COLUMBIA — The $15 billion spending plan legislators passed Tuesday, six weeks after the fiscal year began, included no legislator-requested earmarks but did increase tax breaks for older homeowners.
Budget negotiators in the House and Senate pointed fingers at each other over a process that lasted months longer than usual. Since July 1, the state has operated under a stopgap plan that kept spending at the same levels as last year.
Tuesday’s votes sent the spending plan to Gov. Henry McMaster’s desk. The governor has until Monday to issue his vetoes. The budget will take effect with his veto message.
Members of both chambers said they believe what ultimately passed is a good spending plan.
It incorporates a $309 million reduction in state income taxes as approved through a law signed in March.
It increases teachers’ starting pay from $48,500 to $50,500, upping the entire salary schedule by $2,000. That doesn’t mean every teacher will get a $2,000 raise. Many districts pay above the state minimums by supplementing state aid with local property taxes. In districts already paying more than the new minimums, salary decisions are up to local school boards.
Also included are 2% raises for state employees, extra funding to keep operating the state’s grocery assistance program and money to settle a years-long lawsuit over a barrier island called Captain Sams Spit.
The final spending plan also includes a reduction in property taxes for homeowners 65 and older. That piece was a priority for senators, who passed a bill with a larger tax break earlier this year, but expanding the Homestead Exemption as part of the state budget proved to be a sticking point for the House.
As approved, homeowners 65 and older will be exempted from paying property taxes on $75,000 of their home’s value. That’s up from the $50,000 exemption that’s been state law for half a century. The budget designates an additional $81 million to counties to cover the expansion.
Another part of the compromise plan, which would have created a panel of legislators to review earmarks and decide what to fund, fell apart Tuesday. The two chambers blamed each other for the idea disintegrating ahead of voting.
The panel would have had until the end of September to decide how to spend about $380 million on projects legislators requested for their districts, as well as how much to put toward the state’s cost overruns at the Scout Motors site in Blythewood. That would have meant significant cuts to the proposed projects, which exceeded a combined $430 million.
But Republicans in the House said they didn’t want to come back ahead of the November election to vote on a second spending package, said House Ways and Means Chairman Bruce Bannister.
“We’re better to just punt it to next year if we couldn’t reach some kind of resolution on the projects,” the Greenville Republican told reporters.
Senators were frustrated with the change Tuesday morning, since the earmark-review committee was part of the compromise they agreed to last month. Earmarks refer to state spending sponsored by legislators rather than requested by the agency the money flows through.
“I thought we had an understanding,” said Sen. Tom Davis, a Beaufort Republican on the negotiating committee.
Pointing fingers
Bannister said senators weren’t “negotiating in good faith.”
The House proposed more than $300 million for earmarks — what legislators prefer to call community investments — compared to the Senate’s roughly $130 million.
Bannister said the House spent more because the chamber has more members — 124 compared to 46 — and called the Senate’s requested cuts arbitrary. Senators, who represent more people in bigger districts, contend that doesn’t mean the House’s spending should be more than double.
“Their senators had their feelings hurt, or their egos cringed, as a result of the things that we did for our constituents being more than what they did for their constituents,” Bannister said on the floor.
Senators called the House’s negotiators uncooperative, saying they refused to reduce the amount of spending despite senators being flexible.
After initially asking for the House to match the Senate’s proposal, senators asked for a reduction to $175 million, or something around that number, said Senate Minority Leader Brad Hutto.
“We were flexible in that regard,” the Orangeburg Democrat said. “They weren’t moving at all.”
What’s lost
Legislators in both chambers lamented what people will lose without earmarks in the budget.
The money goes toward local government projects and nonprofits. That includes small, rural areas without the tax base necessary to pay for necessities, such as improvements to water and sewer systems, legislators said.
Senators weren’t opposed to legislator-directed spending entirely. A lot of the money went toward worthy causes, Hutto said.
Rather, the problem was that senators felt the House spent too much without enough oversight to ensure the money was going toward good causes, he said.
“These are real needs of real South Carolinians,” Hutto said. “We want to take care of as many of those as we can.”
Major projects included help on Columbia’s Congaree riverfront development and improvements to a historic swing bridge in Horry County, each of which were slated for $10 million.
Bannister asked for funding for several projects the Department of Commerce wanted but didn’t ask for in its official budget request, he said, including $7.5 million to prepare a site for a proposed undersea location for fiber optic cables in Myrtle Beach.
Davis had $3 million in the Senate’s spending plan for a transportation system connecting some of the islands off the coast of Beaufort and Jasper counties.
“I’m not saying earmarks are inherently bad,” the Beaufort Republican said. “Hell, I had an earmark in there that I wanted.”
Future earmarks
Whether future budgets will involve similar disagreements is unclear.
Bannister said he felt the relationship between the two chambers was strained, bringing into question what sort of spending might fly next year. Senators said they want more oversight in choosing projects to fund and awarding money, with more time for senators to review the House’s spending.
The process of allocating earmarks is much more transparent than it used to be. For years, legislators snuck spending into agency budgets. In recent years, McMaster vowed to veto any spending without at least some documentation.
The earmark debacle left nearly $380 million unspent in this budget, which senators said they could spend in a separate bill next session, which begins in January. Bannister said he didn’t expect legislators to spend it this fiscal year.
“The money hasn’t gone anywhere,” Hutto said.
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