(The Center Square) – An income tax cut, a new funding system for K-12 education, teacher pay increases and a rainy day fund increase were all part of South Carolina Gov. Henry McMaster's proposed $10 billion fiscal year 2022-23 general appropriations budget.
McMaster’s proposal, which he unveiled Monday, would double the state’s rainy day fund by adding $500 million to the fund, leaving the state with 10% of the state’s general fund in reserves.
Recommendations for $1.5 billion in nonrecurring spending were included in the budget proposal. What wasn’t included was $2.4 billion in federal American Rescue Plan Act (ARPA) spending recommendations.
“If we take advantage of this once-in-a-lifetime opportunity by making big, bold and transformative investments in the areas of education, infrastructure and workforce and economic developments, South Carolina will prosper for generations to come,” McMaster said.
McMaster proposed to reduce South Carolina’s 7% personal income tax rate to a 6% rate over a five-year span, subtracting two-tenths of a percentage point each year over the five years, starting with an immediate $177 million cut.
The governor noted South Carolina had the highest income tax rate in the Southeast and 12th-highest in the country.
“This is unacceptable as it makes South Carolina less competitive for new jobs and capital investments, especially with our neighboring states of Georgia and North Carolina, both of which have lowered their income tax well below South Carolina’s 7% rate and they are talking about going even lower,” he said.
McMaster also proposed simplifying K-12 school funding, which currently comes from 29 separate appropriations.
“It must be a system where the state funds follow students directly to the classroom,” McMaster said. “The system must also clearly hold districts accountable for both how the State funds are spent and the results of the taxpayers’ investment.”
McMaster proposed creating a state dashboard that clearly shows how tax dollars are spent by school districts. The proposal also increases the state’s minimum starting teacher salary by $2,000 to $38,000. McMaster said that number was $30,113 just five years ago.
The $3.6 billion in state appropriations for school districts would amount to funding for a ratio of 11.7 students per teacher and an average teacher salary and fringe benefits compensation total of $66,524. There would also be a three-part $2,000 bus driver bonus paid out next school year throughout the state to compensate for a driver shortage and paid in August, December and at the end of the school year.
Other proposed spending included $24 million to purchase energy efficient buses and $60.2 million in additional funding for the state's expected 67 public charter schools, along with $20 million for education savings account (ESA) funds for working class or lower-income families.
“The 44-year-old funding system is an archaic and a complicated piecemeal system that must be transformed if our state is to meet the educational needs of students,” McMaster said.