- Budget Outlook and Impact of South Carolina’s Changing Demographics
- September 30, 2016
- Law Firm: Nexsen Pruet LLC - Columbia Office
The House Ways and Means Committee met on Monday, September 19th, to hear testimony regarding an outlook on future revenues as well as South Carolina’s changing demographics. Dr. Lee Pearson, Associate Dean with the Arnold School of Public Health at the University of South Carolina, spoke to the Committee about social and fiscal considerations relating to the State’s aging population.
Dr. Pearson stated that, as of 2015, adults over the age of 65 accounted for 16.2% of the State’s population (up from 13.7% in 2010). By 2029, it is estimated that 1.1 million South Carolinians will be over the age of 65 which will equate to roughly one out of every five residents.
Dr. Pearson also stressed that aging services represent a vital sector to the State’s economy. Older adults tend to purchase more services in areas such as healthcare and tourism. Additionally, investment in this area by older adults often has a multiplier effect. Dr. Pearson provided statistics to show that South Carolina also serves as a popular retirement destination for older adults. An issue that must be addressed in the years ahead will be the increasing cost of long term healthcare for residents over the age of 65 and the availability of respite care for caregivers.
Following the presentation by Dr. Pearson, Frank Rainwater, Executive Director of the South Carolina Revenue and Fiscal Affairs Office, provided the Committee with an update regarding current and long-term demographic trends as well as a preliminary budget outlook. Mr. Rainwater stated that revenue for the past fiscal year finished around $16.8 million below estimated projections. Unlike last year, lawmakers will not be afforded a large surplus going into the State’s budgeting process. When focusing on trends over the past 35 years, wages as a percentage of taxable income in South Carolina have decreased dramatically while non-taxable “transfer payments” (such as Social Security and Medicaid benefits) have almost doubled since 1980.
Mr. Rainwater also informed the Committee about South Carolina’s aging workforce. In 1970, the average age in South Carolina was 24 and almost half of the State’s population was made up by individuals aging 19 years and younger. It is estimated that in 2020, the average age of a South Carolina resident will be 46 years old, and the percentage of adults over the age of 65 will be make up over one-third of the State’s population.
Although this trend is seen all across the United States, the State’s aging workforce will be a concern in the years ahead regarding how the State spends money and collects tax dollars.
The Committee did not take any formal action during the three-hour meeting. Chairman Brian White (R-Anderson) informed the Committee that he plans to schedule more meetings in order to receive additional information. The next Ways and Means Committee meeting is tentatively scheduled for the week of October 10th.