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Governor Mark Sanford took a stance opposing the federal stimulus package and drew fire from the S.C. General Assembly and the Democratic Party. A fiscal conservative, Sanford rejected the funding as a burden on future generations, and said the massive run-up in government spending in time would devalue the American dollar.
The governor sought to use one quarter of the $2.8 billion coming to South Carolina — about $700 million — to pay for past promises made by state government. Doing so with debt related to education would free up over $162 million in debt service in the first two years and save roughly $125 million in interest payments over the next 13 years, he contended. A recent study by the American Legislative Exchange Council ranked South Carolina fourth highest in the nation for the percentage of annual revenue required to pay debts.
On March 20, Sanford announced that since the White House had denied his request to use stimulus dollars to pay down state debt, he would not seek certification of those funds.
Instead, if the General Assembly chose to seek the funds in his place, he asked the legislature to use other money for debt repayment.
“We’re obviously disappointed by the White House’s decision, because it cuts against the notion of federalism and the idea of each state having the flexibility to act in a manner that best suits its needs,” he said. “As a result, we will not be seeking the use of these federal funds for the way they put our state even further into an unconscionable level of debt. If our General Assembly chooses to make use of this federal money, we’d ask them to use existing state resources to begin paying down our state’s sizable liabilities. Now is the time to do so, because it will give us more flexibility in addressing future needs at a state level if this economic downturn is indeed protracted,” he said. “We simply cannot afford to base 10 percent of our state budget on money that will disappear in two years’ time.”The Congressional Budget Office has forecast a $1.8 trillion federal deficit for this year — the largest ever — and has said the president’s budget plan would lead to $9.3 trillion in deficit spending over the next 10 years, a level $2.3 trillion higher than the White House had predicted earlier.
