SC has more money to spend this year than expected. What it could mean for you
South Carolina lawmakers knew they’d have more money in the bank to budget in the upcoming year. Turns out, it’s even more than they thought. State economists now predict South Carolina will have an extra $4.5 billion to spend in 2022-2023, for a total of some $11 billion that will pay for state services and programs, as well as teacher salaries.
The Board of Economic Advisors made the announcement Tuesday, and it gives the Legislature more flexibility in crafting the government’s budget — but also, likely, more arguments over what to do with the money.
South Carolina will have an additional $621 million in annual recurring dollars that can pay for ongoing costs such as services or programs. For example, paying an for a state employee’s salary isn’t just a one year cost. It continues year after year.
Economists estimated the state will have $921 million in one-time dollars, which usually come from previous years’ surpluses and unspent cash budget writers were unable to allocate. These dollars can be used for one-time expenses, such as building a new school.
That money is on top of the $897 million in recurring and $2.2 billion in non-recurring that state had available to allocate as part of an $11 billion spending plan.
And that’s not including the billions in federal dollars in COVID-relief money and Savannah River Site settlement cash.
Frank Rainwater, executive director of the state Revenue and Fiscal Affairs Office, said the state is going through unusual growth rates and expects the economy to level off at some point.
What will lawmakers do with all this money?
The money comes as the House Ways & Means Committee is in the process of writing its budget proposal to present to the full chamber. Once adopted by the House, the proposal will be sent over to the Senate.
Raises for teachers, state employees and law enforcement officers, as well as paying for road improvements have been discussed as possible uses for the money. The state could also consider an income tax cut — a potentially attractive proposal during an election year.
Following the new estimates from state economists, Gov. Henry McMaster, House Speaker Jay Lucas, R-Darlington, House Ways and Means Chairman Murrell Smith, R-Sumter and House Majority Leader Gary Simrill, R-York, held a news conference on Tuesday to discuss tax reform.
They proposed a tax cut that would bring the maximum tax rate to 6.5% from 7%, and combine those paying less than the maximum into a 3% tax bracket. Those who pay no income tax to the state would continue to pay nothing.
The maximum tax rate would get further reduced by .1 percentage points each year for five years until it reaches 6%.
This story was originally published February 15, 2022 at 2:38 PM.
