monday, days before the Senate's budget-writing committee is set to begin hearings on the new budget.
Additional federal unemployment aid is partly why the outlook is much better than feared.
While closures caused jobless numbers to skyrocket in April and early May in South Carolina, the federal CARES Act provided the newly jobless with $600 weekly on top of the state-maximum $326. That extra aid, which resulted in many receiving more than they made on the job, ended July 31. And in South Carolina, unemployment benefits are taxed.
That's why personal income actually rose, even as wages dropped like a stone, fiscal advisers said Monday, when the board reviewed a slew of data but made no predictions while awaiting Eckstrom's report.
South Carolina escaped the revenue shortfalls of other states, but that doesn't mean the outlook is rosy, said chief economist Robert Martin.
"We seem to be coming back, but we're not all the way back," he said, laying out the various uncertainties to consider, chiefly the impact on tourism, an economic driver. "Things are going to be very, very slow."
Senate Finance Chairman Hugh Leatherman still intends to proceed with writing a new budget, with floor debate set for mid-September.
The chairman of the House's budget-writing committee, Rep. Murrell Smith, said the House's next move will depend on advisers' revenue predictions for the current fiscal year. House leaders could opt to concur with McMaster or take a middle option of writing a new resolution that mostly keeps government running at the same spending levels, with a few tweaks.
"This is good news for the state of South Carolina," Smith said of the surplus available for one-time expenses.
But that doesn't mean it should be spent, said the Sumter Republican.
"This gives us a cushion to go forward and have in reserve in case this economy does not pick up steam," he said. "We need to be prudent and not counting the ways to spend the money but keep it in reserve. Let's hope we pull out of this quickly and grow this economy back to what it was."
No matter what legislators decide to do regarding the budget, they still need to decide how to allocate $668 million remaining in federal aid for COVID-19 expenses. That money reverts to federal coffers if it's not spent by Dec. 31.