Published on 12/28/2008
When lawmakers return to the Statehouse in January they will be forced to deal with a state in fiscal disarray in the midst of a recession. As bad as that will be, members of the General Assembly must know that it is partly responsible for the state's financial problems.
It is time to address South Carolina's tax system, undermined by changes over the past 20 years in futile efforts to appease taxpayers.
Over the past two decades, lawmakers haven't given enough thought to the ramifications of tax changes, how these changes work together and what the unintended consequences will be.
That has left an unstable system. The state now relies too heavily on the sales tax, which is vulnerable to economic downturns. The ability of local governments and school districts to raise their own revenue and run their budgets has been compromised and the Georgetown County School District, like others, is being forced to make millions of dollars in cuts as its funding falls short.
South Carolina needs to examine its patchwork tax system and design a new structure. Senate Democrats are pushing the creation of a permanent, 11-member Tax Research Commission that would study the state's tax system and make recommendations. It's a good start in addressing the need for a complete overhaul, from the food tax to vacation homes.
Another idea being bandied about in Columbia is a spending limit.
Last year's $1 billion surplus would have saved much of the angst of this year's budget shortfall had the Legislature been more far sighted and not rushed to spend every penny.
There are several plans being offered. Some would create a limit based on population growth plus inflation. Others would limit spending to the average growth in state revenue over the previous decade. A bill has been introduced that would cap growth in state spending at 3 percent above the final revenue forecast for the previous year.
Any of these limits would keep state spending from outgrowing revenues and would stop the boom and bust budget cut cycles that cause so much pain in our state.