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Columbia Business Monthly

Gov. McMaster Announces Fiscal Year 2022-2023 Executive Budget

Jan 10, 2022 03:02PM ● By David Dykes

Gov. Henry McMaster on Jan. 10, 2022, announced the FY 2022-2023 Executive Budget and provided his recommendations on how funds from the American Rescue Plan Act (ARPA) should be invested by the General Assembly. 

The budget will look to cut income taxes, reform education funding, and double the size of South Carolina's rainy-day reserve fund. 

"The $2.4 billion in ARPA funds along with the almost $3 billion in surplus revenue generated by South Carolina’s booming economy - presents us with a once in a lifetime opportunity.  An opportunity that we cannot afford to squander," McMaster wrote in a letter to the General Assembly. "If we take advantage of this once in a lifetime opportunity – by making big, bold, and transformative investments in the areas of education, infrastructure, workforce, and economic development, South Carolina will prosper for generations to come." 

For a copy of the governor's executive budget, along with his letter to the General Assembly and a detailed explanation of each allocation, click here. For a copy of a presentation outlining the governor's top budget and ARPA priorities, click here

Executive Budget Highlights, according to the Governor’s Office:

$500 million for rainy day reserves

The Executive Budget places $500 million in South Carolina’s “rainy-day” reserve fund. This will double the size of the state’s rainy-day reserve fund. Since Gov. McMaster has taken office, the state’s debt has been cut in half and South Carolina now has the lowest debt load in the history of the state. With the additional $500 million added to South Carolina’s rainy-day reserve fund, the state will now have 10 percent of the state’s general fund budget put away in reserves.

Gov. McMaster recommends the General Assembly ensure each year that South Carolina maintains a balance of no less than 10 percent of the state’s general fund budget in the rainy-day fund.

$500 million for SCDOT (non-recurring) and $100 million for SCDOT (recurring)

"In 2017, SCDOT launched a 10-year plan to upgrade and improve South Carolina’s road and bridge network. This plan is critical to supporting the state’s continued and future growth in commerce and population growth. The plan is backed by a combination of state and federal funds and is focused on repaving thousands of miles of highways in the state, replacing hundreds of bridges, widening of critical segments of our interstates and improving many rural roads to drive down our state’s rural fatality rate. This Executive Budget invests heavily in this plan recommending $500 million in FY 2022-23 funds to expedite road and bridge projects along with a recurring investment of $100 million in state funds that will leverage significant federal infrastructure investment and increase SCDOT’s federal revenues by approximately $250 million per year over the next five years. Together, this unprecedented investment in the state’s physical infrastructure will help all South Carolinians by combating congestion in urban areas and addressing economic development and mobility needs of rural areas."

$300 million for construction of the NBIF at the States Ports Authority

"The FY 2022-23 Executive Budget also includes $300 million for the continued construction of the NBIF at the State Ports Authority. This targeted investment will facilitate the transfer of international cargo containers between ships/trucks and rail, allowing for the movement of goods and commerce over rail within the state and throughout the United States, stimulating economic development within the region and providing connections to key regional infrastructure. In addition, demand and capacity issues have created the need for a second shipping berth at the new terminal. Adding this berth will allow the South Carolina Ports Authority (SCPA) to recruit and attract additional ocean carrier services and major clients that wish to call on Charleston or locate their business in South Carolina. Recently, the SCPA sought approval from the General Assembly for a $550 million Economic Development Bond to complete construction of the NBIF, a second shipping berth and to conduct barge operations between the Wando and Leatherman Terminals. In 2021, the General Assembly appropriated $200 million in the state budget for the NBIF, rather than approving the bond bill."

$183 million for higher education deferred maintenance

$177 million for an income tax cut

"This year marks the fourth year Governor McMaster’s Executive Budget includes a proposed 1 percent rate reduction over five years for all personal income tax brackets, starting with an immediate $177 million cut, paid for and certified in the FY 2022-23 Executive Budget."

$120 million for K-12 education funding reform 

"The FY 2022-23 Executive Budget begins the process by which the funding system can be transformed by implementing key elements of the funding model that the South Carolina Revenue and Fiscal Affairs Office provided to the Governor, the President of the Senate, and the Speaker of the House in 2019. 

First, the FY 2022-23 Executive Budget identifies four EIA line-item appropriations to be allocated to districts through a single funding formula as defined by State Aid to Classrooms and Proviso 1.3. These line items directly support classroom teachers and students who already receive a weighting for academic assistance through State Aid to Classrooms. The Executive Budget also increases the total state investment in State Aid to Classrooms by $120 million. While this new formula redefines the State’s funding strategy and reallocates resources, the additional funding ensures that each district will receive either the amount proscribed by the new formula, or its funding allocation in FY 2021-22, whichever is greater."

