South Carolina cashes in with $2 billion extra in budget
COLUMBIA, S.C. (AP) — South Carolina lawmakers will again have a significant amount of extra money to spend in next year’s budget.
Economists are estimating a nearly $2 billion increase in the general fund, which lawmakers control, for the budget year that starts in July 2020.
South Carolina’s growing population (the state has added 1 million people since 2000), expanding economy, more vigorous collection of online sales taxes and underestimating other taxes this year has led to the extra money, officials said.
The General Assembly will likely use the money to continue efforts they made when about $1 billion extra appeared in this year’s budget , such as increasing salaries for teachers and state workers, improving prisons and making deferred repairs on state buildings.
But the extra money also increases the likelihood of extensive work on changing the state’s tax code. A group of House members spent much of 2019 studying all the state’s taxes — income, property and sales taxes — and what can be done to make the system simpler, reduce rates and eliminate some exemptions. The Senate appears ready to take up reforms too.
The additional money also could give lawmakers more flexibility to change the decades old formula for public school funding, which many officials think doesn’t treat education in poorer counties fairly.
After the Board of Economic Advisers announcement Friday, Republican Senate Majority Leader Shane Massey said a state of 5 million people like South Carolina doesn’t need a budget that will cross the $10 billion mark for the first time next year.
“It’s time for tax reform and a reduction in the highest income tax rates in the Southeast,” the Republican from Edgefield said on Twitter .
About $800 million in extra revenue is from increased tax collections and fees, which lawmakers prefer to spend on recurring items like salary increases. The rest is one-time money, including extra revenue from this budget year after economists underestimated how much money South Carolina is bringing in.
Budget officials have revised their formula to better estimate revenue after underestimating for several years, state Revenue and Fiscal Affairs Office Executive Director Frank Rainwater said in a statement.
South Carolina’s budget has risen steadily and rapidly from just over $5 billion about a decade ago, when the Great Recession required almost all state agencies to make mid-year cuts.
Now those agencies will all have the extra money in mind as they submit budget requests before lawmakers return for the legislative session in mid-January.
Republican Gov. Henry McMaster will release his own budget suggestions around that time. His office did not provide specifics after the extra revenue announcement, but did issue a statement saying the South Carolina needs to show restraint and conservative stewardship.
“We are winning and our future remains bright,” McMaster said in his statement posted on Twitter . “As I have said before, a surplus means prioritizing and funding the state’s most critical needs, then returning the rest to the taxpayers or cutting taxes.”
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