Governor’s Budget Funds Business Priorities

Governor Henry McMaster outlined his budget priorities this week, which, as it did last year, proposes funding for a number of Upstate Chamber Coalition priorities. Here are our major takeaways from the Governor’s message:

INCOME TAX: South Carolina has the highest personal income tax rate in the southeast and the 12th highest in the nation. The Governor once again proposed a “1% rate reduction over five years for all personal income tax brackets, starting with an immediate $177 million cut.” We have long supported an income tax cut, and we have also long supported the concept of comprehensive tax reform, though that is a much more difficult nut to crack.

ROAD FUNDING: Using about $1.4 billion in ARPA and state surplus funds, the Governor proposed the General Assembly allocate $1.26 billion to the SCDOT “to accelerate construction, expansion, or improvements to our State-owned roads, bridges, highways, and interstates. Projects such as the widening of Interstate 26 to six lanes between Columbia and Charleston, the widening of Interstate 95 to six lanes in the Lowcountry, and additional lane widening on Interstate 85 in the Upstate.”  In addition, he asked for for $100 million recurring so the state will have sufficient state matching funds to apply for additional federal funds that are available in the federal infrastructure bill passed last fall.

PORT OF CHARLESTON: In 2021, the General Assembly appropriated $200 million toward the $500 million total cost to complete construction of the Navy Base Intermodal Facility, a major priority for the Upstate economy. The Governor proposed appropriating the final $300 million to complete construction of the facility, which we support strongly.

UNEMPLOYMENT RATES: The Governor proposed $250 million in ARPA funds be used to replenish the Unemployment Insurance Trust Fund in case of severe economic downturn in the future. This move will keep employer rates down, which is something we have fought for since insurance rates skyrocketed following the Great Recession in 2009-2010.

HIGHER TEACHER PAY: The Governor proposes increasing the state minimum teacher salary schedule by $2,000 to $38,000. This is a major improvement in the state’s teacher salary structure, and it has boosted pay in many Upstate districts for starting teachers above the national average. “It’s important to remember that just five years ago, the minimum starting salary of a teacher in South Carolina was $30,113,” the Governor wrote.

TECH SCHOOL SCHOLARSHIPS: Late last year, the Governor created Workforce Scholarships for the Future — a program to that allows state residents to earn an industry credential or associate degree in dozens of high-demand careers, including: manufacturing, healthcare, computer science, information technology, transportation, logistics, or construction. The Governor said “4,000 South Carolinians have been retrained and employed” through the program and we support his call to add another $124 million in ARPA funds to the program to continue it.

HIGHER ED AFFORDABILITY: The Governor again proposed providing $60 million so that every South Carolinian who qualifies for federal needs-based financial aid – measured by federal Pell Grants – “has the sufficient state financial assistance to attend any in-state public college, university, or technical college.” We strongly support these measures in order to increase educational attainment both in the Upstate and across our state. Students at private and historically black colleges will receive an additional $20 million in grants and assistance. An additional proposal asked the General Assembly to freeze college tuition for in-state students, which will cost about $20 million.

WATER/SEWER INFRASTRUCTURE: “The state’s rural water, sewer and stormwater infrastructure is becoming old and outdated” was an understatement from Governor McMaster. He proposed $500 million in ARPA funds for grants to replace water and sewer in the state’s poorer counties. We support the concept of spending ARPA funds on water and sewer, but we would like to see it expanded to all counties, since most of the Upstate would not qualify under the Governor’s proposal.

BROADBAND ACCESS: Finally, Governor McMaster asked for another $400 million for broadband expansion, something we have lobbied the General Assembly and Congress about over the past several years.

We’ll learn more about these proposals in the Governor’s State of the State Address next week. The House Ways & Means Committee is working on its budget proposals, which should start becoming clear in the next 6 weeks or so.