$100 million for instructional materials 

$60 million for charter schools 

$46 million for a merit raise to state employees 

$31 million for law enforcement raises

$24 million for electric buses

"The Executive Budget also allocates $24 million for the purchase of energy efficient school buses and will include a proviso instructing the South Carolina Department of Education to purchase Energy Efficient School Buses with low to zero-emissions."

$20 million for nursing shortage

"National and state data identify a key factor contributing to the shortage of nurses: inadequate funds to hire and pay faculty who are preparing our nurses needed now and in the future. Due to competition in the market, nursing faculty can earn more working in healthcare practice than in teaching, especially doctoral prepared nurses and nurses with specialty training like advanced practice nurses, nursing informatics, and nurse scientists. Faculty are also less likely to enroll in doctoral programs. Non-competitive salaries for nurse educators lead to shortages at all levels. Shortages of faculty result in fewer nursing classes, fewer supervised clinical rotations in field work, and fewer qualified students earning their degrees.

“The Executive Budget recommends $20 million in lottery revenues to begin addressing the nursing shortage. These one-time funds will be used at our public colleges and universities, including technical colleges, for the following initiatives. First, $10 million would be used to supplement the salaries of existing full-time faculty and the hourly rates of part-time faculty, or the salaries of clinical nursing faculty. The funds will be allocated to each public college or university, including technical colleges, based on the number of students enrolled in nursing programs. The remaining funds will provide tuition reimbursement or scholarships for students enrolled in graduate-level nurse educator programs, Doctor of Nursing Practice programs, or PhD programs. The scholarship recipients must agree to assume a faculty role in a state nursing program after graduation and provide tuition reimbursement or scholarships for current master’s level, full-time nurse faculty to enroll in doctoral programs. Current doctoral students who are not yet faculty and desire to be faculty members must agree to teach for a minimum of two years for every one year funded. Authority should be given to carry forward unexpended funds over time."

$20 million for education savings accounts

"The Governor is directing $20 million in lottery dollars for the creation of education savings accounts, pending a change in the law by the General Assembly. All children should have access to a quality education, and parents should be allowed to make the best educational choices for their children."

$20 million for body camera and vest grants

"The safety of South Carolina’s law enforcement officers, as well as maintaining levels of trust and transparency between law enforcement and the communities they serve, is of paramount importance. To support both priorities, this Executive Budget includes investments in officer body-worn cameras and protective vests for officers. This investment, which includes $20 million for body camera and vest grants and $1.1 million in recurring state funds for body cameras, will support a wholesale migration to new equipment and expedite implementation of body-worn cameras. Purchasing this equipment and these services through state contract will address technological issues, provide warranty/maintenance and lower annual licensing and storage fees by using a shared services approach that will result in lower cost to the state." 

$20 million for a tuition freeze        

"The FY 2022-23 Executive Budget allocates $20.1 million in recurring funds for tuition mitigation. The funds are based on a 2.7 percent Higher Education Price Index (HEPI) and are allocated based on the number of in-state students at each public institution. In exchange for receiving these funds, each institution must agree that there is no in-state tuition or mandatory fee increase for the 2022-2023 academic year."

$12 million for bus drivers

"The pandemic has exacerbated the school bus driver shortage in our country and state. The FY 2022-23 Executive Budget includes $12 million in non-recurring funds to provide salary supplements to school bus drivers. The funds will be awarded in three separate payments, not to exceed $2,000 in total. The funds will be awarded on August 15, 2022, December 15, 2022, and at the end of the school year based on continuous employment. The Executive Budget also allocates $24 million for the purchase of energy efficient school buses and will include a proviso instructing the South Carolina Department of Education to purchase Energy Efficient School Buses with low to zero-emissions."

$10.7 million for law enforcement pension and $9.6 million military pension

"For the fifth year in a row, this budget also includes a full retirement income exemption for retired military veterans and first responders. This exemption for those who have served their fellow citizens will be effective immediately upon ratification and extend into perpetuity and would include retired state and federal law enforcement, firefighters and peace officers. This will reward those who have served South Carolina’s communities and add another recruitment and retention tool for our law enforcement agencies."

$3 million for election commission

"The FY 2022-23 Executive Budget includes $3 million in recurring funds for the State Election Commission’s (SEC) Election Integrity and Compliance Audit Program. This funding will support new auditor positions at the SEC and help advance its strategy for compliance with state and federal laws and agency policies by ensuring it has the resources needed to assure county boards of voter registration and election are uniformly abiding by federal and state statutes, as well as SEC regulations and directives."

$1.7 million for ethics commission

"In another effort to bolster accountability and transparency among the state’s elected officials, the governor’s Executive Budget also doubles the State Ethics Commission’s existing budget by investing an additional $1.7 million annually. This additional funding will allow the Commission to hire additional investigators, thereby increasing its investigative capabilities and furthering its mission of enforcing the state’s laws on campaign finance, financial disclosure, and lobbying activity."

