South Carolina earns ‘D’ grade for its fiscal health

A new analysis of South Carolina’s financial statements has found the state is facing a $26.2 billion shortfall, according to Truth in Accounting. That burden equates to -$18,100 for every state taxpayer.

As South Carolina’s fiscal health deteriorates, elected officials continue to mislead the public by failing to disclose significant amounts of retirement debt on the state's balance sheet, despite new rules to increase financial transparency. This skewed data gives South Carolina’s residents and taxpayers a false impression of the state's overall fiscal health.

Truth in Accounting is a Chicago-based nonprofit think tank that analyzes the latest federal, state and municipal comprehensive annual financial reports. According to its report for 2017, South Carolina had $38.7 billion in bills and roughly $12.5 billion in available assets to pay those bills after capital and restricted assets were excluded. This results in a $26.2 billion shortfall and a -$18,100 Taxpayer Burden™, which is each taxpayer's share of state bills after its available assets have been tapped. TIA's Taxpayer Burden indicator incorporates both assets and liabilities, not just pension debt. South Carolina’s Taxpayer Burden has increased by $5,900 since 2009, when taxpayers were on the hook for -$12,200.

A key reason for the huge jump in South Carolina’s Taxpayer Burden is because of an accounting rule implemented two years ago that requires state and local governments to report all of their pension debt on the balance sheet. At the end of the 2017 fiscal year, the state's reported pension debt was $14 billion; however, the state continues to hide $7.4 billion of its pension debt, as well as hide $13.8 billion of retiree health care debt. However, a new accounting standard taking effect next fiscal year will require government entities to report this debt on the balance sheet.

The bottom line is that South Carolina would need $18,100 from each of its taxpayers to pay all of its bills, which is why it received a "D" grade for its fiscal health.

You can read the full report here.