FY 2024-2025 Budget Brief: Conference Committee Report

The conference committee for H.5100 (FY25 budget) and H.5101 (capital reserve bill) have reached agreement on both bills. The state budget is slightly more than $41.8B and the capital reserve fund is $390.1M for a grand total of $42.2B. By fund type (rounded to the tenth):

• $14.3B State recurring and nonrecurring funds (general funds);

• $13.6B Other recurring and nonrecurring funds (other state funds such gasoline excise tax);

• $13.6B Federal funds (formula and grant funds);

• $560.6M lottery funds (for college scholarship programs);

• $390.1M capital reserve funds.

Below is a review of big ticket items. When dollar figures are discussed, these are new, incremental dollars and not the total appropriation for a budget line item. Example: in the base budget a line item has an appropriation of $10M and in the budget there is $1M appropriation in new recurring funds. That line item has a new total appropriation of $11M ($10M base + $1M from the summary control document).

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Resources

FY 2024-2025 General Appropriations Bill Versions

House Ways & Means Committee Budget Summary Documents

Senate Finance Committee Budget Summary Documents

Big Ticket Items

1. Income tax relief. The budget accelerates the scheduled state income tax cut by an additional 0.1%, which has a revenue reduction of nearly $100M. The top income tax rate will decrease to 6.2% instead of 6.3%.

2. K-12 education. The budget appropriates $170.28M in State recurring funds and $29.72M in Education Improvement Act (EIA) recurring funds for a total of $200M recurring funds for the State Aid to Classrooms budget line. The committee increased the teacher state minimum salary schedule with a starting salary of $47,000 and increased the experience factor from 23 years to 28 years. Instructional materials will receive $35M in one-time funds from a lottery surplus, $8.9M EIA recurring funds, and up to $5M in EIA one-time surplus funds. School bus purchase/lease funding is $28.29M in one-time lottery funds plus any unclaimed lottery prize money in excess of $20M. State Superintendent Ellen Weaver had her requests for $30M for the new Education Scholarship Trust Fund program and $10M for the Palmetto Math Project fully funded, in addition to her request to increase teacher pay.

3. Infrastructure. The budget includes Governor Henry McMaster’s call for an investment in bridges with a $100M bridge modernization program and a $100M bridge acceleration program, both funded with State nonrecurring funds. The budget appropriates additional infrastructure investments: $200M in State nonrecurring funds to the County Transportation Funds program and $117.4M in State nonrecurring funds for a rural road safety program. The State Ports Authority would receive $55M from the capital reserve fund bill for land acquisition in North Charleston.

4. State employees. The $107.5M state health plan annualization is fully funded. State employee salary increases are appropriated $61.59M using the following formula: $1,125 per FTE earning $50,000 or less, and 2.25% increase in base salary for FTEs earning more than $50,000. This does not include any salary increases appropriated to specific agencies.

5. Student tuition and scholarships. The budget appropriates over $540M in lottery funds to various post-secondary scholarship programs, including the SC Workforce Industry Needs Scholarship (SC WINS) program with $94M, which is one of Gov. McMaster’s top priorities. Tuition mitigation across higher education institutions, but not the technical colleges, is appropriated $67M. The technical college system is appropriated $8M for “base funding for local colleges,” which is a variant of tuition mitigation. This will be the fifth consecutive year there is an in-state tuition freeze in exchange for tuition mitigation funding.

The new veterinary school at Clemson University will receive $125M from State nonrecurring funds and the capital reserve fund bill. Additionally, an $8M recurring funding line is established for the vet school. USC will receive $100M for its new medical school facility.

Lastly, the budget did not appropriate any funds for a study on the future of the higher education system, which is one of Governor McMaster’s highest priorities. The House budget had recommended $3M in State in nonrecurring funds.

6. Health and social services. The Department of Health & Human Services is appropriated $103.1M for Medicaid maintenance-of-effort requirements and to increase provider rates. The budget funds some additional budget requests: $2M for nursing salary increases at the Department of Public Health and $10.8M for more patient capacity at the Department of Mental Health. The Department of Social Services is appropriated $8.8M in State nonrecurring funds for Phase 2 of a new SNAP benefits system, $5M in recurring funds for child welfare placement stability, and $2.5M in recurring funds for working families child care scholarships.

7. Department of Veterans’ Affairs. One of the newest state agencies received a significant investment of $76.4M for its veterans nursing homes, including funds for a new veterans nursing home in Lexington County. Additionally, $5M is appropriated to Stone Pavilion, a veterans nursing home currently operated by the Department of Mental Health that will transfer to the Department of Veterans’ Affairs on July 1, 2025. The budget appropriates funds to the military enhancement fund ($2M State recurring, $8M State nonrecurring) and the Veteran Trust Fund ($1M State nonrecurring).

8. SC Nexus. The budget appropriates $5M State recurring, $10M State nonrecurring, and $5M in the capital reserve funds to support the SC Nexus initiative. Requested by Gov. McMaster, this consortium housed at the South Carolina Department of Commerce has the goal of increasing the availability, resiliency, and security of advanced energy technology. In October 2023, SC Nexus was named one of 31 Regional Technology and Innovation Hubs by the United States Department of Commerce.

9. Criminal Justice. The budget appropriates $26M in new State recurring and nonrecurring funds to the Department Corrections, including nearly $11M to fund the agency’s top priority: a cell phone interdiction initiative to stop organized crime occurring within prisons. The budget appropriates $29.1M in new State recurring and nonrecurring funds to the Department of Juvenile Justice (DJJ), including $15M for the agency’s master plan implementation. The State Law Enforcement Division (SLED) is appropriated $17.4M in new State recurring and nonrecurring funds, including $566k for animal fighting task force initiative that is one of Gov. McMaster’s highest priorities.

10. Land Conservation. The budget appropriates $21.5M in new State recurring, nonrecurring, and capital reserve fund dollars to the Department of Natural Resources (DNR), including $10M State nonrecurring dollars for habitat protection and land conservation. When combined with the $16M in State nonrecurring funds and $2M in State recurring funds at the Conservation Bank, $28M is appropriated for land conservation efforts.