
Governor Sanford wanted to reject the funds because, on a macro level, he believes the spending increasing national debt will devalue the dollar and hurt the national economy. On a local level, he did not want to increase state spending at time when they should be cutting back. The one time provision of $700 million will need to be funded by the following budget or be slashed then, setting up a future budgeting battle.
Essentially, this unanimous ruling from the SC Supreme Court requires fiscal irresponsibility on behalf of the state, particularly since the state legislature has already passed a budget that counts on the money for education. Gov. Sanford had asked the legislature to make equalizing cuts elsewhere in the budget to accommodate the $700 million, but they refused to do so.
More from Reason on the Stimulus and its fall out here.