The budget picture in South Carolina is grim. The State's Comptroller General said recently that corporate income tax collections are down 57 percent, sales tax collections are down by 18 percent, and individual income tax collections are down nearly 3 percent since July. State agencies have reportedly reduced their own budgets by $600 million to take into account reduced revenues.
According to the Center on Budget and Policy Priorities forty-two other states now face a budget shortfall. Policymakers in other states have come forward with a variety of proposals to deal with their state's crisis. For example, New York Governor David Paterson recently asked for federal money to assist his state and Arizona Governor-Elect Jan Brewer won't take tax hikes off the table.
Governor Mark Sanford's answer to South Carolina's budget woes are in left field and across the street compared to these strategies.
In fact, Governor Sanford has publically argued against providing federal aid to the states and just this week he released a budget busting list of tax changes that include eliminating the state's progressive corporate income tax and introducing an optional single rate personal income tax. While some other items on his list would raise some revenue (raising the state's regressive cigarette tax, eliminating sales tax holidays, reducing business tax "incentives"), overall, it's pretty clear that Governor Sanford's solution is to dig the revenue hole deeper.
To the cynical among us it appears that Sanford may be gearing up for 2012. He was recently elected chairman of the Republican Governor's Association and is clearly attempting to beat the "supply-side" drum -- never mind that the notion of supply side economics has been debunked repeatedly.