Districts have announced teachers will lose jobs, and even some of the governor's allies contend his resistance to taking the cash doesn't make sense because state taxpayers will repay the money even if the state doesn't get it.
Amid the turmoil, the governor is continuing his push for reduced government spending and assailing fellow Republicans with whom he already had a fractured relationship. Mr. Sanford contends the money should be used to pay down state debt and disputes the estimates that hundreds of teachers will be tossed out of work.
Discovering the facts is a challenge. Street protests, television ads and plenty of political ax grinding add to the confusion.
While the numbers are the subject of debate, few can dispute one key point: The governor argued for years that the economy was on shaky ground and ultimately would put the state in a bind.
Here's a look at the arguments over the stimulus money and the budget:
SANFORD: More tax dollars will be spent in South Carolina this year than ever before and government spending is out of control.
COUNTER: State lawmakers who write the budget say the numbers include federal spending that legislators traditionally do not control.
CHECK: The House-passed budget plan for next year would use $8.2 billion in federal money and $6.3 billion in state tax collections. A third of the spending does not come from taxes: It includes $7.2 billion from other sources, such as fines, fees, college tuition and fishing licenses. In all, the spending totals $21.2 billion, up from $20.3 billion that legislators used for the current year's budget. The increase mostly comes from $1 billion in federal stimulus money -- a third of which Mr. Sanford is fighting to keep from being spent. Given the mix of money, it's tough to argue state lawmakers shoulder the blame for the money being available. And with $1.1 billion in budget cuts since July, they clearly aren't spending more.
SANFORD: If lawmakers simply adopt the governor's spending plan and its $275 million in spending cuts, then the state won't need the $700 million for schools.
COUNTER: The governor's spending proposal keeps in place nearly all the midyear budget cuts that did slash money from public schools and colleges, and from Medicaid programs for low-income children.
CHECK: It's unlikely lawmakers will approve the governor's budget plan, which suggests a series of changes he's been unsuccessfully pushing for years, such as closing branches of the University of South Carolina. Saying cuts won't have to be made under his proposal also disregards some of the staff furloughs and program cuts that had to be made as $1 billion was slashed from the current $7 billion spending plan since July. Part of Mr. Sanford's savings come from eliminating or curtailing programs the state would need to have in place or restore before it would be eligible for stimulus cash.
SANFORD: Senate leaders created a "chaos budget" by not using federal stimulus money tied to Medicaid as a way to spare state agencies from cuts and exaggerated problems to bring political pressure to bear on him.
COUNTER: The Senate Finance Committee approved a spending plan Thursday that allows the use of stimulus cash, but it uses only about $100 million of $650 million in Medicaid-generated money to help support agencies with no ties to health care.
CHECK: Mr. Sanford is correct on the political pressure, and Senate Finance Committee Chairman Hugh Leatherman has said as much. But Mr. Sanford's chief ally on the budget said Friday he is tracking down a document that shows the federal Medicaid-linked money can be widely spent in the budget, as other states have done. That creates a policy issue that would have legislators pitting the needs of the state's poor, disabled and aged against courts, police and prisons.
SANFORD: Using the federal stimulus money during the next two years will open a budget gap of $740 million when the money runs out.
COUNTER: House Speaker Bobby Harrell has said the federal money would give agencies time to deal with budget cuts down the road. Others say it's a bet the economy will recover and state revenues will fill the gaps.
CHECK: The money does create the likelihood of a hole in the budget in two years. That would come from the loss of $350 million in the money meant mostly for education and the Medicaid reimbursement cash coming to the state regardless of whether the governor wants it. But the size of the problem depends on how slowly the economy recovers.