Tax cut in 2022 likely for SC, but how big will it be? What else lawmakers are tackling
In front of state lawmakers this year are two dueling proposals aimed at cutting taxes for many South Carolinians.
One proposal is on the fast track to passage.
The House’s budget-writing committee will meet Tuesday to advance an income tax cut and begin discussions on how to craft the state’s new $11 billion spending plan that will start July 1. It will include about $4.6 billion in new dollars that lawmakers will decide how to divvy out — they could possibly spend the cash on pay raises and major infrastructure projects — or store away.
House budget writers first considered a tax cut on Feb. 3, but last week tweaked the plan after state economists projected a surge in new revenue. Gov. Henry McMaster and House Republicans — all up for reelection in November — proposed cutting most of the income tax rates in the state in a press conference last week that did not include any senators.
The proposal has two main tax brackets, 3% and 6.5%. The top rate would then be cut each year for five more years until the top rate reaches 6%.
The tax cut would cost the state about $600 million in the first year.
Those additional annual tax cuts would be put on hold for a year if the revenue to the state’s general fund doesn’t increase by at least 5% in a year.
Proponents say the tax cut would spur additional economic growth, though some lawmakers have shared a mix of feelings on the proposal when the state has so many critical needs.
“I have mixed feelings about doing it, but the approach and methodology to how we’re doing this is … incredibly fair and incredibly balanced and done in thoughtful way. (It’s) not a knee jerk or a political ploy,” said state Rep. Leon Stavrinakis D-Charleston, who sits on the Ways and Means Committee.
“The triggers and all those things make it a very safe and sensible approach in how to do this,” he continued. “The relief in those middle brackets is really commendable.”
The House tax cut plan was followed up last week by a proposal from new Senate Finance Chairman Harvey Peeler, R-Cherokee. Peeler has pushed a larger tax cut in the first year, lowering the top income tax rate to 5.7%, which would cost about $900 million.
He also wants to send $1 billion back to taxpayers. Details of the proposal would have to be worked out by the General Assembly. Senators have yet to schedule a hearing on the legislation.
Meanwhile, House budget writers this week will get their first look at the proposed state budget that’ll likely include raises for teachers, state employees and state law enforcement officers.
McMaster wants lawmakers to spend an additional $120 million on school districts, and raise the starting teacher salary to $38,000, from $36,000. A $2,000 raise would not be mandated for all teachers if their districts are already above the minimum schedule, under McMaster’s proposal.
Outgoing schools Superintendent Molly Spearman in her budget request called for a 2% raise for all teachers and an additional raise for teachers who are in the first five years of their career. She later said the state should strive to raise the starting teacher pay to $40,000 a year.
Lawmakers won’t just tackle the budget this week.
Here’s what else is on the agenda for Feb. 21-24.
Senate panel to debate vaccine mandates
The Senate Finance Committee will continue debating efforts to prevent businesses from firing employees for not taking the COVID-19 vaccine.
Senate Majority Leader Shane Massey, R-Edgefield, amended a House bill that prohibits public employers and school districts from mandating that workers and students, respectively, get the COVID-19 vaccine.
Massey’s proposal also aims to charge employers higher unemployment insurance rates for each employee they fire for not taking the vaccine.
Massey said he was motivated to make the change after North Charleston fired police officers and firefighters who refused to get the vaccine, and after the Medical University of South Carolina removed people from the its organ transplant list for refusing to take the vaccine.
“I feel like I’ve gotten to the point that I’m forced to do something,” he said. “If we don’t do something, there’s nobody else.”
SC could join other states going hands free
The debate over whether to prevent people from driving and holding a cell phone is expected to continue in the Senate.
Senators are debating whether to ban people from driving and holding a cell phone to talk or send a text message.
Under the proposal, drivers would be allowed to use voice-to-text functions, earpieces, smart watches and a car’s built-in hands-free media system. Drivers also would be able to park their car and use their phones while still inside.
Lawmakers tackle school choice plans
The Senate Education Committee on Wednesday is scheduled to debate a proposal that creates education scholarship accounts, which parents of low-income and special needs students can cover private education costs.
Money could be spend on tuition, tutoring, computers and instructional materials, among other things.
The measure is similar to a House proposal which would use $75 million from reserves for a three-year pilot program for 5,000 students to attend a school of their choice.
SC’s health, environmental agency could be split
A Senate Medical Affairs Committee panel plans Thursday to debate a plan to split up the Department of Health and Environmental Control.
The move has been pushed by Sen. Peeler, who wants to restructure the agency that has led the state’s response to the COVID-19 pandemic.
The move would also include the Department of Alcohol and Other Drug Abuse Services and the Department of Mental Health.
Under the proposal, DHEC’s health-related divisions and the drug and alcohol and mental health departments would be combined into one agency called the Department of Behavioral and Public Health.
The health department’s environmental divisions, along with the environmental and water resources division of the Department of Natural Resources, would be combined to make the Department of Environmental Services.
This story was originally published February 20, 2022 at 11:00 AM.
