STATE OF THE SOUTH CAROLINA ECONOMY PRESENTED TO SOUTH CAROLINA ECONOMIC DEVELOPERS ASSOCIATION MAY 4, 2012 S.C. BUDGET & CONTROL BOARD BOARD OF ECONOMIC ADVISORS/OFFICE OF RESEARCH & STATISTICS REMBERT DENNIS BUILDING, SUITE 459 803-734-3805 frank.rainwater@ors.sc.gov
POP QUIZ SOUTH CAROLINA ECON 101 1
PERCENT OF SC POPULATION BY AGE RANGE 100% 90% 80% 70% 60% IS SOUTH CAROLINA GROWING OLDER OR YOUNGER? 50% 40% 30% Me 20% 10% 0% 1970 2010 0-4 5-17 18-64 65+ 2
PERCENT OF SC POPULATION BY AGE RANGE 100% 90% 7.4% 13.7% 80% 70% 60% 50% 49.0% 63.0% 40% 30% 20% 10% 0% 27.8% 9.1% Median Age = 24.8 Answer: Median Age = 37.9 16.8% 6.5% 1970 2010 0-4 5-17 18-64 65+ 3
3,500,000 QUESTION: WHAT COMMON DEMOGRAPHIC KEY INDICATOR DOES THIS CHART REPRESENT? 3,000,000 2,500,000 2,000,000 1,500,000 3,415,421 73.9% 1,000,000 500,000 0 564,654 87.7% 884,232 19.1% 44,478 6.9% 325,711 7.0% 34,942 5.4% 4
3,500,000 ANSWER: SOUTH CAROLINA POPULATION DISTRIBUTION - 2010 3,000,000 2,500,000 2,000,000 1,500,000 3,415,421 73.9% 1,000,000 500,000 0 564,654 87.7% 884,232 19.1% 44,478 6.9% 325,711 7.0% 34,942 5.4% LARGEST 15 COUNTIES MIDDLE 16 COUNTIES SMALLEST 15 COUNTIES POPULATION POPULATION CHANGE 2000-2010 Source: SC Office of Research and Statistics 4/17/12 5
County Population Distribution (2010) Oconee 74,273 Pickens 119,224 Anderson 187,126 Greenville 451,225 Abbeville 25,417 McCormick 10,233 Spartanburg 284,307 Laurens 66,537 Greenwood 69,661 Edgefield 26,985 Cherokee 55,342 Saluda 19,875 Union 28,961 Newberry 37,508 Aiken 160,099 York 226,073 Lexington 262,391 Barnwell 22,621 Allendale 10,419 Chester 33,140 Fairfield 12.2 23,956 % Bamberg 15,987 Hampton 21,090 Calhoun 15,175 Orangeburg 92,501 Jasper 24,777 5.01%+ of State Population 3.01% to 5.0% of State Population 1.0% to 3.0% of State Population <1.0% of State Population Source: U.S. Census, 2010 Richland 384,504 Lancaster 76,652 Kershaw 61,697 Colleton 38,892 Beaufort 162,233 Sumter 107,456 Dorchester 136,555 Chesterfield 46,734 Lee 19,220 Clarendon 34,971 Charleston 350,209 Darlington 68,681 Berkeley 177,843 Marlboro 28,933 Florence 136,885 Williamsburg 34,423 Dillon 32,062 Marion 33,062 Georgetown 60,158 Horry 269,291 County Popn 2010 Greenville 9.8% Richland 8.3% Charleston 7.6% Spartanburg 6.2% County Popn 2010 McCormick 0.2% Allendale 0.2% Calhoun 0.3% Bamberg 0.4% 6
Farm Sales Comparison 2000 Farm Sales in South Carolina 2.40% 3.73% 3.42% 11.18% 17.65% 11.23% 3.45% 36.79% Question: Which crop has seen 7.2% compound growth between 2000 and 2010 and seen its share of total sale rise from 36.79% to 46.65%? 4.53% 2010 Farm Sales in South Carolina 2.76% 1.51% 1.35% 4.77% 10.62% 6.75% 2.36% Question: Which crop has seen - 9.2% compound declines between 2000 and 2010 and seen its share of total sale fall from 11.18% to 2.66%? 5.47% 7.10% 2.66% 4.82% 46.65% Source: Economic Research Service, USDA 6.09% 1.02% 1.69% 7
Farm Sales Comparison 2000 Farm Sales in South Carolina 2.40% 3.73% 3.42% 4.53% 11.18% 2.76% 17.65% 1.51% 11.23% 36.79% 3.45% 1.35% Meat animals Dairy products, Milk Poultry/eggs Miscellaneous livestock Food grains Feed crops Cotton Tobacco Oil crops Vegetables & Melons Answer: Poultry and Eggs has grown from $552.5 million in sales in 2000 to $1.11 billion in sales in 2010. 2010 Farm Sales in South Carolina 4.77% 10.62% 6.75% 2.36% Meat animals Dairy products, Milk Poultry/eggs Answer: Tobacco has seen sales shrink from $167.9 million in 2000 to $63.36 million in 2010. Source: Economic Research Service, USDA 5.47% 7.10% 2.66% 4.82% 6.09% 1.02% 1.69% 46.65% Miscellaneous livestock Food grains Feed crops Cotton Tobacco Oil crops Vegetables & Melons Fruits & nuts 8 All other crops
