House, Senate OK compromise budget

COLUMBIA --- The South Carolina Legislature has sent the governor a $7 billion state budget that would give state employees a 1 percent pay raise, buy 125 new school buses and promote tourism.

Legislators who adopted the compromise spending plan Thursday acknowledged the budget likely satisfies no one, but said it's the best they could do during an economic slowdown without raising taxes.

"It's not a mean budget but a lean budget," said Senate Majority Leader Harvey Peeler, R-Gaffney.

The plan covers rising medical costs for state employees, so they don't lose benefits or see premium increases. It also continues to send money collected through fees on property sales to the South Carolina Conservation Bank to preserve open space statewide -- a major sticking point between House and Senate members hashing out differences in their plans.

Most agencies were cut between 2.5 percent and 5 percent.

Senate Minority Leader John Land was glad the Education Department received more money. Legislators noted it was the only agency to receive more.

"I wish we could've done more," the Manning Democrat said.

The compromise approved by the House and Senate adds $95 million for K-12 education, as called for in a state formula adjusted yearly that sets minimum per-student spending. That so-called "base student cost" largely pays for teacher salaries.

The agency got another $50 million from other funding sources, including the lottery. But it expects a $30 million shortfall in programs paid for through a penny in the state sales tax.

Though the budget includes $10 million for new school buses, that's $20 million less than what's needed to buy the 380 buses promised under a bill approved by lawmakers last year.

House Ways and Means Chairman Dan Cooper said he hopes the Legislature can buy additional buses when the economy improves and remain on track to replace the state-owned fleet every 15 years.

The state bought about 530 buses with help from extra cash in last year's budget. If the state buys 125 this year, it will be about 110 buses behind schedule, according to the Education Department.

But it might need to use money for new buses to keep the current ones running.

The agency predicts it needs $10 million to pay for rising fuel costs. Every penny increase in diesel equals an additional $125,000, department spokesman Jim Foster said.

Legislative leaders say the agency should shuffle money around from different parts of its budget.

"That's where good management comes in," Senate Finance Chairman Hugh Leatherman said. "If the Department of Education decides fuel's more important than other areas, I expect the department to move it there."

If fuel costs force the agency into the red next year, it can ask the Budget and Control Board to run a deficit. But it would have to prove it can't do any more shuffling, said Mr. Leatherman, who sits on the five-member board.

Last week, the board delayed action on allowing the state Corrections Department to run a $4.3 million deficit for the current fiscal year -- a shortfall brought on by rising food, fuel and medical costs.

Prisons Director Jon Ozmint has said he's expecting a shortfall next year and will need to close prisons and lay off guards if the agency can't run in the red.

Gov. Mark Sanford has criticized deficit spending. His spokesman, Joel Sawyer, said the Republican governor will soon begin pouring over the budget to veto items he doesn't like. He has until midnight Wednesday.

"Next year, let's hope the economy will improve," Mr. Leatherman, R-Florence, told senators before they voted on the compromise.

His Finance Committee cut $180 million from the budget last month after the state's economic forecasters predicted the state would collect less taxes than initially thought.