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Familiar tax cuts, new bonuses in SC governor's budget

Governor's Budget-South Carolina
Jeffrey Collins/AP
South Carolina Gov, Henry McMaster, left, releases his budget proposal along with Lt. Gov. Pamela Evette, right, on Monday, Jan. 10, 2022, in Columbia, S.C. McMaster's spending proposal includes an income tax cut more than $1 billion for roads and rural water and sewer improvements. (AP Photo/Jeffrey Collins)

Gov. Henry McMaster's suggestion for how South Carolina should spend billions of extra dollars contains some familiar requests he hasn't got in his five years in office like cutting income taxes.

But the governor is sprinkling in some new proposals, like bonuses for school bus drivers, cash to expand election audits and money to replace South Carolina's aging health lab.

McMaster released his budget request Monday. The General Assembly controls what gets spent, but lawmakers have had a good relationship with the governor whose ideas at least carry weight in the House and Senate chambers above his office.

There is a lot of extra money flying around. The state expects to collect $1 billion more in taxes in the fiscal year that starts this July than before. There is an additional $1 billion left over from previous years where the state was careful about its spending, worried the COVID-19 pandemic might wreck the economy.

There also is more than $3 billion in federal COVID-19 relief money and penalties paid to South Carolina because the U.S. government failed to meet deadlines to remove nuclear material from the Savannah River Site near Aiken.

"If we go off on the wrong side of the bridge on this, we won't get another chance," McMaster said.

At the top of McMaster's list — as it has been since he took over as governor in 2017 — is an income tax cut. The governor proposes cutting South Carolina's top rate from 7% to 6% over five years as long as economic growth continues. It would cost $177 million next fiscal year and about a $1 billion a year when fully implemented.

The governor said South Carolina needs the income tax cut to stay competitive with neighboring North Carolina and Georgia, which would still have lower rates.

The governor suggests all state employees be eligible for a raise, but the $47 million he sets aside would be for merit increases. Agency leaders would decide who gets extra pay and how much with the approval of human resources employees in the Department of Administration.

McMaster's plan sets aside $31 million in raises for law enforcement, prison employees and other public safety positions. But how that gets doled out would be based on a study to make sure workers doing similar jobs — like juvenile prison guards and regular prison guards — make the same salary and officers like state troopers are paid in line with their peers in other states.

The governor had already announced many of his proposals, like nearly $1.3 billion on road expansion and repair. About two-thirds of that is COVID-19 relief money. McMaster does want to set aside $100 million this year and for years to come so South Carolina can get more road money out of the federal government.

Some of the money would go toward jumpstarting a project to expand Interstate 26 to three lanes from Columbia to Charleston and Interstate 73 to give an expressway connection from Interstate 95 to Myrtle Beach.

The rest would tackle the Department of Transportation's ranked list of work it wants to do, like expanding I-95 to three lanes just north of Georgia or finish the widening of Interstate 85 to at least three lanes through the state.

"It takes a long time to build a highway. It takes a long time to plan to build a highway. But fortunately our Department of Transportation already has plans," McMaster said at a news conference Monday to announce his plan.

The governor also has announced his wish to set aside $500 million to repair aging local water and sewer systems, including sweeteners like parks or new roads for cities with smaller systems that allow them to be absorbed by larger ones.

McMaster proposes sending $3 million in additional money to the state Election Commission to do more audits of election returns and $100 million to replace the state health lab, which is about five decades old.

The governor's budget suggests paying school bus drivers a $2,000 yearly bonus, paid in installments in August, December and May, to keep drivers from leaving. That would cost about $12 million.

There are smaller projects important to McMaster like spending about $200,000 to hire a State Law Enforcement Division agent to concentrate on stopping animal fighting, which was one of McMaster's focuses when he was attorney general from 2003 to 2011.

McMaster's budget also would spend $1.7 million to double the budget of the state Ethics Commission so that it could hire more investigators and give the state inspector general $1.5 million more to expand his jurisdiction to any group that receives state money, from school boards to cities to non-profits.