Question: What is the order of the top 5 Countries for SC Exports in 2010? #? #? #? #? #? Source: U.S. Census Bureau 9
Answer: Top 5 Countries for SC Exports in 2010 #2 #1 #5 Country Value (millions) Canada $3,187 #4 #3 Germany $2,944 China $2,157 Mexico $1,319 United Kingdom $1,124 10 Source: U.S. Census Bureau
Question: What type of event accounts for the largest share of Admissions Tax Collections for FY2009-10? $12,000,000 $10,000,000 $9,867,268 $8,000,000 $6,000,000 $4,000,000 $2,000,000 $1,514,219 $1,042,962 $4,808,488 $4,926,680 $2,900,753 $2,198,234 $1,249,514 $1,463,795 $1,005,391 $1,038,914 $0 Source: SC Department of Revenue, Annual Report 2009-10 11
$12,000,000 Answer: Golf is the largest source of Admission Tax collections in the state. For FY2009-10 Golf Admission Tax collections were $9.9 million out of a total of $32.0 million. $10,000,000 $9,867,268 $8,000,000 $6,000,000 $4,000,000 $2,000,000 $0 $1,514,219 $1,042,962 $2,900,753 $1,249,514 $2,198,234 $1,463,795 $1,005,391 $1,038,914 $4,808,488 $4,926,680 Source: SC Department of Revenue, Annual Report 2009-10 12
Question: What type of revenue does the following graph represent? $140,000,000 $120,000,000 $100,000,000 $80,000,000 $60,000,000 $66,545,953 $59,180,652 $40,000,000 $20,000,000 Source: ESPN? $0 13
Answer: NCAA Reported Athletic Revenue - 2009 $140,000,000 $120,000,000 $100,000,000 $80,000,000 $60,000,000 South Carolina $66,545,953 Clemson $59,180,652 $40,000,000 $20,000,000 Notre Dame ACC PAC 12 SEC Big 10 $0 Big 12 Source: ESPN Athletic Revenue Alabama Texas Ohio State Florida Tennessee Michigan Oklahoma State Wisconsin Texas A&M Penn State Auburn Georgia LSU Notre Dame Kansas Iowa Michigan State Oklahoma Stanford USC Nebraska Florida State Kentucky Minnesota Duke Illinois South Carolina Arkansas North Carolina UCLA Virginia Tech Virginia California Purdue Boston College Washington Maryland Clemson Indiana Oregon 14
SOUTH CAROLINA ECONOMIC & FISCAL DATA 15
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Real Consumer Net Worth, 1953-2011 70000 60000 50000 In billions 40000 30000 20000 10000 0 1953-01-01 1954-12-01 1956-11-01 1958-10-01 1960-09-01 1962-08-01 1964-07-01 1966-06-01 1968-05-01 1970-04-01 1972-03-01 1974-02-01 1976-01-01 1977-12-01 1979-11-01 1981-10-01 1983-09-01 1985-08-01 1987-07-01 1989-06-01 1991-05-01 1993-04-01 1995-03-01 1997-02-01 1999-01-01 2000-12-01 2002-11-01 2004-10-01 2006-09-01 2008-08-01 2010-07-01 Source: Federal Reserve System Table B.100, Not Seasonally Adjusted 19
8.00% National Employment Change 12 and 24 Months Post Recession (First bar 12 months post and Second bar 24 months post) Percent Change in Employment since Last Month of Recession 7.00% 6.00% 5.00% 4.00% 3.00% 2.00% 1.00% 0.00% 1.00% 1.40% 2.20% 2.10% 5.50% 3.30% 6.60% 3.60% 6.90% 0.40% As of January 2012, nationally employment is up 1.2% from last month of recession 32 months. 1.60% 1.60% 0.20% 1960/61 1969/70 1973/75 1981/82 1990/91 2001 2007/09 0.40% 0.60% Official Recessions 20
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Share of South Carolina Nonfarm Employment By Sector Calendar Years 2000 and 2011 14 12 10 (Percent of Total) 8 6 4 2 0 Mining & Logging Construction Durable Goods Manufacturing Nondurable Goods Manufacturing Wholesale Trade Retail Trade Transportation and Utiliites Information Financial Activities 2000 2011 Professional and Business Services Education and Health Services Leisure and Hospitality Services Other Services Federal Government State Government Local Government Source: South Carolina Department of Employment and Workforce 4/24/12 22
