Rather than using $500 million to provide homeowners a one-time property tax rebate, the House proposal calls for a faster income tax drop, and it is the budget that the South Carolina Senate began considering on Tuesday.
The tax break and other items in South Carolina’s $15.4 billion spending plan for the upcoming budget year will be the subject of a dispute that will likely be resolved over the course of the next month by a group of three senators and three House members, possibly including the leaders of each chamber’s budget committee.
Harvey Peeler, the Republican chairman of the Senate Finance Committee, described the dueling tax breaks as a great problem to have in the budget for the 2024–25 fiscal year, which once again gave lawmakers a sizable amount of extra money to spend.
However, Peeler has made it clear that he believes investing $100 million to lower the state’s average income tax rate from 6.3% to 6.2% is the right decision, pointing out that this decrease lasts forever as opposed to a one-year property tax cut.
The state is currently attempting to lower its top income tax rate from 7% to 6% during a five-year period.
The funds in question originate from an account intended to offer relief from property taxes. Sales tax is deposited into the fund, and the account is well-stocked with cash due to a surge in expenditure both during and after the COVID-19 pandemic.
The money was to be returned as a property tax rebate, according to the House budget. However, county authorities fear that next year’s property tax bills may spike again, infuriating residents.
The Senate plan uses the $500 million for municipal water and sewer system upgrades, road and bridge maintenance, and other projects in addition to $100 million in income tax savings.
The amount of raise that state employees receive is another issue that the budget conference committee will need to decide. Under the Senate measure, state employees earning less than $50,000 would receive an annual raise of $1,375. Employees earning more than that would see a wage increase of 2.75%.
Workers making less than $66,667 would receive a $1,000 boost under the House plan, while those making more would receive a 1.5% raise.
Raising teacher compensation is one issue on which both houses concurred. Each of the two budgets allocated roughly $200 million.
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The minimum pay for a new teacher would rise to $47,000 annually, and all teachers would receive pay increases. A yearly rise for each of the first 28 years of teaching, rather than only the first 23, would also be permitted by the budget.
A $100 million new medical school at the University of South Carolina and a $175 million new veterinary school at Clemson University need to be completed.
To find out where $1.8 billion in a state Treasurer’s Office account originated and was intended to go, senators allocated roughly $5 million for a forensic audit and other assistance.
$12.5 million will be used to modernize electoral systems, and $11.5 million will be used to ensure the integrity of the 2024 election.
“It’s balanced not just in math, but on the needs of the state of South Carolina,” Peeler stated of the Senate budget. “Infrastructure comes first, followed by tax relief and public education.”
