ATLANTA -- South Carolina avoided ending fiscal 1992 with a deficit, but came close to depleting its reserves in the process.
State Comptroller Earle E. Morris Jr. said Tuesday in a press release that $61.89 million of available reserves was needed to close a $54 million operating deficit for fiscal 1992, which ended June 30. That leaves a $7.59 million surplus.
The $54 million deficit results from a mismatch between $3.4 billion of operation expenses and $3.35 billion of operating revenue.
The state tapped all $38 million in its general fund reserve and most of its local government and federal matching funds intended for the current fiscal year, the release says.
"We will take action to close the books on fiscal 1991-1992 in a responsible way that will protect the fiscal integrity of the state as well as our coveted AAA-rating," Gov. Campbell said in a statement.
"Furthermore, I want to reiterate that the state is prepared to take steps to deal with any downward revision of the revenue estimate used by the General Assembly in passing the '92-93 budget," he added.
Standard & Poor's Corp. in March placed North Carolina's AAA general obligation bond rating on CreditWatch, citing recurring operating deficits.
Moody's Investors Service rates the state's $853 million of outstanding general obligation debt Aaa.
South Carolina has run an operating deficit in the last two fiscal years. Spending outpaced revenues by $82.9 million in 1990 and by $173.7 million in 1991.
Parry Young, a director at Standard & Poor's, said yesterday that the operating deficit is one of three areas of concern at the rating agency.
"The operating deficit was a problem, but we will also consider the state's 1993 structural deficit and the state's accumulated deficit," he said.
He said the agency will decide on the state's rating when it receives more information, which could be as early as Monday.
Moody's is monitoring the state's fiscal situation, but does not expect any rating action in the near future, Catherine Fleischmann, an assistant vice president, said yesterday.
"The state has a strong mechanism, the State Budget and Control Board for closing any deficits," she said. "We would anticipate that they would be able to restore balance."
The board, whose chairman is Gov. Campbell, will meet Saturday to take formal action on closing the fiscal 1992 operating deficit and consider possible budget cuts for fiscal 1993. The board consists of the governor, the comptroller, two legislative leaders, and the treasurer.
State budget officials had been encouraged when state revenues improved earlier this year. Collections during January, February, and March were above year-earlier levels.
However, collections in May and June once more began to lag expectations, particularly in retail sales and individual income tax collections.
State budget officials blame the financial crisis on inaccurate estimates by state revenue forecasters, as well as overspending by the state legislature.
The State Board of Economic Advisors met yesterday and was expected to lower fiscal 1993 revenue estimates. Figure were not available by late afternoon yesterday.
