S.C. economy gets national notice

McClatchy NewspapersFebruary 24, 2012 

WASHINGTON — South Carolina is faring better than most other states across a wide range of measurements tied to its economy and to the fiscal health of its state government.

Dual reports by Federal Funds Information for States, a think tank affiliated with the National Governors Association, place South Carolina in the top quarter of states in the nation's slow recovery from the Great Recession.

In one key figure included in the group's Index of State Economic Momentum, South Carolina ranks No. 9 in employment growth with a 1.9 percent increase in the number of jobs from November 2010 to November 2011.

"What we're seeing is that the economy is slowly starting to turn around," said Bill Hauk, an economics professor at the University of South Carolina's Moore School of Business in Columbia. "It's not going gangbusters like we'd like it to, but there does seem to be some growth out there."

In one encouraging sign, the state's manufacturing sector grew by 5.5 percent, adding 11,600 jobs, from December 2010 to December 2011, according to the S.C. Department of Employment and Workforce.

The overall unemployment rate in South Carolina fell to 9.5 percent in December, reaching its lowest level in three years after the fourth consecutive monthly drop. The January rate hasn't been released yet.

The S.C. unemployment rate was still 1 percentage point higher than the national rate of 8.5 percent, but the gap has narrowed in recent months and eight states now rank below South Carolina, among them Georgia and North Carolina.

S.C. Rep. Brian White, chairman of the House Ways and Means Committee, said a state constitutional balanced-budget requirement and legal limits on debt have helped build a foundation for major firms such as Boeing, Bridgestone, BMW and Continental Tire to expand in South Carolina.

"We've gone in and reduced our expenditures pretty expeditiously, which has helped us maintain our AAA credit rating," said White, an Anderson Republican. "We've landed a lot of good companies. I think the future's bright for us."

A separate analysis by FFIS, which it termed the Continuum of State Fiscal Stress, lists South Carolina as one of just 11 states that ended the 2010-11 state fiscal year with reserves totaling at least 10 percent of the general fund spending during the same year.

And South Carolina ranked No. 4 in the nation with a 9 percent increase in its level of reserves, measured as a share of its overall spending.

Gov. Nikki Haley heralded the two reports' findings.

"We have worked very hard this past year to improve the economic and fiscal climate and morale of the state," she told McClatchy.

McClatchy obtained copies of the reports, which are available from FFIS through subscription.

Les Boles, director of the S.C. Budget and Control Board, said the general fund grew by 6.4 percent in the 2010-11 fiscal year, which ended June 30, and is forecast to increase by 3 percent in the current year. It had a $525 million combined surplus and rainy day fund in mid-2011.

"Our budgeting is very conservative," Boles said. "We're moving in the right direction. From November 2007, revenue just went straight down. We hit our low point in January 2010. Since then, we've been increasing every month slowly but surely."

South Carolina was one of only 10 states that met four criteria set by FFIS to compare state governments' fiscal health across the country:

  • Contrary to previous years, it didn't have to cut its enacted 2010-11 budget;
  • Its tax collections met or exceeded revenue estimates for the year;
  • It ended the fiscal year with reserves equaling at least 5 percent of general fund expenditures;
  • Its total balances rose from the end of the 2009-10 and 2010-11 fiscal years.
"A state that is building reserves has restored balances to its budget and is on a path to recovery," the FFIS report said.

Ashley Landess, head of the South Carolina Policy Council, a Columbia think tank that promotes limited government and free enterprise, debunked the analysis.

Landess said that by looking only at the general fund, the report ignored the total scope of state government spending from other sources including increased license fees and federal funds.

"They're not cutting the cost of government," she said of Haley and the General Assembly. "They're still spending the same amount of money or more, but they're doing it with fees, fines and federal dollars."

ON THE WEB

South Carolina Budget and Control Board

South Carolina Department of Employment and Workforce

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