Gov. McMaster reveals his SC 2023-24 executive budget priorities
COLUMBIA, S.C. (WCSC) - South Carolina Gov. Henry McMaster released his Fiscal Year 2023-2024 Executive Budget listing his economic priorities for the new year Friday morning.
A release from the governor’s office states that McMaster, as in years past, is prioritizing fiscal responsibility and “wise, transformative investments in education, infrastructure, public safety, and provides tax relief for South Carolinians.”
“We are presented with an opportunity to take bold, transformative actions that will help expedite prosperity for generations of our people to come,” McMaster wrote in a letter to the General Assembly. “By thinking big, by being bold and by making these transformative investments that I have proposed, I believe we will set our State on a course that will provide the opportunity for prosperity, success, and happiness for generations of South Carolinians.”
Highlights from McMaster’s budget
McMaster asked the General Assembly to set aside an additional $500 million for the state’s rainy day fund to voluntarily increase its minimum balance from 7% to 10%.
“By saving this money instead of spending it - something that served our state well during the recent pandemic - we will once again be prepared for any future economic uncertainties, should they arise,” he said.
He also asked for a one-time $500 million allocation for the SCDOT, $300 million for Phase 1 of I-73 and a $50 million recurring allocation.
“The Department of Transportation was allocated almost $1 billion last year to accelerate and jump start construction, expansion, or improvements to our State-owned roads, bridges, highways, and to widen interstates,” McMaster said. “This year, my Executive Budget provides an additional $850 million to expedite the start and completion of SCDOT projects that will relieve traffic congestion, repair, or replace over 400 bridges, and to enhance repaving and resurfacing on our local and secondary roads.”
McMaster also is asking for $500 million for economic development committments and $200 million for megasite development and acquisition.
He wants $380 million in remaining American Rescue Plan Act funds to go to grants to be used to replace, repair or consolidate the state’s aging and outdated rural water, sewer and stormwater infrastructure.
He also wants $87 million set aside to fund another income tax cut.
“Until recently, South Carolina had the highest personal income tax rate in the southeast and the 12th highest in the nation. No more,” he said. “Last year, I was honored to sign into law the largest income tax cut in state history and, as such, my executive budget recognizes this year’s $87.5 million scheduled cut to the income tax rate.”
Additional requests include:
- $266 million for conservation and the environment
- $254 million for state aid to classrooms
- $132.5 million for teacher retention bonuses
- $121.5 million for the State Health Plans and free OBGYN visits
- $100 million for need-based and tuition grants
- $78 million for Workforce Scholarships for the Future
- $78 million for state employee pay raises
- $45 million for mental health professionals and services
- $43 million for a tuition freeze
- $38.4 million for a first responders income tax credit
- $27.3 million for school resource officers
- $25 million for education scholarship accounts
- $21.5 million for law enforcement pay raises
- $5 million for health agencies’ restructuring study and plan
- $3.5 million for a new training center at the South Carolina Law Enforcement Division
McMaster’s recommendations are just that. The General Assembly controls what gets spent and passes the state budget, and McMaster will then have the opportunity to veto certain appropriations. But state lawmakers have maintained a good relationship with the governor.
One year ago, one of the top priorities in his 2022-2023 recommendations was an income tax rate cut from 7% to 6% over the next five years. Lawmakers agreed to lower the tax rate and workers in the state are likely to see a little more money in their take-home pay this year.
The state’s Department of Revenue made the adjustments as a result of the tax cuts made by state lawmakers in the summer. The cuts dropped the state’s top income tax rate from 7% to 6.5% beginning in 2023, with additional cuts possible over the next five years.
In 2023, under the lower rate, someone making $39,000 a year, who would have paid $1,378.86 in the 2022 tax table, will only pay $757.35 under the new tax table, which puts an additional $621.51 in their paychecks over the course of the year.
Lawmakers also included $1 billion in direct rebates to income taxpayers in 2022′s budget. Rebate checks of up to $800 to eligible taxpayers were sent out starting in November.
The budget lawmakers sent to McMaster’s desk also raised 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. It also provided a 3% raise for state employees along with a one-time, $1,500 bonus, with another $38 million going toward increasing starting salaries for state law enforcement and corrections officers.
State budget writers also set aside $1 billion for fixing state roads with large chunks intended for expansion and widening projects on I-26 and I-95.
The budget called for more than $1 billion in the budget to be set aside in state reserves or left unspent, action they said would prevent them from needing to make cutbacks in the event of an economic downturn.
McMaster announced 73 line-item vetoes, totaling $52 million, to the nearly $14 billion budget last year. But he touted the budget’s accomplishments and called it “the most transparent and accountable budget in modern times.”
SC celebrates record industry recruitment
The governor’s budget recommendations come on the heels of an announcement of the state’s record-breaking industry recruitment in 2022. The state’s Department of Commerce on Thursday released its 2022 industry recruitment results indicating $10.27 billion in capital investment in the state, the single largest year in South Carolina history.
That amount represents 120 projects and the creation of more than 14,000 jobs.
In a statement, the governor said it was neither an accident nor a surprise that the state was breaking economic development records.
“We have consistently proven that our people are among the most talented and hard-working in the world, that we’re committed to fostering a competitive business-friendly environment, and that there is no better place to live, work, and raise a family,” McMaster said. “These historic achievements are a direct result of the South Carolinians who make our state great and understand the value of hard work.”
The record-breaking capital investment of $10.27 billion reflected a 118% increase over 2017, and announced investments in rural South Carolina in 2022 increased 30% over 2017.
While domestic-based companies represented the majority of announced investments, overall foreign direct investment in 2022 increased 371% over 2021.
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