SC House will debate a $9.8B spending plan this month. Here’s what’s in it

Teachers, school nurses, law enforcement and state prisons are big winners in the state spending plan House budget writers advanced Thursday.

The annual spending bill, totaling $9.8 billion, adopted by the House Ways and Means Committee Thursday, now heads to the full House for debate.

Lawmakers are working with a limited amount of new recurring projected revenue, just $180 million to spend — down from the $800 million they expected to have before the pandemic — and they also have $956 million of nonrecurring dollars available. However, much of that one-time money is being set aside for the state’s capital reserve fund and a COVID-19 reserve fund to help ease any future stress on the state budget resulting from the pandemic.

The amount of new revenue is smaller than previous years because of how the COVID-19 pandemic has wreaked havoc on the economy and the state’s revenues.

As a protection against the economy slowing again, House budget writers set aside $500 million of the nonrecurring money in a contingency fund to cover shortfalls in the future.

Even though new revenue is projected to be limited for the 2021-22 fiscal year, House budget writers were able to include money to give teachers an annual pay bump based on years of experience and education levels.

The money is coming through an additional $73 million increase to the base student cost, money that school districts can use for teacher salaries, instructional materials and other things related to educating a child.

“This is what we call the pandemic budget, the worst case scenario. So the worst case scenario is teachers are going to still receive their step increase,” said House Ways and Means Chairman Murrell Smith, R-Sumter.

Budget writers also included $5.5 million to ensure every school in the state has a nurse on campus.

“I thought it was important we provide a nurse in every school because of COVID,” said state Rep. Bill Whitmire, R-Oconee. “It does no good if you have a nurse and she’s 10 miles away.”

The House panel did not give all state employees a pay raise in its spending plan, but lawmakers did include $16.2 million for annual pay bumps and pay increases to retain state law enforcement and corrections officers.

Smith said lawmakers could revisit pay raises for other state employees later, if the state’s revenue forecast improves.

“It’s going to be a priority of ours to make sure we compensate them accordingly,” Smith said.

The House budget also includes:

▪ $90 million for the Department of Corrections to make long sought security upgrades to the prisons needed after the Lee Correctional Institution had a deadly riot in 2018.

▪ $318 million for LIFE, HOPE and Palmetto scholarships, $51 million for tuition assistance, $80 million for student needs-based grants, $16 million for workforce scholarships, and $17 million for the S.C. WINS program.

▪ $30 million for broadband expansion in the state aimed at addressing a lack of access to the internet exposed by the pandemic. The money only scratches the surface of the state’s needs to increase access to high speed internet.

“We all know we have a long way to go,” Smith said.

Lawmakers hopeful for revenue boost

The final bellwether for what the state has available to spend is the tax filing season and how much in refunds the state has to pay out.

Even though the economy has performed better than the Board of Economic Advisors has anticipated, the state budget forecasters have yet to adjust their revenue projections. An additional $440 million may be available, according to the BEA.

“We’ve been trying to wait to benchmark this economy, and every one of those benchmarks have exceeded our expectations,” Smith said. ”I hope that we’re going to find that our tax filings are stable, and if they are then I expect there to be a significant revenue increase by the BEA.”

If the BEA adds that amount to its forecasts, budget writers expect to come later in the session to determine how to allocate the additional dollars.

Also not yet determined is how to spend $525 million coming from the federal government in the Savannah River Site settlement probably in April, and possibly an expected windfall of $1.5 billion to $2 billion from the latest COVID-19 relief bill working its way through Congress.

One proposal from the Governor’s Office that did not make it into the House budget was $123 million for small business grants, but that program could still be funded with federal COVID-relief dollars, Smith said.

“I could assure you that when we receive that money that we will look at trying to adopt a program as proposed by the governor,” he said. “We have helped small businesses that have been decimated, absolutely torn to shreds by COVID.”