Last week, the South Carolina Board of Economic Advisors (BEA) met to provide an update on the state’s revenue collections and revise their existing economic forecasts. Notably, the BEA raised their FY2023 and FY2024 General Fund Revenue estimates by $564 million and $240 million respectively. The BEA cited continued wage growth and consumer spending as reasons for the increase in collections. They noted that although recent tax reform lowered income tax collections, sales and corporate income tax collections continue to exceed expectations. As pointed out in The State, this additional revenue will give lawmakers some unpredicted wiggle room to negotiate differences between the House and Senate’s FY2023-24 budget proposals. Lawmakers must allocate the revenue and finish the budget plan before the end of the state’s fiscal year (June 30, 2023).
Although the FY2024 estimate was increased by $240 million, the BEA expects an economic slowdown with slower income growth and less consumer spending in the next fiscal year. In the BEA’s May 9 press release, they said, “The BEA remains concerned about persistent inflation, the effects of Federal Reserve interest rate increases, issues within the banking industry, and international conflicts, all leading to deeper concerns about the potential for a recession within the next year.”