70 SC Employment Growth by Sector 2000-2011 Number of Jobs 50 30 (in thousands) 10-10 -30-50 -70-90 Total Mining Const Durable Nondurable Wholesale Retail Transportation and Utilities Information Finance Prof Svc Health Leisure Other Federal State Local Source: SC Board of Economic Advisors 4/24/12 23
SC Employment Growth by Size (Private Sector) 2002-2011 Number of Jobs 50 40 30 20 (in thousands) 10 0-10 -20-30 -40-50 All 0-9 10-49 50-99 100-249 250-499 500-999 1000+ 24
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Percent Change in S.C. General Fund Revenue Percent (%) Change 30 25 20 15 10 5 0 4.7-0.1 16.4 2.6 1.0 Est. Income Tax Withholdings Changed Income Tax Brackets adding 6% & 7% 20.1 Corp. Tax Increased to 5% 9.7 0.7 2.5 9.3 6.2 12.2 18.1 11.4 3.9 Sales Tax 26.8 Increased to 4% Corp. Tax Increased to 6% 13.4 19.7 10.5 15.2 11.9 Minibottles Act Case Tax on Alcohol Prepayment of Sales Tax 6.1 11.4 13.8 15.1 11.8 12.0 7.0 5.6 Casual excise tax enacted @ 4% 9.2 13.1 7.4 Income Tax Brackets Changed Adopted Federal Reg For Income & Corp. Tax EIA 1 cent 4.8 7.3 9.1 6.9 Decreased Corp. Income Tax Gradually to 5% 9.9 9.6 4.8 0.3 1.1 Adjusted Brackets 1/2 Inflation 8.7 5.2 2.7 5.6 5.6 2.3 1.8 9/11 Attacks 0.1 5.0 7.8 Decrease Food Tax to 3% 9.7 Decrease Food Tax to 0% 8.2 Income Tax Cut 6.4 3.4 3.9-5 -3.1-3.4-3.1-5.3-10 -15 53 55 57 59 61 63 65 67 69 71 73 75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 11 13 State Fiscal Year Source: SC Board of Economic Advisors C:\Users\dglenn\Desktop\Percent Change in S.C. General Fund Revenue 13 update.xlsx.xlsx -12.5 * FY 12 & FY 13 Projected 27 BEA/01/05/12 * *
GENERAL FUND REVENUE General Fund Appropriations & Property Tax Relief $8,000 $7,500 $7,000 $6,500 $6,000 $5,500 $5,000 $4,500 $515.5 $6,609.4 $520.2 $6,382.2 $526.0 $5,515.4 $528.9 $5,190.4 $534.7 $541.8 $5,552.0 $5,752.0 $549.1 $5,988.0 $4,000 $3,500 $3,000 $2,500 $2,000 $1,500 $1,000 $500 $0 FY 07 FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 General Fund Appropriations Property Tax Relief Fund Source: SC Board of Economic Advisors 4/06/12 28
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3.0% South Carolina Total and General Fund Sales Tax Collections as a Percentage of Total Personal Income Additional 1% for residential property tax relief in FY 2008 2.5% Percent of Personal Income 2.0% 1.5% 1.0% Exempt sales of electricity and natural gas for resident use beginning in 1979 Maximum cap on autos and EIA additional 1% in 1985 Sales tax on food to 3% in 10/2006 and 0% in 11/2007 0.5% Total Sales Tax General Fund Sales Tax 0.0% Source: SC sales tax collections and U.S. Department of Commerce, Bureau of Economic Analysis Fiscal Year 31
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3.0% South Carolina Income Tax Collections as a Percentage of Total Personal Income Indexation of tax brackets beginning in FY 1991 2.5% Percent of Personal Income 2.0% 1.5% 1.0% Job development/retraining fee enacted for FY 1996; Large scale use of credits beginning in FY 2001; Credits totaled $88.5 million in FY 2009 Lowest bracket of 2.5% reduced to 0% for FY 2008 0.5% 0.0% Fiscal Year Source: SC individual income tax collections and U.S. Department of Commerce, Bureau of Economic Analysis 4/11/12 33
DISTRIBUTION OF SC INDIVIDUAL INCOME TAX RETURNS and Taxes Paid for 2010 45.0% 40.0% 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% % of Total Retuns % of Total Taxes Paid Tax Liability 0 to $1,284 Tax Liability $1,284 to $3,034 Tax Liability $3,034 to $6,534 Tax Liability $6,534 and up 0.0% $0 $1 to $24,999 $25,000 to $49,999 $50,000 to $99,999 $100,000 and over SC Taxable Income on Return Source: SC Board of Economic Advisors 4/11/12 34
