COLUMBIA -- The leaders of South Carolina’s Republican-controlled legislature said Thursday they will not use an additional $913 million in revenue to boost agencies’ budgets back to pre-recession levels, and agencies should not expect to add back employees after years of cuts.
“If we start getting in this caught-up mentality, budgets are going to blow up like a hot air balloon,” said Senate President Pro Tem Glenn McConnell. “That’s the worst thing that can happen.”
However, both he and House Speaker Bobby Harrell agree current state employees are due a raise.
“That absolutely ought to be in the mix,” Harrell said. “We don’t want to add back positions, but current state employees shouldn’t be penalized either.”
The two Charleston Republicans were among legislators of both parties who spoke to reporters during a preview of the session that starts Tuesday.
State employees have not received a pay increase in three years. In many agencies, they’ve been forced to take unpaid leave, which has shrunken their paychecks.
This time last year, lawmakers were lamenting an $850 million budget gap, due to the slow economy and the end of federal stimulus money. But South Carolina’s budget outlook for 2012-13 is relatively rosy, even as other states continue to face budget deficits.
Budget advisors expect an additional $913.4 million in one-time and recurring revenue because of surplus from the fiscal year that closed June 30, along with more money coming in this fiscal year than legislators budgeted, plus continued growth.
Even after some key funding issues are covered – such as increases to employee health costs, Medicaid, and scholarship programs – legislators will have several hundred million dollars of additional revenue to allocate for 2012-13, according to the state’s budget office.
Still, revenues have not returned to the high point of December 2007, when the Great Recession officially began, said budget office director Les Boles.
“There will be a massive fight over what to do with the excess funds,” said Rep. Jim Merrill, R-Charleston, who leads a subcommittee on pension reform. For that reason, he said, it’s impossible to commit to a raise for state workers.
But Rep. Gilda Cobb-Hunter, D-Orangeburg, said she will push for raises, especially since lawmakers are talking about increasing by 1 percentage point, to 7.5 percent, how much employees contribute toward their pension.
That’s one piece of a drafted proposal in the House for reforming the state pension system – an issue legislators of both parties call a top priority to make the system solvent and ensure employees can get their retirement checks decades from now.
“We can’t in good conscience just increase the rate of contribution without some acknowledgement and some giving on our part to increasing wages,” Cobb-Hunter said. “The bottom line is, we have got to recognize the sacrifices state employees have paid.”
Each 1 percent raise for state workers would cost $14 million. How much of a raise employees receive, if any, will be part of a protracted budget debate.
Republican legislators said they want to put the additional revenue toward paying down debt in the pension system and the state’s unemployment insurance trust fund, as well as giving the Commerce Department more money to recruit businesses and funding infrastructure needs.
Legislators complained of potholes on interstates, “see-through bridges,” and bottlenecks on I-95 and I-26. But they want to reform the Department of Transportation before addressing funding – something they did several years ago in a way legislators of both parties said made problems worse.
“It just goes to show we didn’t fix the problem,” said House Minority Leader Harry Ott, D-St. Matthews. “We thought we had. Just passing reform in the name of reform doesn’t always work.”
With uncertainty in the economy and gas prices going up, the Legislature needs to “take a cautious approach and not go out and be foolish with the money,” said House Ways and Means Chairman Brian White, R-Anderson. “It’s going to be a slow growth period, which I kinda like. We can better manage and spend wisely.”
Sen. Darrell Jackson, D-Columbia, said he has no problem with using additional revenues to pay down debt, but state employees must be a priority.
“If you have a business and have a good year, you pay down debt and reward your employees,” he said. “Otherwise, you’re an awful employer.”
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