COLUMBIA, S.C. (WIS) - According to economists, South Carolina could lose about a billion dollars in tax money because of the coronavirus pandemic.
On Thursday during a meeting of the Board of Economic Advisors, budget forecasters shared their updated revenue projections for the upcoming fiscal year.
Frank Rainwater, the executive director of the state’s Revenue and Fiscal Affairs Office, said right up to the beginning of this pandemic, South Carolina’s economy was very strong. The amount of revenue coming in was higher than forecasted.
"We had the most growth and highest amounts of revenue South Carolina had ever seen in a 12-month period," he said.
Due to the coronavirus pandemic, Rainwater and others are anticipating South Carolina will see a dip in the amount of revenue it brings in. They said, because of the lack of data at this time, the adjustment to their forecast was based on assumptions more than usual.
Rainwater said this is really uncharted territory for everyone.
"This is not like a banking crisis. Like a mortgage crisis we had during the Great Recession," he said.
According to the new revenue projections, the coronavirus pandemic will wipe out $1.2 billion of the $1.9 billion surplus that was projected for the upcoming fiscal year.
Rainwater said these projections are based on economic and social restrictions being removed around June 1.
"We hope to flatten out by the summer and start recovering by January 2021. We expect this to be a severe but brief downturn. We'll turn back around much quicker than in other recessions," he said.
Rainwater said the projections will be updated as we move forward.
Last month, the S.C. House of Representatives passed a $10 billion budget that set aside money to cover raises for teachers, state employees, tax credits and fixes for rural roads. That plan would now have to be reworked because of these new projections.
Rainwater said senators would have 60% new money to work with when they put together their plan.
"As we move forward, we have to remember the priorities we established in this budget,” House Ways and Means Chairman Murrell Smith (R-Sumter) said. “We have to try to make sure we don't lose focus of that."
Rep. Smith said the best way for lawmakers to move forward is to pass a continuing resolution before the middle of May to avoid a state government shutdown. On Wednesday, those efforts were slowed down.
Smith said legislators need to wait until everyone has a better understanding of how the pandemic will impact the economy and revenue streams.
"The best thing we can do is wait and see what the information says,” he added. “See how we rebound before we start crafting a budget that will last the rest of the fiscal year."
Smith believes after the continuing resolution is passed, lawmakers will meet in the fall to rework the budget.
Officials said, because South Carolina was doing so well before the pandemic, there should not be any cuts to services if these projections hold up.
Economists said agencies like the South Carolina Department of Transportation and the state Department of Education might be affected since they take in some revenue from things like car sales taxes and the state lottery.