Tax cuts, rebates and raises part of nearly $14B state budget heading to governor’s desk
COLUMBIA, S.C. (WCSC) - A nearly $14 billion state budget that cuts taxes for many South Carolinians and would even give them money back is on its way to the desk of Republican Gov. Henry McMaster.
Members of the General Assembly voted Wednesday to advance the spending plan, a compromise worked out at the end of last week between the two versions of the budget previously passed in the state’s House of Representatives and Senate.
The focal point of this budget is a restructuring of South Carolina’s income tax brackets that will cut the state’s top rate down from 7% to 6.5% when people file next year — around $600 million in reductions — and then gradually down to 6% over the next five years — about $1 billion in cuts when fully implemented. Most people who pay income taxes in South Carolina are in this bracket.
The plan collapses the other current tax brackets of 6%, 5%, 4%, and 3% into one bracket taxed at 3%.
It also includes $1 billion in direct rebates to income taxpayers. Checks would be sent out in November or December this year with amounts based on how much people paid in state income taxes, maxing out around $800.
A previous version of this rebate plan would have sent a check to anyone who filed state income taxes, but that was changed as the two chambers worked out a budget compromise to include only those who had actually paid those taxes.
“About a third of South Carolinians will have their entire tax liability taken care of,” Rep. Gary Simrill, R – York and chair of the House’s budget-writing Ways and Means Committee, said. “That’s more money in their pockets to spend how they see fit. A taxpayer knows better what to do with their money than the government does, and this gives that grand opportunity.”
Several South Carolinians will see more in their paychecks next year too.
The budget raises the minimum salary at every cell on the teacher pay schedule by $4,000, including upping the statewide starting minimum salary from $36,000 to $40,000.
Lawmakers said school districts will receive enough money that they should be able to give raises to teachers already making above those new minimums.
“But that’s not ultimately our decision,” Speaker of the House Murrell Smith, R – Sumter, said. “That’s going to be the decision of the school districts across the state, and they’re going to have to determine where they’re going to make their investments.”
State employees will receive a 3% raise and a one-time, $1,500 bonus, with another $38 million going toward increasing starting salaries for state law enforcement and corrections officers.
Between the budget and money from the federal government, another $1 billion will be spent on fixing South Carolina’s roads, with large chunks intended for expansion and widening projects on I-26 and I-95.
“We’re going to take care of the local areas and also fix our interstates, which it accelerates the expansion by four to five to six years on things that are major corridors for industry and business and trucking and travel and tourism for South Carolina,” Smith said.
State budget writers had so much money to spend this year because of how South Carolina recovered economically from the pandemic, paired with the billions of dollars the federal government sent the state in pandemic relief.
But lawmakers also took more than $1 billion in the budget and put it in state reserves or left it unspent, which they said will prevent them from needing to make cutbacks in the event economic tides turn.
“The economy, if it does soften — we hope that it doesn’t — but if it does soften, at least we’re prepared in that vein,” Simrill said.
With lawmakers approving this budget Wednesday, it will next head to the governor, who is likely to make vetoes of his own.
But McMaster has been supportive of some of the major focuses of the spending plan, including the tax cuts and raises for teachers and law enforcement.
The General Assembly returns to Columbia near the end of June to respond to any vetoes the governor issues.
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