History of Use (2003-2010) $200 $100 $112 million Subsidized Millions $0 -$100 -$200 -$300 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Subsidizers -$400 -$500 -$600 -$520 million Firms in rate classes 1 paid in $112 million more in contributions than had benefit charge against them. Firms in rate classes 20 paid in $520 million less in contributions than had benefit charges against them. 12 firms in class 20 alone accounted for $87 million deficit. 35
Cost per Worker-House Version 2011 "Revised" Rates with $146 million in appropriations Source: SCDEW calculations Proposed 2012 rates with $77 million in appropriations Current 2012 Savings vs. 2012 PROJECTED 2013 Rate Class 2011 Rates Rates Current Rates Rates* 1 $10.30 $10.30 $11.76 $11.76 0.0% $10.54 2 $103.80 $81.80 $97.44 $85.98-11.8% $95.43 3 $114.30 $90.30 $107.64 $94.73-12.0% $105.23 4 $126.90 $99.90 $119.04 $104.45-12.3% $116.12 5 $140.60 $110.60 $130.56 $115.26-11.7% $128.22 6 $155.30 $122.30 $144.60 $127.27-12.0% $141.67 7 $172.10 $135.10 $159.84 $140.61-12.0% $156.61 8 $190.00 $149.00 $176.40 $155.43-11.9% $173.21 9 $211.00 $165.00 $195.48 $171.90-12.1% $191.66 10 $233.10 $183.10 $217.08 $190.20-12.4% $212.15 11 $258.30 $202.30 $240.00 $210.53-12.3% $234.92 12 $286.70 $223.70 $265.44 $233.13-12.2% $260.23 13 $543.30 $423.30 $501.84 $439.44-12.4% $491.29 14 $602.20 $470.20 $557.76 $487.46-12.6% $545.08 15 $668.40 $521.40 $618.84 $540.83-12.6% $604.84 16 $742.00 $579.00 $686.28 $600.12-12.6% $671.24 17 $824.00 $642.00 $761.28 $666.00-12.5% $745.03 18 $915.50 $712.50 $845.16 $739.20-12.5% $827.01 19 $1,016.40 $791.40 $938.04 $820.53-12.5% $918.10 20 $1,127.90 $878.90 $1,042.32 $910.90-12.6% $1,019.31 These rates pay for the first 20 weeks of unemployment benefits; through December 2011 all weeks after 20 are 100% federally funded. To keep 2012 employer costs the same as revised 2011 rates would require approximately $97.1 million in appropriations. Tax rates each year will vary based on economic conditions including the unemployment rate, interest rates, and number of individuals employed. 2013 taxes are expected to be slightly lower than 2012 taxes due to continued employment gains. The tax savings for businesses due to the proposed appropriations will not be available until the funds are deposited into the Trust Fund account; this will result in credits and/or refunds to businesses for any overpayments in the first and second quarter of 2012. 36 *2013 official tax rates will be available October 2012 after revised projections from the Congressional Budget Office become available.
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HOMESTEAD EXEMPTION FUND (TIER III) Revenues and Expenditures $700,000,000 $650,000,000 $600,000,000 FY 13 Projected Shortfall: $118.3M $550,000,000 $500,000,000 $450,000,000 $400,000,000 FY 07-08 FY 08-09 FY 09-10 FY 10-11 FY 11-12* FY 12-13* TIER III EXPENDITURE WITH $2.5M (1% SALES TAX) * Preliminary Note: Tier III Expenditure includes $2.5M minimum disbursements. Revenue projection based upon 2/15/12 BEA forecast. Source: SC Budget and Control Board, Office of Research and Statistics; SC Board of Economic Advisors 3/23/12 39
FY 2012-13 REVENUE SOURCES Net Revenue and Base Appropriations $6,300 $6,200 $6,100 $6,000 FY 13 Revenue Estimate FY 14 Long Range Estimate FY 14 Est. Growth $175.8m $5,900 $5,800 $5,700 $5,600 $5,500 $5,400 $5,300 $5,200 $5,100 FY 11 Actual Revenue FY 12 Revised Estimate FY 12 Surplus $255.5m FY 11 Surplus $122m (Cont Res Fund) FY 13 "New" Recurring Revenue $535.2m $5,000 FY 10 FY 11 FY 12 FY 13 FY 14 (LRF) FY 12 Budget Process FY 13 Budget Process Source: SC Board of Economic Advisors 4/06/12 40