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SC Governor's Spending Plan Includes Teacher Raises, Income Tax Rebates

henry mcmaster

South Carolina Gov. Henry McMaster wants to send taxpayers a $200 million rebate, raise teacher salaries by 5 percent and make sure a police officer is present in every school in the state thanks to an unexpected windfall of about $1 billion. 

McMaster released his proposal for South Carolina's $9 billion budget on Tuesday. He said the extra cash — both in one-time money and tax revenues the state can expect to collect each year — gives leaders a unique opportunity to address problems in education, law enforcement salaries and even ethics reform.

"It's like a gift from the sky," the governor said. "That makes it more imperative that we do it this year."

Lawmakers, as always, have the final say on the spending plan and can ignore McMaster's suggestions. But leaders in the Republican-dominated Legislature already have said they plan to work more closely with this GOP governor than they have with others in the past.

McMaster isn't suggesting a big cut in income tax rates as he did during his first two years as governor. He said he wants to help House leaders this year achieve their goal of rewriting the state's entire tax code, including property tax caps, sales tax exemptions and income taxes. Lawmakers have warned such a rewrite could take years.

Instead, the governor is proposing a rebate. How much the average taxpayer might get isn't known. Staff members said they will have to see how many 2018 returns are filed, then do the math. The checks won't go out until around December.

In 2017, just over 2.3 million returns were filed, which if applied to the governor's proposal, would lead to an average rebate check of just under $87.

"Just because we collect it doesn't mean we have to spend it," McMaster said, repeating one of his mantras since he took over as governor in 2017, replacing Nikki Haley when she was appointed U.N. Ambassador.

McMaster won his own four-year term in November, and his budget reflects his beliefs that private businesses can solve a lot of problems, law enforcement and veterans deserve raises and tax breaks and something needs to be done to stop sharp rises in college tuition.

His spending plan offers a 6 percent increase in funding for colleges that agree to freeze tuition. The governor hopes to continue that funding increase yearly through sales tax now collected on online shopping, but the state's predictions on how much revenue that can bring in each year still vary widely.

On education, along with $155 million to give each teacher a 5 percent pay raise, the governor proposes a $10 increase on what is called the base student cost, or the amount of money the state sends per student to school districts. That's a less than 1 percent increase from last year's $2,495 per student.

Instead of sending money directly to the state's poorest school districts, McMaster is proposing a new $100 million Department of Commerce fund that would be used to help bring new businesses into the 28 districts with the poorest citizens and lowest tax bases. That money could go toward anything the new business might need — from improvements to school buildings to a better water or sewer system.

Other items in McMaster's budget include:

  • $46 million to hire 758 additional police officers, which would place an officer in every South Carolina school, along with $2.2 million to hire 88 additional school mental health counselors.
  • $20 million to offset a permanent income tax exemption on retirement pay for all police officers, military veterans and first responders.
  • $33.6 million for pay raises and bonuses for new hires in law enforcement
  • $40 million for repairs and upgrades to the state prisons.
  • $31.3 million to match federal contributions to pay for damage caused by Hurricane Florence's floods in 2018.