$1.5 million for the Inspector General  

"South Carolina needs stronger and expanded investigative authority to improve its ability to investigate how taxpayer funds are spent and influenced. Governor McMaster’s Executive Budget doubles the State Inspector General’s (SIG) budget allowing the agency to hire additional inspectors. Governor McMaster believes the SIG should be given statutory authority to follow state taxpayer dollars wherever they go in order to bolster accountability among any agency, local government, school board, or other organization that receives these funds. He supports legislation introduced in the General Assembly to expand the scope and authority of the SIG, including providing it with subpoena power. Providing an additional $1.5 million in recurring funds for the SIG and further empowering it to investigate and address allegations of fraud, waste, abuse, mismanagement, misconduct, and wrongdoing will ensure it can follow taxpayer dollars wherever they go."

$200 thousand for sheriff ethics training

"This Executive Budget directs $200,000 to the Law Enforcement Training Council to develop and implement ethics training for all 46 sheriffs across the state. The Executive Budget will also include a proviso that will call for public reporting of those who participated and those who did not. Requiring participation in this coordinated training program will further instill a level of trust between law enforcement and the communities they protect and serve." 

ARPA Recommendations

$500 million for rural water and sewer infrastructure 

"A $500 million investment in the revitalization of South Carolina’s water, wastewater, and stormwater infrastructure. Modernizing the state’s water and sewer infrastructure through this proposal will support public health and economic development by helping the state maintain its competitive advantage for growth and investment. It will also support better future efficiency and stewardship of taxpayer funds through promoting the regionalization and coordination between larger and small water and sewer systems."

$400 million for broadband access and expansion 

"I ask that the General Assembly appropriate up to $400 million for additional broadband expansion, $300 million from ARPA Act funds and $100 million from the federal Infrastructure Investment and Jobs Act (IIJA) - and that it be deployed in a manner consistent with the State’s Broadband Infrastructure Program."

$360 million to complete I-26 widening from Columbia to Charleston

"A $360 million investment to expedite the existing plans to widen key portions of Interstate 26 between Charleston and Columbia. This targeted investment will accelerate this high priority project on one of the state’s most traveled interstates by at least six years. Accelerating the timeline of this critical project will support the demand created by the continued population and economic growth, particularly growth related to record volume at South Carolina Ports, which has already increased traffic on this portion of Interstate 26 to 22 million vehicles per year."

$300 million for the Office of Resilience for environmental mitigation and remediation 

"To protect South Carolina’s abundant natural resources, I am proposing that the General Assembly provide the state Office of Resilience with $300 million in ARPA funds.  A portion of these funds will be used to offset COVID-19 related increases in the cost of construction (30 percent) in the Hurricane Florence Recovery Program and to complete green infrastructure projects throughout the state.

I am requesting that the General Assembly authorize the Office of Resilience to expend a portion of these $300 million in ARPA for the purpose of determining present day costs associated with a complete remediation of these hazardous materials from the USS Yorktown, and to execute a contract for their complete removal and remediation, subject to approval from the Joint Bond Review Committee, and the State Fiscal Affairs Authority."

$300 million for I-73 

"A $300 million investment to begin construction on Interstate 73 in South Carolina. This investment will provide an important boost to start work on a project that will serve as a catalyst for local and federal government partners to finalize their own investment plans and provide additional growth opportunities in the state."

$250 million for unemployment trust fund and small business assistance 

"I am requesting that the General Assembly set aside $250 million in ARPA funds to replenish the Unemployment Insurance Trust Fund in case of severe economic downturn in the future."

$124 million for Workforce Scholarships for the Future 

"To address the historic labor crisis affecting key sectors of South Carolina’s economy, I am requesting that the General Assembly invest $124 million in American Rescue Plan Act (ARPA) funds to expand Workforce Scholarships for the Future, a program that allows residents to earn an industry credential or associate degree in high-demand careers like manufacturing, healthcare, computer science, information technology, transportation, logistics, or construction."

$100 million for a new DHEC laboratory 

"According to DHEC, the average useful life of a public health laboratory is about 40 years. The current structure has exceeded the expected useful life and it is one of the oldest in the country. Based on the increase in testing demand due to the COVID-19 pandemic, the agency is concerned that State’s core health and environmental laboratory building is no longer able to meet the technological advances of modern-day laboratory practices and high-tech testing systems.

DHEC is requesting $100 million in ARPA funds be appropriated by the General Assembly for the construction of a new public health laboratory and anticipates a new facility will have a useful lifespan of 40 years into the future."

$87 million to harden state agency IT infrastructure. 

$50 million for agribusiness marketing and initiatives. 

$50 million for tourism recovery initiatives. 

$30 million for motorsports marketing and infrastructure. 

$10 million for guidehouse grant management.