COLUMBIA -- Gov. Nikki Haley used a panel of experts Wednesday to explain why South Carolina's financial situation is dramatically healthier than Washington, D.C.'s, even as the state faces the threat of losing its sterling credit rating.
Several representatives from Moody's Investors Service traveled to Columbia for the governor's financial summit. The state is at risk of having its triple-A credit rating downgraded, because of South Carolina's interdependence on the federal government. South Carolina is one of five states in the situation that's tied to debate in Congress over federal spending and fiscal responsibility.
Haley said her goal is to get the state's financial house in order and build the workforce.
"There is an absolute stark contrast between where we're going and our financial condition in South Carolina and where the federal government is going," Haley said. "While they continue to go into somewhat of chaos, we are going to continue to become more independent and solid in the way we conduct our affairs."
Representatives from Moody's did not comment on whether information from the summit would impact their decision on setting South Carolina's credit rating. The credit rating matters because it determines how much interest the state will pay on its loans.
South Carolina's economy is tied to the federal government because of the amount of federal cash spent in the state on everything from military salaries to federal research grants at colleges and universities to Medicaid.
But South Carolina is different than Washington in one major way. The state has a balanced budget requirement, which means the government can't spend more than it takes in from tax collections. The state's financial experts, including Comptroller Richard Eckstrom, outlined the various cash accounts the state has set aside in case tax collections can't cover the bills. Lawmakers recently committed to stashing more money in a savings account, Eckstrom noted.
Eckstrom does have one big concern. The state's retirement system for public employees, including teachers and police officers, is a $14 billion unfunded liability. Several initiatives are under way to find a solution to the problem.
The experts, including Roy Hess, chief financial officer for the state Department of Health and Human Services, also ran down efforts the state is making toward controlling costs in Medicaid, an entitlement program primarily for the poor. A couple of ways the state is lowering the cash it spends on Medicaid is by targeting high-cost areas such as the number of low-birth-rate babies born in the state and negotiating cost efficiencies with providers under the threat of lowering the rate they are reimbursed.
Eckstrom said he doesn't think the analysts from Moody's will adjust South Carolina's credit rating based on the state's efforts at fiscal responsibility.
"I think that it's somewhat out of our hands," Eckstrom said. South Carolina will suffer based on Washington's actions, he said. But, Eckstrom said, he expects Moody's will ultimately decide against downgrading the ratings.
Besides, if the Congress and President Barack Obama can't work out a solution to the debt-ceiling debacle, Eckstrom said the whole country will be in a jam. Consumers could face increased taxes and higher loan payments for their cars, homes and credit cards, he said.