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SC Gov. McMaster wants pay raises for some state workers, tax cuts for all

South Carolina’s 35,000 state workers are not paid enough, according to a study comparing their pay to others.

That will not change for most state workers if the Legislature adopts Gov. Henry McMaster’s 2018-19 budget recommendations for the state’s fiscal year that starts July 1.

McMaster included pay raises for only a few of the state’s 35,000 workers in his roughly $8 billion spending plan, released Monday. The budget proposal includes almost $400 million in new spending.

McMaster did, however, propose phasing in income tax cuts for all South Carolinians, allowing taxpayers to keep more of their money, he said. It is the first budget proposal by the Richland Republican since taking office last year.

“We’ve got a 6-foot bed and a 4-foot blanket,” McMaster said. “Everybody can’t get what they want at once.”

‘Let them keep their money’

McMaster – who faces three challengers in June’s GOP primary for governor – said now is the “right time” for tax relief for every South Carolinian.

His proposed income tax cut would be phased-in over five years, he said, resulting in about $139 million in savings in one year and about $2.2 billion over the full five years.

The cut would save taxpayers an average of between $55 and about $54,000 over the full five years, depending on their income, and reduce the state’s revenue by more than $782 million, according to the S.C. Revenue and Fiscal Affairs.

McMaster also wants to cut – to zero – the amount that nearly 38,000 retired military veterans and more than 20,000 police officers, fire fighters and other peace officers pay in state income taxes on their retirement income.

That tax cut would save the retirees $22.6 million in the first year.

The tax cuts for law enforcement, firefighters and peace officers would be about $713 a year for retirees under 65 and $102 for those 65 or older. For retired military veterans, the cuts would total about $524 a year in savings for those under 65 and $210 for those 65 and older.

“Let them keep their money,” he said. “(That means) they have more money. That means they will spend more money.”

McMaster, elected the state’s lieutenant governor in 2014, became governor last January when then-Gov. Nikki Haley joined President Donald Trump’s administration as U.S. ambassador to the United Nations.

Haley, too, proposed income-tax cuts, citing the state’s “high” 7 percent top-end tax rate. But legislators never approved those cuts, with some arguing they would resulted in deep cuts to already underfunded state programs.

More money, but not for all

Teachers, in particular, will miss out on pay raises under McMaster’s budget recommendations.

The S.C. Department of Education asked the governor for an across-the-board 2 percent raise for teachers. The agency also asked to raise the starting salary for first-year teachers to $32,000 a year from $29,900. Together, the two moves would have cost the state about $45 million.

Educators say the raises would help the state recruit more teachers. About 4,000 teachers could leave the classroom this year when a popular state retirement program – called the Teacher and Employee Retention Incentive, or TERI – ends June 30.

Instead, McMaster proposes targeting pay raises for the most critical needs, according to his office, including:

▪  $14 million for the S.C. Department of Corrections, including nearly $5 million to hire and retain officers.

▪  $1.5 million for the S.C. Department of Juvenile Justice, including about $1 million to hire and retain officers

▪  $2.5 million for the S.C. Department of Public Safety, including about $2 million to pay overtime

McMaster’s budget proposal also includes $32.4 million to help cover state employees’ increased pension costs and $59.2 million to help cover the cost of higher health insurance premiums.

Carlton Washington, head of the S.C. State Employees Association, said McMaster’s pay proposal sends “a message of division” that employees of some state agencies are more deserving than others.

“He’s had agency directors tell him how important competitive pay is,” he said. “He’s seen a pay study, and he has the S.C. State Employees Association telling him how pay is uncompetitive. All these people are telling him what the issue is.”

McMaster’s recommendations now go to the S.C. House, where lawmakers will pass their own budget in March. The Senate will vote on its version afterward.

The legislative session starts Tuesday.

Maayan Schechter: 803-771-8657, @MaayanSchechter

What does the governor want in the SC budget?

S.C. Gov. Henry McMaster unveiled his 2018-’19 budget proposal Monday. Highlights include:

▪  $5 million: An increase to the $5 million a year that the S.C. Department of Education already gets to replace aging school buses

▪  $5 million: For poor, rural schools to hire resource officers. The money would hire 75 officers.

▪  $10 million: In new state money to combat the state’s growing opioid crisis

▪  $18 million: In added money for S.C. charter schools to cover higher per-student costs and enrollment growth

SOURCE: Gov. Henry McMaster’s 2018-’19 budget proposal

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