Latest news with #R-Greenville
Yahoo
21-05-2025
- Business
- Yahoo
SC legislators get extra $1B to spend as budget negotiations begin
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.
Yahoo
25-03-2025
- Business
- Yahoo
Republicans' ‘historic' tax-cut plan attempts to give SC competitive edge
House Ways and Means Chairman Bruce Bannister, R-Greenville, (at the podium) outlines the GOP income tax plan on Tuesday, March 25, 2025, surrounded by House and Senate Republicans. (Photo by Travis Bell/STATEHOUSE CAROLINA/Special to the SC Daily Gazette) COLUMBIA — An income tax plan touted by state GOP leaders Tuesday as making South Carolina more competitive will cut taxes across all wages while requiring some people to pay more. The proposal released with much fanfare in the Statehouse lobby would collapse all tax brackets to a single, flat 3.99% starting Jan. 1 for tax year 2026 — meaning taxpayers may not really realize it until they file their taxes in spring 2027. That would seem to be a huge cut from this year's top tax rate of 6.2%, and that's the goal. Republicans have long complained the state's top marginal rate makes South Carolina appear as the highest-taxed state in the Southeast, even while the effective rate — what tax filers actually pay — was among the lowest. A 2022 law that has already reduced revenue by $1 billion has so far reduced that top tax bracket — what previous GOP leaders likened to a sticker price on a car that's negotiated down — from 7% to 6.2%. But that number is still the region's highest. The plan announced Tuesday appears to be a far deeper cut. Yet, it reduces revenue flowing into state coffers far less. Under the phased-in 2022 law, the biggest cut came in the first year, when it eliminated more than $700 million from state coffers for a half-point reduction. Under the new plan, the state can get to 3.99% in one fell swoop by shaving $200 million from tax collections, said House Ways and Means Chairman Bruce Bannister. Regionally, only Florida and Tenneessee would have a lower income tax rate — and that's because theirs is zero. Their tax structure doesn't include a state income tax. Both neighboring Georgia and North Carolina already have a flat tax rate, at 5.39% and 4.25% respectively, according to the nonpartisan Tax Foundation. 'That makes us not only more competitive, but also more attractive to new businesses and more affordable for families to call South Carolina home,' Bannister, R-Greenville, told reporters. The plan does that by adjusting the tax structure, which will result in some people paying more. Currently, South Carolina is among just five states basing tax collections on 'federal taxable income,' meaning the state taxes only what's left after home mortgage interest, property taxes and various other deductions and personal exemptions are subtracted. Essentially, tax filers start their state tax forms with less income to tax, compared to their neighbors across the state border. The plan untethers South Carolina from the federal tax code and switches to taxing adjusted gross income as most states do. That makes South Carolina's taxes truly comparable. How many taxpayers will pay more versus less is not yet known. The state's fiscal experts are working on projections that likely won't be ready until next week. Republicans call it flat and fair. 'Everybody has to pay something — a little something, at least — to be a part of this great state of South Carolina,' Gov. Henry McMaster said. As of calendar year 2023, 44% of tax filers paid zero in state income taxes, while 10% of filers accounted for 65% of the total income taxes paid, according to the last analysis by the state Revenue and Fiscal Affairs Office. That was largely unchanged from before the 2022 law, which helps explain why it received unanimous approval in the Legislature. Rather than cutting taxes mainly for top earners, as the bill's filers initially proposed, the compromise spread tax breaks to lower income levels — which received high praise from Democrat lawmakers as helping the 'working man.' In its first year, the law dropped South Carolinians' average effective tax rate from 3.4% to 2.7%. With the annual income tax reductions since, the effective rate is almost certainly something less in 2025, though how much less is unknown. An updated number may be released with Fiscal Affairs' analysis of the GOP plan. The changes won't simply shift to lower-income filers. The plan provides a new personal exemption meant to help them, offering a full tax break for people drawing just $6,000 and providing relief for people making up to $40,000. The bill does not change any of the state's existing tax benefits or deductions, including those benefiting military families, senior citizens and parents of young children, Bannister said. It's also designed to start putting more money in South Carolinians' paychecks starting in 2026, by requiring the state Department of Revenue to adjust employers' withholding tables to reflect the new tax structure. That means employers will withhold less in taxes, resulting in higher take-home pay. But it should also result in smaller refunds at spring tax time, Bannister said. Democrats are withholding judgment on the new plan until they see the details. Rep. Roger Kirby, the House's assistant minority leader, said he's not opposed to a tax cut, but legislators need to be sure they don't hurt low-income residents and government services in the process. 'Those were always the unanswered questions' on various study committees over the years looking at reducing taxes, said the Lake City Democrat said. Moving to a single tax rate could reduce the sticker shock for people looking to move to South Carolina and businesses wanting to start shop here, since the top tax rate made it appear so much higher than surrounding states, Kirby said. 'Hopefully, it'll be something good everybody can support, and it'll be good for economic development,' he said. The state Chamber of Commerce, which has pushed for a tax overhaul for years, wasted no time in applauding the proposal. 'South Carolina's incredible economic growth has been achieved despite a clear competitive disadvantage — an archaic and confusing individual income tax rate that discourages investment and stymies talent attraction,' said the chamber's CEO, Mike Brenan. 'This historic tax cut proposal would fix that — immediately vaulting South Carolina ahead of other states that have recently cut tax rates and creating a more competitive economy that will attract even more jobs with even higher wages.' The proposal calls to continue reducing taxes until the flat rate gets to 2.49%. Doing that all at once would cost a whopping $2.7 billion, Bannister said. Instead, the plan calls for reducing revenues by $200 million for every year tax revenue projections rise by 5%. That might take half a dozen years of annual reductions, as the population and industry investments continue to grow. The proposal sets no time frame, Bannister said. 'Four years, five years, six years from now, if that's how long it takes us to get to that 2.49 number — it will just be different, because our economy would be different and the budget would be different,' Bannister said. McMaster called on legislators to get the bill to his desk this year. About 50 Republicans joined GOP leaders from both chambers at Tuesday's announcement, signaling widespread support. The bill will mostly likely get finalized with the state budget package for the fiscal year starting July 1. 'We'll make time,' Senate Finance Chairman Harvey Peeler, R-Gaffney, told reporters.
