State ends fiscal year with
By Richard Eckstrom
The S.C. Comptroller’s Office closed the books on the 2018 fiscal year, which ended June 30.
General Fund revenues increased by $542 million over the previous year’s revenues, bringing in $8.1 billion in Fiscal Year 2018 compared with $7.6 billion in Fiscal Year 2017, a 7 percent growth rate.
Part of this $542 million of additional revenue was claimed by increased spending in 2018 as authorized in last year’s Appropriations Act. Yet even after this additional spending and even after funding all the items in this year’s supplemental budget, we closed out 2018 with surplus General Fund revenues of $177 million, all of which is non-obligated.
Finishing the year with such a large surplus is obviously great news – a testament to the strength of our state’s economy, which is experiencing broad growth with increases in employment, personal income, and take-home pay.
None the less, some words of caution are in order.
First, it’s worth remembering that good times don’t last forever. Recall that just over a decade ago, state government collected and then spent more than $1 billion in surplus revenue over a two-year period (2007 and 2008). But the state’s “windfall” spending would come back to haunt us just the following year, when the Great Recession triggered a series of deep budget cuts across state agencies – a painful reminder of the necessity of saving for a rainy day.
The General Assembly would be wise to resist any “spending spree” temptation, considering instead using some or all of the surplus revenue to shore up the state’s all-important rainy-day balances. Restraint now could avert a crisis in the lean years that are sure to come.
Second, the State Retirement System retirement plans are underfunded by $24 billion, while the retiree health plan is more than $10 billion underfunded on its benefit promises. These are without a doubt the most serious long-term threats facing our state, and there are no painless choices for making up the huge shortfalls. But paying now toward reducing these unfunded liabilities could lessen some of the future pain in store for us. When it comes to spending our surplus revenues, it would be wise to prioritize using them to reduce the Retirement System deficits over any new recurring spending.
As the General Assembly deliberates over this $177 million surplus, I’d urge that they do so with an eye toward improving the state’s long-term fiscal health.