FY 2023-2024 Budget Brief: Senate Finance Committee Version

After weeks of subcommittee hearings, the Senate Finance Committee (SFC) met on April 3 and 4 to deliberate the allocations and provisos for the FY 2023-2024 General Appropriations Act and the FY 2023-2024 Capital Reserve Fund. The summary control documents will be posted on the SFC webpage. View this primer for how to read a summary control document, and keep in mind the figures below are increases to the recurring base appropriations for existing line items, not total funding. Also, there are some State nonrecurring funds discussed below.

Today is a review of big ticket items; there is plenty more material to review and discuss before the budget bill hits the Senate floor the week of April 18. In five minutes - 1,124 words - be caught up on the SFC deliberations.

Have a question about this version of the budget? Need some help understanding it? Click the Contact link in the upper right hand corner and schedule a consultation - no charge for the first conversation. Click here to read about the House Ways & Means Committee budget, as well as Part 1 and Part 2 about interesting initiatives in the House budget, which the SFC version will receive the same review in a series of blog posts soon.

Caveats

It is very common for the House and Senate budget versions to have significant differences. A few caveats when comparing the SFC budget to the House budget.

1. The Board of Economic Advisors will not issue its final revenue forecast at its April 5 meeting; instead it will wait until April 15 has passed and issue its final forecast at its May 9 meeting. Any additional recurring and nonrecurring revenue, which most observers expect there will be more revenue, can be appropriated once certified by the BEA. That revenue may help resolve some differences between the chambers.

2. Some budget line items in the SFC version have very low allocations: $1 is common, sometimes $2 or $4 while the House version might allocate millions of dollars for the same line items. This is a way the chambers, and the House will show low figures too when it adopts its second amendment to the budget, “communicate” they are not in agreement on certain budget lines. This has been the protocol for decades.

3. Many of the increases at the agency level in the SFC version are due to earmarked funds for local governments or local nonprofits; they are not agency-level spending. Examining recurring allocations is another method to ascertain differences between budget versions.

4. Half of the Senate membership serves on SFC with the other half serving on Senate Judiciary Committee. There will be many amendments offered on the Senate floor and the Senate rules regarding the budget are far different, and less restrictive, than the House rules regarding the budget. 

Big Ticket Items

1. State employees. Not only was the $121M state health plan annualization funded but the committee allocated $155.6M for state employee pay raises: $2500 per FTE earning less than $50,000 annually and 5% increase in base salary for FTEs earning more than $50,000 annually. In toto, with retirement system contributions, the committee invested over $317M in state employees, which is a larger appropriation than the House budget.

2. K-12 education. The committee allocated $129.6M in State recurring funds and $136.9M in Education Improvement Act (EIA) recurring funds for a total of $266.5M recurring funds for the State Aid to Classrooms budget line (budget lines rolled into this budget line were excluded from these calculations). This matches the House. These funds increase the state minimum salary schedule to $42,500 annually - a $10,000 increase from FY 2019-2020 just four years ago. Also, the committee matched the House and allocated $120M in EIA nonrecurring funds for school district capital projects, such as school building construction and renovation. This funding is in addition to the $100M appropriated in the current fiscal year for school buildings. Lastly, $39M (-$3M compared to House) allocated in EIA nonrecurring dollars for a “literacy instruction program,” which new State Superintendent of Education Ellen Weaver has stated literacy is her top priority.

3. Student tuition and scholarships. The committee allocated $94.7M to the state’s public 4-year and 2-year institutions to freeze in-state tuition for FY 2023-2024, approximately $10.7M more than the House. Gov. McMaster has proposed tuition freezes for the past five years and the General Assembly has agreed with him for the past five years. The SC Workforce Industry Needs Scholarship (SC WINS) program received a large increase of $80M (-$20M from the House); last year the program received $17M. When combined with other state-based scholarships and student aid, a student can effectively attend one of the sixteen technical colleges in South Carolina without paying any tuition and incurring no student debt. Also, each institution received nonrecurring funds or capital reserve funds for capital projects, though there were several differences between the House budget regarding allocations and projects.

4. Human services. Several agencies whose missions are primarily to provide human services (i.e. Medicaid, health care services, social services) were allocated significant increases: the Department of Health & Human Services ($254M, +20.6M compared to House); the Department of Social Services ($38.2M, +$12.6M compared to House); the Department of Mental Health ($27.3M, $6.8M compared to House). The current budget and this future budget make significant investments in mental health services, more so than the past twenty years.

5. The outdoors. If you love the outdoors and natural resources, you’ll be pleased to learn the committee recommended $117.8M (+$64.7M compared to House) to the Department of Parks, Recreation & Tourism and $71.7M (+$20.9M compared to House) to the Department of Natural Resources. The Conservation Bank would receive $25M (+$7M compared to House) in State nonrecurring funds.

6. Law enforcement. The Department of Public Safety was allocated $61.8M (+$9.4M compared to House) in new dollars; $30.4M (-$12.2M compared to House) for the Department of Corrections; $81.1M (+$44.8 compared to House) for the Department of Juvenile Justice; $10.1M (+$1.1M compared to House) for the State Law Enforcement Division (SLED); and $4.8M (-$2.7M compared to House) for the Department of Probation, Parole & Pardon Services. Included in the SLED allocation was funds for the new Center for School Safety and Targeted Violence.

Key Differences

1. Rainy day fund. The SFC met the constitutional requirement for the state’s rainy day fund but it did not allocate any extra funds to it. The House allocated $108.9M in extra funds after amending its budget on the House floor to pay for the incentives used to attract Scout Motor’s first manufacturing facility, creating 4,000 jobs and $2B in capital investment.

2. Infrastructure. The committee allocated $1 to two significant budget line items: bridge replacement at the Department of Transportation and county transportation funds (known as “C” Funds). The House allocated $200M nonrecurring funds for bridge replacement and $250M nonrecurring dollars for “C” Funds. The Division of Aeronautics was allocated $1 by the committee for airport capital projects while the House allocated $50M. Unless the BEA recognizes significantly more nonrecurring revenue, infrastructure funding could be one of the major sticking points between the two chambers during the conference committee.

3. Annualization. The SFC budget allocates $84.7M of nonrecurring revenue to fund recurring appropriations in Part 1A of the budget. This is commonly called an annualization where one-time funds are used to pay for ongoing expenses. Past budgets have included annualizations, but the House budget does not propose such a general fund annualization. If some level of annualization is ultimately included in the FY 2023-2024 General Appropriations Act, that means the FY 2024-2025 budget will have a hole to be filled or recurring funding somewhere in the budget must be reduced. This difference could be another sticking point during the conference committee.

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