FY 2025-2026 Budget Brief: Executive Budget Version
Governor Henry McMaster released his FY 2025-2026 Executive Budget on January 13, 2025. The total budget is approximately $42.6B:
$14B State recurring and nonrecurring funds (general funds);
$14.58B Other recurring and nonrecurring funds (other state funds such motor fuel excise tax);
$14B Federal funds (formula and grant funds).
Below is a review of big ticket items, but there is plenty more material to review and discuss before the budget bill hits the House floor the week of March 10. 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 Executive 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 2025-2026 Summary Control Document
Big Ticket Items
1. Individual Income Tax Relief. The Executive Budget accelerates the scheduled individual income tax relief required by the Comprehensive Tax Cut Act of 2022 from 6.2% to 6.0%, which has an estimated state revenue impact of $193.5M. Governor McMaster stated at his press conference that he would support additional tax relief if the General Assembly can agree on tax legislation.
2. K-12 education. Governor McMaster made good on his promise to advocate for a minimum teacher salary of at $50,000 by 2026, and the Executive Budget allocates $200M to the State Aid to Classrooms budget line ($180M State recurring funds and $20M in Education Improvement Act (EIA) recurring funds. The current state minimum salary schedule requires a starting salary of $47,000 and every cell in the schedule received the same increase, approximately $3,000. Instructional materials were allocated $90M in new nonrecurring State and EIA funds. The Executive Budget allocates $35M in nonrecurring EIA funds for the purchase or lease of school buses. Governor McMaster fulfilled another promise of funding a school resource officer (SRO) in every public school with $29.4M in State recurring and nonrecurring funds to hire and equip 177 new SROs.
3. Disaster Relief. The Executive Budget proposes $240M in State nonrecurring funds for three disaster relief programs: $150M to the South Carolina Emergency Management Division, $50M to the South Carolina Department of Transportation (SCDOT), and $40M to the South Carolina Office of Resilience (SCOR). The $150M appropriation represents the state cost share with the federal government of Hurricane Helene, as well as the creation of a grant program for entities that were not eligible or denied federal assistance, but have documented damages. The $50M to SCDOT is to offset costs from Hurricane Helene, including emergency bridge replacements. The $40M to SCOR replenishes disaster relief accounts and a grant program.
4. Health and social services. The South Carolina Department of Health & Human Services (DHHS) was allocated $79M State recurring funds for Medicaid maintenance-of-effort, increase provider rates including behavioral health and substance abuse providers, and reduce the waitlist by 1,000 patients at the Department of Disabilities and Special Needs (DDSN) in their home and community-based services (HCBS) waiver program. Governor McMaster made a big splash with a $100M allocation to DHHS for a world-class neurological care and rehabilitation hospital to be built in Columbia in partnership with the University of South Carolina School of Medicine.
5. Student tuition and scholarships. The Executive Budget once again allocates State recurring funds to hold in-state tuition flat for a sixth consecutive year; $28.9M is allocated to the state’s public 4-year institutions, MUSC, and 2-year USC branch campuses . However, no funds were allocated to the state’s sixteen technical colleges for tuition mitigation. Over $523M in lottery funds were allocated to various post-secondary scholarship programs, including the SC Workforce Industry Needs Scholarship (SC WINS) program with $95M, which has been a top priority for Governor McMaster. Lastly, the Executive Budget allocated $2M for a study on the future of the higher education system, which was one of Governor McMaster’s highest priorities last year but was not funded in the final budget.
6. Department of Corrections. One agency that received significant financial support was the South Carolina Department of Corrections (SCDC). The Executive Budget recommends $24.2M in State recurring funds and $24M in State nonrecurring funds to the agency to hire more correctional officers, medical personnel, and pay for salary step increases. Governor McMaster supported the agency’s request for Phase 2 of its cellphone interdiction program with a $10M State nonrecurring appropriation.
7. Bridges. Governor McMaster once again proposed a large appropriation to repair and replace the state’s bridges with $100M in State nonrecurring funds.
8. State employees. The Executive Budget recommends $112.2M for the state health plan annualization and holds employee premiums flat for the 13th consecutive year. Governor McMaster proposed a budget proviso requiring a cost containment study of the state health, pharmacy, vision, and dental plans to analyze options for reducing the annualization in future years.
9. Large IT Modernization Projects. Several agencies submitted information technology (IT) modernization projects for consideration and Governor McMaster supported several large ones: $45M to the Judicial Department for its case management system; $20M to the South Carolina Department of Motor Vehicles (DMV) to modernize and replace its Phoenix system; $10M to the Department of Social Services (DSS) for its economic services system (ESSAM); and $5M to the Department of Juvenile Justice (DJJ) for IT modernization.
10. Policy Provisos. Governor McMaster proposed several new provisos that will draw some significant discussion during the budget process:
Permit consumers to use debit cards to purchase lottery tickets; South Carolina is one of three states that doesn’t allow this payment method.
Require the South Carolina Technical College System to adopt a dual enrollment policy and provide $5M in funding for this program.
Require the Office of Regulatory Staff to study the economic and technical feasibility of burying power lines in the state.
Prohibit public institutions of higher education from requiring undergraduate domestic students to have health insurance as a condition of applying or enrolling in the institution.
