COLUMBIA — Asked about eliminating the state income tax, Lt. Gov. Pam Evette said on the debate stage that she’d start with a “wage freeze,” while Attorney General Alan Wilson said legislators already could have put $20 billion back in taxpayers’ pockets.
Eliminating South Carolina’s income tax has been a theme in the governor’s race, with the entire GOP field promising to make it happen. The tax is expected to generate $6.8 billion in the fiscal year that starts July 1, making up 45% of general fund revenues, according to state economic advisers’ projections in May.
One of the questions in Tuesday night’s debate at Coastal Carolina University put the runoff candidates on the spot for specifics: “What is the exact year you would make the tax rate 0% and which specific parts of government spending would you cut to make up for that lost money?” asked panelist Raphael James with WJBF.
Neither candidate suggested any cuts to services. Wilson came closest to giving a year.
In South Carolina, the governor can’t change state tax law or allocate taxpayers’ money. The governor’s role consists of making annual recommendations on spending and trying to persuade legislators to adopt those suggestions. On the back end of the budgeting process, the governor has veto power to strike spending, though the Legislature can — and usually does — override those strikes.
Here’s a closer look at the candidates’ responses.
Pay freeze
Evette, former CEO of a human resources outsourcing firm, began by pointing out she’s “an accountant by trade.”
After pledging to decrease spending, she said, “first of all, we’re going to put a wage freeze on everybody in Columbia until we can figure out what’s going on.”
She didn’t say whose salaries she wanted frozen. Asked about it later, a campaign spokesman said she was referring only to state legislators and statewide elected officers. She wants them to turn down any raises going forward until they “make sure spending is under control,” said spokesman Matt Goins.
Legislators are set to get an additional $1,500 a month starting in December, as per a state budget clause. While the 2026-27 budget isn’t finalized, the raise is already baked in because it’s in both chambers’ plans. But even if it unexpectedly falls through, a law signed by Gov. Henry McMaster last month guarantees legislators’ pay will rise after the 2028 elections to $47,500 annually. In all, the state would save just under $4.3 million in 2029 if all 170 legislators turn down those raises.
And there is a near-zero chance of that happening.
Under a separate law signed by McMaster in May, the salaries of South Carolina’s governor and lieutenant governor are set to rise in January for the first time in 32½ years.
If Evette’s elected, Goins said, she would turn down any raise approved by the commission that’s tasked with analyzing and resetting salaries for all constitutional officers. At $106,000 annually since 1994, the governor’s salary ranks 46th nationally, ahead of only Nebraska, Oregon, Arizona and Maine.
Beyond pay freezes, Evette called for an audit of all state agencies, “so we can find out where money is siphoning out to that we may not even know today because we’re pushing so much paper around.”
She also said the state needs to invest in technology upgrades, citing decades-old computing systems still in use at the state Department of Motor Vehicles.
“That’s what business owners understand. When you run efficiently, you impact the bottom line,” Evette said.
The effort to replace the DMV’s “ancient” technology is underway, and it’s expensive.
In the budget approved last year, the state drivers’ licensing office was allowed to raise its fees to cover the rest of the much-needed $100 million overhaul. The Legislature provided $26 million toward the project through taxes.
Also underway are technology upgrades in the state’s judicial branch. The Legislature provided $25 million last year. The state budget for the coming fiscal year puts an additional $10 million toward the project. It too is expected to cost $100 million total.
Returning billions to taxpayers
As for the attorney general, Wilson called for capping annual increases in state spending to the rate of population growth plus inflation.
“Had we brought down the raise in the rate of spending to the raise of population growth, we could have returned $20 billion to the people of South Carolina” over the last decade, he said.
Asked later how he arrived at that number, Wilson’s campaign pointed to calculations by Americans for Tax Reform, a Washington-based organization founded by Grover Norquist. According to its website, South Carolina’s current budget is $29 billion in “state funds” alone.
But the 2025-26 state budget allocated $15 billion in state tax collections.
The other $14 billion includes what budget spreadsheets sum up as “other funds,” which, among other things, lumps in tuition charged by public colleges and fees charged by various agencies to fund expenses, such as those DMV fees mentioned above. Courts and state parks, for example, have historically relied heavily on fees for operations. In all, “other funds” tallies more than $13 billion this year.
The difference could also include property tax relief for homeowners, which is subtracted from state revenues before the budgeting process begins.
“The devil is in the details to what counts as spending,” said House Ways and Means Chairman Bruce Bannister.
Amid criticism about state spending and calls for eliminating the income tax, the Greenville Republican has defended the state budget as “responsible governing” in one of the nation’s fastest-growing states. Countering accusations of a bloated government, he says there are 6,000 fewer state employees today than in 2000. And he points to various tax cuts passed in the years since that have collectively returned billions to taxpayers.
That includes a 2022 law that, now that it’s fully phased in, reduces income tax collections by more than $1 billion annually ($1.3 billion this year).
A bill signed by McMaster in March further reduces revenue by $300 million in the coming year and calls for continued incremental cuts to income taxes as the economy grows.
Capping spending at some arbitrary number won’t meet South Carolinians’ needs, Bannister said.
He notes it took years to catch up after deep cuts amid the Great Recession. Adding to needs that went unfunded for years is an influx of new residents, requiring greater investments, particularly in roads, bridges, and water and sewer infrastructure.
“Before saying ‘Y’all can’t spend any more money,’ we have to get our roads fixed,” he said.
Suddenly ending a tax that makes up 45% of the general fund, without firing all state employees, would require replacing the lost revenue with some other tax, such as a big hike in the state’s 6% sales tax, Bannister said.
“But that doesn’t get you elected governor,” he said, referring to candidates’ campaign pledges.
“You cannot end the income tax in one day,” Bannister said. “You have to do it over a period of time, because the economy has to be able to absorb it so that you continue to fund other core functions of government.”
Responding to the debate question, Wilson gave a range of six to 10 years for when he believes the state income tax could be eliminated.
But further complicating the ability to reduce revenues are the state’s rising costs to maintain services.
“It’s not as easy as saying we’ll just reduce (income tax) until it falls off,” Bannister said.
For example, rising health care costs requires about $100 million additional in the coming budget to cover the state’s share of Medicaid costs just to keep paying doctors and providing services at current levels.
The budget also includes an additional $34 million to cover the state’s share of administrative expenses in the Supplemental Nutrition Assistance Program, commonly known as food stamps.
Starting in October, states must pay 75% of the cost to distribute the aid, up from 50%, as required under the massive federal tax package signed by President Donald Trump last July 4.
The state’s costs could balloon in future budgets.
Starting in October 2027, states will have to cover a portion of the grocery aid if their error rate tops 6%. How much depends on their record for correctly distributing payments.
In 2024, South Carolina’s error rate was 9.25%, according to data released last summer. That’s better than the 22.6% for 2023, which state officials called an anomaly. But it would still require South Carolina to contribute 10% of the costs. Last fiscal year, that would’ve been $136 million.
Editor Seanna Adcox contributed to this report.
SC Daily Gazette is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. SC Daily Gazette maintains editorial independence. Contact Editor Seanna Adcox for questions: info@scdailygazette.com.
