What recession? SC could collect $800M more than expected. What it could mean for state raises
Despite some ongoing fears of an economic slowdown, South Carolina actually will have nearly $1 billion more than expected to spend in the coming year. That’s hundreds of millions more dollars that could go toward state employee raises, ailing bridges and more as the state’s budget nears completion.
Lawmakers have a total of $4.3 billion of additional money to allocate— $800 million more than originally projected — as they finalize state spending plan for the budget year that begins on July 1. However, $1.3 billion of that total has already been committed to the Scout Motors project.
Revenues to the state have continued to come in above in above estimates, as an expected recession has yet come to fruition.
Statesales tax revenue is above estimates, while individual income tax to the state has been below expectations but continues to grow.
State economists, however, also expect a slowdown in the amount sales tax coming to state as people spend less, as income growth is expected to slow down. Revenue growth in the state in recent years had been aided by the injection of federal COVID stimulus money.
“We see some early signs of a slowdown, but the big slowdown we anticipated has not yet occurred,” said Frank Rainwater, the executive director of the Revenue and Fiscal Affairs Office during Tuesday’s Board of Economic Advisers meeting.
The state economists said concerns of ongoing inflation, the effect of interest rate hikes by the Federal Reserve and issues with the banking industry could still lead to a recession.
When budget discussions began earlier this year, the Board of Economic Advisers projected lawmakers would have $3.5 billion of additional money available to distribute. As discussions took place, lawmakers opted to spend $1.3 billion on an incentive package to lure Scout Motors to invest $2 billion in an electric vehicle plant in Blythewood.
However, the additional $800 million now projected by the state economists will give lawmakers to room to negotiate over the differences in the House and Senate budget proposals, including how big of a pay raise state employees could get next year.
Senate budget writers want to spend more on state employee raises, proposing a $2,500 pay raise or 5%, whichever is greater. That plan would cost about $155 million more a year for the state. House budget writers proposed a $2,500 pay raise or 3%, whichever is greater, a plan that would cost the state $124 million more a year.
House members, who were expected to take another look at the budget Tuesday, in March approved a $13.8 billion spending plan, which took into account the Scout Motors deal.
House budget writers included $200 million for bridge maintenance work and $250 million for local road projects, which wasn’t included in the Senate budget.
Senate budget writers have included $314 million worth of member-initiated projects, commonly referred to as earmarks, as part of their $13 billion spending plan. House budget writers on Tuesday were expected to release their member-initiated projects.
The Senate also included more money for the state Department of Juvenile Justice so it can build a new detention center.
