Lawmakers pass $13.8B SC budget with large tax rebates, cuts
COLUMBIA, S.C. (AP) — A $13.8 billion budget that sends hundreds of dollars of rebates to many South Carolina taxpayers and also cuts their income tax rates is on its way to Gov Henry McMaster's desk.
The House and Senate each passed a compromise spending plan Wednesday that also would raise the minimum salary for teachers from $36,000 to $40,000, put $1 billion extra into road repair and expansion and give state employees a 3% raise and $1,500 bonus.
The 2022-23 fiscal year budget also calls for raising a number of state law enforcement salaries, giving colleges money if they freeze tuition and setting aside about $1 billion in case this is the year the economy craters.
The approved budget is $3 billion more than last year's spending plan. The extra money comes from a booming economy, federal pandemic money and savings from the past two budgets just in case COVID-19 wrecked the financial system.
People can complain the budget is bursting, but Republican House Ways and Means Committee Chairman Gary Simrill said lawmakers are in a way sending back as much money to taxpayers as they can.
“Look at what is going back to the citizens of South Carolina either in infrastructure, non-spent revenue or tax cuts and rebates.,” the Republican from Rock Hill said.
The Senate passed the budget unanimously, while just a handful of House members voted against it. The governor has until early next week and has a line-item veto to take out any part of the budget he does not like. The General Assembly will return by the end of June to consider those vetoes.
Items McMaster has guaranteed he will not veto are the income tax cut and rebate.
The rebate will give every South Carolinian who pays income tax the amount they pay back for this tax year, up to about $800. About 44% of the state’s 2.5 million people who file returns end up paying nothing in income tax and won’t get a check when the rebates are given out in November or December. The rebates will cost about $1 billion.
“Delivery is expected in late November or early December – just in time for Christmas,” Republican Senate Finance Committee Chairman Harvey Peeler said.
The compromise also immediately cuts the state’s top income tax rate from 7% to 6.5%. for the 1.1 million taxpayers who pay the most. The plan then knocks 0.1% off the top rate each year the state continues to substantially increase revenues until the top rate is at 6%. It is the House plan backed by McMaster.
The other tax bracket will be at 3%, cutting taxes for the more than 300,000 taxpayers now between the 6% and 3% brackets. Anyone lower than that will not pay taxes at all.
The budget compromise also revamps the way the state funds education, simplifying a complex formula into money mostly based on student-teacher ratio and minimum teacher salaries.
Lawmakers are putting $275 million more into the formula. Districts can use the money however they like, and a number of lawmakers have suggested a $4,000 salary increase for all their teachers is a good start.
On roads, most of the money is going to accelerate major interstate plans, such as widening Interstate 26 from Charleston to Columbia to three lanes each direction or untangling where Interstates 20, 26 and 126 all meet west of Columbia.
But the budget also sends money directly to every county to spend as they see fit. “This budget helps fill in potholes," Peeler said.
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