The South Carolina state Senate is turning its attention to avoiding the boom-and-bust budget practices that blew holes in the state's $7 billion spending plan this year.
THE TASK: They're cutting spending on school buses, college research and economic development to balance the state budget as sales and income tax collections slipped. Senators ended up cutting $180 million before approving the budget last week.
THE MEASURE: The Senate Finance Committee approved a measure that would tie annual spending increases to long-term trends in state tax collection growth. The move is expected to generate surpluses for years.
THE PAST: If the proposal had been in place this budget year, the state would have had about $750 million in reserves available to cover them and deal with a downturn, Senate Finance Committee Chairman Hugh Leatherman said.
THE FUTURE: The legislation will allow the state "to get away from the real peaks and valleys that we've been going through," Mr. Leatherman said.
State spending would be capped at no more than the average growth in state revenues for the previous decade. Tax collections that come in during good economic times would be accumulated in a reserve account that could be tapped during a sluggish economy. The surpluses could be spent on emergencies, building roads and bridges, paying off state debt and other projects. Mr. Leatherman doesn't want it used for tax breaks.
-- Associated Press
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