SC legislators get extra $1B to spend as budget negotiations begin

Yahoo

21-05-2025

The Board of Economic Advisors announced $1 billion more in state revenue than expected as legislators began negotiating their budget plans Tuesday, May 20, 2025. (File/Getty Images)
COLUMBIA — An extra $1 billion fell into legislators' laps as they started budget negotiations Tuesday, making a budget process with few sticking points potentially even smoother.
Following a stronger-than-anticipated tax season for the state, along with continued increases in corporate income tax and sales tax collections, legislators will have an additional $669 million for one-time expenses and $377 million in recurring revenue, the state Board of Economic Advisors announced Tuesday.
Normally, such mid-year hikes occur before the chambers approve their budget plans. But the state's revenue forecasters declined to recognize any surplus at its meeting last month.
However, with just six weeks left in the fiscal year, the board decided to officially increase its revenue estimates: The $669 million is most, but not all, of what's flowed into state coffers above expectations through April and $377 million is the boost in projections for the fiscal year starting July 1.
Those 'surprisingly good numbers' will make 'a lot of what we'd be fighting over a lot easier,' said House Ways and Means Chairman Bruce Bannister, R-Greenville.
A six-member committee — three each from the House and Senate — is tasked with hashing out the differences in their chambers' $14.4 billion budget plans.
The panel met publicly for about an hour Tuesday before staff mentioned the $1 billion adjustment, and the meeting adjourned. Talks resume Wednesday.
Some major parts of the budget package were already locked in before negotiations began. That includes $1,500 raises in the state's minimum pay for teachers and an accelerated income tax cut (which completes a 2022 law that phased in rate reductions).
Other items are still up for debate.
For instance, the Senate put an additional $100 million into updating aging bridges across the state, while the House provided $200 million as the second installment of a five-year, $1 billion commitment sought by the state Department of Transportation. The Senate sent the DOT $25 million to cover clean-up costs of Hurricane Helene not paid by the federal government, while the House provided $35 million.
There are a number of projects at the state's universities that one chamber funded while the other didn't.
Other differences are in how the money's spent. Both chambers, for example, put an additional $112 million into 'state aid to classrooms,' which is meant for teachers' raises. So, that amount is set. However, an adjustment in the way the House proposes to fund virtual charter schools could shift more of that total to traditional K-12 schools.
How the compromise committee might spend the additional $1 billion is not yet clear. Bannister didn't give any specifics. And the Greenville Republican declined to name any particular possible sticking points.
Legislators already expected smoother sailing during this year's budget process than in recent years, when disagreements over how much to spend on Clemson's new veterinary school either stalled the process or derailed it for weeks.
The committee expects to reach a compromise by the end of the week, sending the spending plan back to both chambers for final approval by next Wednesday, said Bannister, chief budget writer for the House.
That leaves more time than usual before the fiscal year begins July 1. Budget negotiations normally carry into June, sometimes with only days to spare.
Much of the newly recognized money could be put into savings.
'There's enough money to cover everything, and then we will have money left over that we will not allocate in this budget cycle,' Bannister said.
Despite more revenue than expected coming in this year, the state's economic forecasters warned the growth might not last. Although the state's population and income are expected to continue growing, proposed tariffs could cause some businesses 'to take a more measured approach to activity,' potentially taking a hit to state revenue, according to a news release.
Putting aside part of this year's extra revenue for next year's budget process could help offset some of those impacts, should they come, Bannister said.
'Certainly, it's nice to have growing revenues and one-time money that's not going to be spent this year to have a cushion in case something does come up in the next 12 to 24 months,' Bannister said.