By JEFFREY COLLINS, Associated Press
COLUMBIA, SC (AP) – South Carolina continues to have more money to spend because the state collects more tax money than expected as the economic impact of COVID-19 is less than expected.
About $ 421 million more than expected was deposited in state bank accounts through April, which is 10 of 12 months of this fiscal year, according to a report released Thursday by the Revenue and Fiscal Affairs Office.
That’s nearly 3% above economists’ forecast and puts South Carolina on track to collect about 15% more in taxes than it did for the July 2019 to June 2020 fiscal year.
The continued good news has led lawmakers to shift from dire predictions of not hanging on or even preparing for cuts to programs and employees last summer to Senators writing a spending plan with more than one billion dollars spent on renovating university buildings and constructing veteran nursing homes. as well as dozens of local projects like boat launches, parks, festivals and lighthouse repairs.
The House, which had the first crack when drafting the 2021-22 budget, has become much more conservative. They return in June for a special session that leaders have dubbed “Budget 2.0” to review and revise the Senate’s plan, which also includes a 2% increase for all state employees and a $ 1,000 increase for teachers.
The state’s $ 10 billion spending plan that begins in July is approaching the $ 2 billion more that lawmakers were expected to spend in the previous plan. The additional taxes collected during this fiscal year will be incorporated in the next budget.
And that’s not counting the $ 2.1 billion in federal stimulus money that Congress approved in March and South Carolina has years to spend.
The Office of Revenue and Fiscal Affairs again warned COVID-19 on Thursday and its fallout means its forecast has more volatility.
With the income tax deadline extended to mid-May, the state processed about 200,000 fewer returns than at the same time in 2019. If the state owes more refunds than expected, the amount of tax revenue that legislators must spend decreases. But those final returns could also end up making more money, economists said at Thursday’s meeting.
They’re also watching to see if supply chain disruptions like scarcity of computer chips or inflation like rapidly rising lumber costs are pushing the economy out of its recovering course.
COVID-19 still hangs over all of this, especially in other countries where the disease appears to be less under control.
Still, Thursday’s report was full of good news. South Carolina sales tax collections are 10% higher than forecast for this fiscal year. Corporate income taxes also fare better, about the same percentage.
The state is collecting 5% more in lodging taxes and 6% more in alcohol taxes than previous fairly optimistic forecasts, which are signs that tourists are coming back and people are heading to restaurants.
Gov. Henry McMaster said all the good news validated his decision to try to keep as much open-mindedness as he thought he could safely do during the height of the pandemic.
“The good news today … would have seemed impossible a year ago, and yet here we are,” McMaster said in a rare statement released after the economist released his report.
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