McMaster says SC should look into privatizing mental health counseling, cut taxes in 2022

S.C. Gov. Henry McMaster painted a sunny picture of a state recovering from the COVID-19 pandemic and flush with cash in his fifth State of the State address Wednesday.

McMaster told a joint session of the state Legislature that he will ask them to pass additional spending and tax cuts to take advantage of the state’s strong fiscal position.

”Ladies and gentlemen, South Carolina is booming,” McMaster said. “People from all over the world are visiting and falling in love with our state. Employers are creating new jobs, entrepreneurs are opening new businesses and companies are deciding to relocate here. Our business and family-friendly environment has produced historic gains in new jobs, capital investment and population growth.”

The Legislature will have about $6 billion in additional money to spend this year due to a stronger-than-expected economy, federal COVID-19 relief and the Savannah River Site settlement. So McMaster has proposed enacting an ambitious spending plan.

McMaster told lawmakers the state enters 2022 in a resilient mood after “never closed” in the face of COVID-19. While McMaster’s office issued some pandemic-related restrictions earlier in 2020, he never called for a statewide face mask mandate and moved to block local governments and school districts from issuing similar requirements. The governor also cheered a recent U.S. Supreme Court ruling that blocked the Biden administration from enforcing a vaccine mandate on large employers.

”Thankfully, President Biden has been about as successful in defending his mandates in court as he has been selling them to the American people,” McMaster said.

The newest policy announcement to come out of the governor’s speech was an executive order to state Health and Human Services Director Robbie Kerr to evaluate how mental health counseling services are delivered to South Carolina schools and explore private sector alternatives.

The state Department of Mental Health provides counselors to schools through Medicaid, but staffing availability and billing issues have hampered the service in recent years, even as mental health-related emergencies among adolescents jumped by 31% in 2020, McMaster said.

“I also suggest to members of the General Assembly that the time has come to evaluate whether the state should privatize behavioral health services currently provided by the Department of Mental Health,” McMaster said.

The governor’s executive budget lays out a $10.8 million increase in the Department of Mental Health’s budget.

McMaster also recognized two Medal of Honor recipients in the House gallery Wednesday.

Sgt. Maj. Thomas “Patrick” Payne, an Army Ranger who grew up in Batesburg-Leesville and Lugoff, was part of a daring rescue operation in 2015 that freed dozens of Iraqi hostages being held by the Islamic State. The governor also recognized the widow and daughter of Sgt. Christopher Celiz, another Ranger and Citadel graduate posthumously awarded the Medal of Honor after his 2018 combat death in Afghanistan, where he put his own life in jeopardy to ensure a medical evacuation got away safely from the Taliban.

McMaster’s 2022 priorities spelled out in proposed budget

Last week, McMaster unveiled his executive budget, included his recommendations for spending federal funds from the American Rescue Plan passed in response to the COVID-19 pandemic.

McMaster wants to move $500 million into the state’s rainy day fund, an amount that will double the size of South Carolina’s reserve fund to an equivalent of 10% of the state’s general fund. The governor recommended the Legislature mandate the 10% figure into law to ensure South Carolina can withstand future shocks, including what McMaster called in his budget proposal the “the Biden administration’s reckless fiscal policy and decisions.”

The governor also called for an additional $500 million for road and bridge improvements in the state’s 2023 budget, and a new annual $100 million investment that will, he said in his budget recommendation, “leverage significant federal infrastructure investment and increase SCDOT’s federal revenues by approximately $250 million per year over the next five years.”

Those improvements would include “projects such as the widening of Interstate 26 to six lanes between Columbia and Charleston, the widening of Interstate 95 to six lanes in the Lowcountry, lane widening on Interstate 85 in the Upstate and the long-awaited start of construction on I-73 from the Pee Dee to the Grand Strand,” McMaster said.

The governor’s budget also includes $300 million for expanding capacity at the State Ports Authority, $120 million in additional state aid to classrooms and $24 million for energy-efficient electric school buses.

And he wants to offer taxpayers some relief with a 1% reduction in the state income tax over the next five years, including with an immediate $177 million tax cut. He pointed out that South Carolina’s 7% marginal rate is the highest income tax in the Southeast.

“This makes South Carolina less competitive for new jobs and capital investment,” McMaster said.

State Sen. Sean Bennett, R-Dorchester, who has lobbied for the state to tackle and modernize taxes, said he supports lowering income taxes but more work needs to be done.

“Does it solve the problem? No,” he said. “It doesn’t solve he problem unless we deal with income taxes at the same time we’re dealing with sales taxes and property taxes, those are the primary pillars of revenue right for the state.”

Another top Republican priority for 2022 — including that of the governor’s — will be to expand school choice through the creation of education savings accounts, “which by the way, have been available to parents in ‘red’ and ‘blue’ states for years,” McMaster said.

Senate Minority Leader Brad Hutto sits on a Senate committee looking into the school choice legislation — a proposal he called a distraction to South Carolina’s real education problems.

“We’re talking about plans, for instance like in Tennessee where it affects 700 children, in North Carolina where it affects 500 children. We’ve got a limited amount of time to spend on debating true education needs in South Carolina, and that I see as a distraction,” the Orangeburg Democrat said. “... We’ve got to address the fact that our children, many of them, did not receive the learning they should have over the last year-and-a-half, due to nobody’s fault but the pandemic’s. We’ve got to address that. And anytime we ... don’t spend time debating all of the children in South Carolina who are in public schools is a distraction.”

To provide for a shortage of nurses amid the ongoing pandemic, the governor wants lawmakers to boost funding for nurse training and instruction at state colleges.

Under the governor’s plan, $10 million in lottery revenue will be redirected to give a pay boost to nursing instructors, and another $10 million will go to tuition reimbursement or scholarships for students enrolled in graduate-level nurse educator programs, Doctor of Nursing Practice programs, or PhD programs.

Another $46 million will go toward merit-based pay raises for state employees.

“Across-the-board pay raises for state employees are less effective than those based on performance, merit, success, or longevity,” McMaster said. “Agency directors should be empowered to incentivize their personnel.”

This story will be updated.

Senior politics editor Maayan Schechter contributed to this report.