Gov. Henry McMaster called on South Carolina lawmakers to raise pay for state employees and law enforcement officers by 2%, all while urging legislators to also cut taxes. McMaster unveiled his spending wish list for the Legislature Monday, a day before lawmakers return to work. The state has about $3 billion in additional annual and one-time money to spend during this year’s budget discussions. Lawmakers also have $2.5 billion in federal COVID-19 relief money and $525 million from the Savannah River Site settlement.
McMaster rolled out the federal recommendations with his executive budget because several of the initiatives are intertwined, the governor’s staff said.
In his budget proposal, the governor included $31 million for raises for law enforcement officers and $46 million for merit raises for other state employees. The amount of money proposed would cover 2% raises for all state workers, but McMaster wants that money distributed based on merit. “Across-the-board pay raises for state employees are less effective than those based on performance, merit, success or longevity” McMaster said. “Agency directors should be empowered to incentivize their personnel.” McMaster’s budget includes more money for raising pay for some teachers in the state, bringing the state starting salary to $38,000 from $36,000. However, a $2,000 raise wouldn’t be mandated for school districts already above the proposed minimum. The raise is part of the additional $120 million McMaster wants to send to public schools in the budget. The governor said he wants to give school districts flexibility in how to spend the money, but also require more transparency on where dollars go. To that end, McMaster is asking school districts to provide the Department of Education information on how they spend their money so it can be posted online.
“The real key is the transparency and accountability,” McMaster said. “I think most South Carolinians want the money to be spent on teachers and they don’t want the money to be spent on administration costs or top heavy administration expenditures. They want teachers in the classroom and want the best teachers in the classroom.” McMaster proposed a $2,000 bonus for school drivers to help school districts recruit and retain drivers through an entire school year. “Superintendent (Molly) Spearman is appreciative of the support Governor McMaster has shown through his executive budget towards increasing teacher and bus driver salaries — two positions facing critical shortages in our state,” said Ryan Brown, spokesman for the Department of Education. “We now look forward to working with the members of the General Assembly to bring funding for these priorities and others to fruition.”
McMaster, who is running for reelection this year, also wants to push tax relief as part of the budget.
As in year’s past, McMaster proposed reducing the state’s top income tax rate to 6% from 7% over a course of five years. It’s a move that would cost the state $177 million in the first year, and up to $1 billion once it’s fully implemented. McMaster also proposed that the tax cut would be on hold for a year if new revenue doesn’t grow by 5%. South Carolina has the highest tax rate in the southeast and 12th highest in the nation, according to the governor’s office. “This is unacceptable as it makes South Carolina less competitive for jobs and capital investment,” McMaster said in his letter to lawmakers. He pushed the tax cut along with a proposal to exempt retired military personnel from paying income taxes on their pensions. He also pushed for exempting police officers who have pensions through the state’s retirement system from paying income tax on their pension income.
McMaster pushed the proposal as the state has sizable budget surpluses. “Now is the time,” he said. “With our economic growth, with the things that are happening, we think the next five to 10 years, which is as far as we can see, you’re going to have phenomenal growth and prosperity for the state.” McMaster also wants to place $500 million in reserves in case of economic uncertainties. He suggested setting aside $250 million of federal COVID-19 relief money for the unemployment insurance trust fund in case of a severe economic downturn. The recommendation includes using $500 million in federal COVID money for rural water and sewer infrastructure upgrades, $360 million to widen Interstate 26 between Columbia and Charleston, and $300 million the first phase of Interstate 73. The executive budget includes $300 million for the Port of Charleston to expand rail and barge operations. In addition to the federal money, McMaster wants to direct $600 million to the state Department of Transportation to expedite road construction projects and to use federal dollars for infrastructure.
McMaster also included $400 million for broadband expansion in his recommendation, $300 million of which would come from a federal COVID-19 relief and $100 million from the federal infrastructure bill. For the third straight year, the governor recommended a college tuition rate freeze for in-state students by including $20.1 million to be sent the state’s colleges and universities. He also wants $183 million to address maintenance at the state’s colleges and universities. McMaster also recommended using $124 million in COVID relief money to expand workforce development programs to help residents earn credentials or associate degrees in high-demand careers such as manufacturing, health care, computer science and transportation. The governor also proposed an additional $1.5 million for the inspector general’s office and an additional $1.7 million for the State Ethics Commission so each agency can hire additional investigators.