S.C. Statehouse Report
Sunday, April 30, 2006
VIEW: http://www.statehousereport.com/columns/06.0430.econ.htm

Mixed bag of economic news for Palmetto State
By Andy Brack
SC Statehouse Report

APRIL 30, 2006 - - At first blush, a spate of recent economic news might make you think that things aren't too rosy in the Palmetto State.

For example, the state's unemployment rate, still fourth highest in the nation, inched up in March by one-tenth of a point to 6.5 percent.

Meanwhile, new federal figures show South Carolinians are earning more income - - about $1,200 a year on average from 2003 to 2004 - - but the state's average income ranking dropped two slots to 44th in the nation. In other words, we're doing a little better, but we're not keeping up with the rest of the country.

But economists say there are limitations at looking only at those numbers as economic indicators.

Just as the S.C. Employment Security Commission was reporting the slight increase in unemployment, Gov. Mark Sanford countered that the rate actually decreased in every county. Unlike the ESC, which used seasonally-adjusted data, Sanford used unadjusted employment figures, which showed the rate dropped from 6.9 percent to 6.4 percent.

While some wags may accuse the governor of using a different-than-usual set of numbers to make things look better for his political campaign, Clemson economist Bruce Yandle noted, "The world isn't seasonally adjusted."

Economists say the unemployment rate, generally reported in the press as a seasonally-adjusted average, is an imperfect reflection of what's really happening because it is based on a small sample and misses sectors, such as black market labor. Additionally, it can be misleading - - teachers, for example, usually are on a 10-month cycle, which can cause summer blips.

Columbia economist Harry Miley said a better indicator of the robustness of the economy may be in monthly data on tax collections. Looking at sales tax collections, for example, shows whether people are buying stuff or holding off.


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According to state data, South Carolina collected $198 million in sales taxes in March - - a 13.6 percent increase over the $174.4 million collected in March 2005. (For comparison, March 2004: $189.8 million; March 2003: $160.9 million; March 2002: $153.6 million.)

Income withholdings data shows a similar trend. The amount withheld and sent to the state for income taxes in the fourth quarter of 2005 was $829.7 million - - 4.7 percent higher than the $792.2 million collected for the same span in the previous year.

In other words, based on data that is closer to what is happening - - actual sales and income - - the state has been growing. Incomes are up. Activity is up.

But again, those numbers might not give the whole picture because they are statewide averages, which tend to be skewed to successes in urban areas like Columbia, Greenville and Charleston.

"You just can't go to Allendale, Hampton, McCormick or Marion counties and say our economy is any better off," Miley noted.

* * *

With all of this focus on numbers, there is some good news for people who think South Carolinians pay too much in taxes.

It turns out we're paying much less when compared to other states. New figures from the U.S. Census Bureau show South Carolinians pay $1,719.95 per person annually in state taxes, which is 43rd in the country. Twenty years ago, the state's per capita tax collections were ranked 27th nationally.

What's happened? The General Assembly reduced taxes overall from 7 percent of per capita income in 1985 to 6.1 percent in 2005 through a variety of measures, according to an April 10 letter by state economist Bill Gillespie. Among the measures: indexing income tax brackets, reducing corporate and capital gains taxes, and a variety of tax incentives. Also, the General Assembly provided property tax reductions in the 1990s that exempted $100,000 of value of homes for school operating purposes.

Gillespie's conclusion: "It is clear from the Census figures that South Carolina is among the lowest taxing state governments."

Veteran political observer Andy Brack, publisher of S.C. Statehouse Report, has a new book of columns called "Bugging the Palmettos."

lighter side

4/30: Time for dirty tricks

Another great cartoon from Bill McLemore:

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Recent feedback

Ahead on inspector general

A look at how you often learn first about things in SC Statehouse Report:

From Statehouse Report, 7/31/05:

"If the state invested $1 million a year in a new independent Inspector General's office, it likely can reap $100 million annually in efficiencies, improving customer service and boosting performance of state agencies. And, of course, it will be able to find any "waste, fraud and abuse" that does, in fact, exist."

From this week's bill introductions:



Here's a "thumbs up" and "thumbs down" related to various political news items from the past week:

Thumbs up

Leventis. For his fortitude, this past week's award goes to Sen. Phil Leventis, D-Sumter, for his attempt to reverse the Senate's pending approval of the so-called "right-to-farm" bill. He pointed out that the bill allows a poultry farm to use a neighbor's land as a buffer required by law, without the neighbor's permission. The bill passed any way on a cloture motion by Sen. Larry Martin, R-Pickens. But Leventis made his point clearly, no matter that Martin and others did not listen.

Moore. Sen. Tommy Moore, D-Aiken, may well have made the best recommendation yet for use of a larger tax on cigarettes. A gubernatorial hopeful, Moore would add 39 cents a pack to the present 7 cents and dedicate the income to help half of 800,000 uninsured workers and small businesses to afford health insurance. Trading a pack of taxes for better health sounds as if it makes sense for the state.

In the middle

Taylor: The governor's new secretary of commerce, Joe E. Taylor, has gotten all sorts of praise in the second floor Statehouse for his personality and his dealings with the legislators. Legislators seem pleased, and that may explain in part why not much was made in the Legislature over Taylor's admitted "colossal error" in announcing a new Spartanburg industry that had not yet signed a contract for its call center. He apologized, and that could well make the difference, because there was no call for Taylor's resignation in an economically needy state.

Thumbs down

Richardson: Sen. Scott Richardson, R-Hilton Head, joined in the disagreement over whether local funding should be allowed into the "wish list" (to be spent if money is left over), by arguing against the amendments. Not long after, Richardson put up an amendment that would allocate $7 million to repay Beaufort County Schools for what he called a "hogwash" in a school appropriation formula last year.

Charter schools: Two days after the Legislature finally agreed on what is believed to be the first statewide charter school district in the nation as a means of making charter schools easier to open, word came on Thursday from Charleston that the second of two charter schools there has failed. The latest could not pay its bills, even with state money for students just like the public schools.

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  • LEGISLATIVE AGENDA: Back to property taxes
  • RADAR SCREEN: Cigarette proposal still alive?
  • PALMETTO POLITICS: Dems head to Gallivants Ferry
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  • MEGAPHONE: What's common among sailors and credit card-aholics

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