Georgetown schools loan plan loses steam

Gov. Mark Sanford's veto of a bill to allow the Georgetown County School District to borrow money for day-to-day operational expenses during a budget shortfall is expected to stand.

Although local Reps. Vida Miller and Carl Anderson overrode Sanford's veto Thursday with a vote of 2-0, it is unlikely both local senators will do the same.

In the case of a local bill, it is up to the local legislative delegation to override a veto or not.

Sen. Ray Cleary, R-Murrells Inlet, said Thursday he plans to vote to sustain the governor's veto. The bill is not expected to come for a vote until next week, because both Cleary and Sen. Yancey McGill are currently in Columbia working through the state's budget.

"The major reason to sustain the veto is that I spoke with two members of the school board who assured me that they could balance the upcoming budget without the bill," Cleary said. "They wanted to use this in case of an emergency."

The bill would have applied only to the 2010-2011 school year.

Normally, districts are allowed to borrow money only for capital expenses such as building projects.

In addition, Cleary said the school district may want to save their bonding power until the 2011-2012 year when the state will face a $1.2 billion shortfall. The state will be forced to cut back spending dramatically and education will be hit hard.

"When you see what is coming down the slope it is scary," Cleary said. "Next year we will have to use every trick up our sleeves to find dollars anywhere we can."

Miller was one of the house representatives who sponsored the bill.

"The main reason for the bill was at the request of the school district to use as emergency funding, especially if there are more cuts and we are not in session," Miller said. "That already happened to us last summer."

The district has had to slash about $3.2 million from its budget this year because of state budget cuts and deficits. School districts in South Carolina are limited in their ability to raise property taxes for school operating costs.

Under Act 388, which passed in 2006, school districts cannot charge taxes for operating costs on owner-occupied property, only on vacation homes and commercial property. Tax increases on commercial property and second homes is also capped. The district does still collect property tax for debt service.

Sanford vetoed the bill Monday.

He said in a statement he was sympathetic to the difficulty the school district faces but that he was compelled to veto the legislation because it breaks a "cardinal rule of prudent finance."

"Bonded indebtedness should not be used by school districts to fund operating expenditures because an absolute rule of finance is that you do not fund short-term operations with long-term debt," Sanford said in the statement.