FY 2025-2026 Budget Brief: House Ways & Means Version
The House Ways & Means Committee adopted its version of the FY 2025-2026 General Appropriations Bill and Capital Reserve Fund Bill on February 19, 2025. The total budget is approximately $43.2B:
$14.6B State recurring and nonrecurring funds (general funds);
$14.6B 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 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).
To read our review of FY 2025-2026 Executive Budget released by Governor Henry McMaster on January 13, 2025, click here - it’s less than 4 minute read.
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. Read our primer on summary control documents - it is less than a 5 minute read.
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Resources
FY 2025-2026 HWM Summary Control Document
FY 2025-2026 Summary Control Document
Big Ticket Items
1. Individual Income Tax Relief. The HWM Budget provides additional individual income tax relief but doesn’t commit to a specific proposal. One possible pathway is accelerating the scheduled tax cuts 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 and was proposed by Gov. McMaster in his Executive Budget. However, during the committee debate it was stated that individual income tax relief was a priority.
2. Disaster Relief. The HWM Budget appropriates $322.7M in State nonrecurring funds to four disaster relief programs: $222.4M to the South Carolina Emergency Management Division (EMD), $50M to the South Carolina Department of Transportation (DOT), $38M to the South Carolina Office of Resilience (SCOR), and $12.3M to the Department of Natural Resources (DNR). The Executive Budget proposed $240M to EMD, DOT, and SCOR.
3. Student tuition and scholarships. One of the most significant differences between the Executive Budget and HWM Budget is tuition mitigation for higher education institutions. The Executive Budget allocated 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.
The HWM Budget appropriates $53.2M to the public 4-year institutions and 2-year USC branch campuses, and $8M recurring funds to the Tech College System for "instructional and workforce development programs" that the system will disburse for a total of $61.2M. Additionally the USC Law School received $5.8M for law school tuition mitigation and the MUSC Dental School received $5M for tuition mitigation, but both of those are graduate programs.
The HWM Budget tuition mitigation proviso will permit, but not require, institutions to increase tuition paid by first-year students beginning with the Fall 2025 cohort. Governor McMaster issued a statement on social media stating his opposition to increasing in-state tuition.
Over $538M in lottery funds were appropriated to various post-secondary scholarship programs in the HWM Budget, including the SC Workforce Industry Needs Scholarship (SC WINS) program with $90M, which has been a top priority for Governor McMaster. Lastly, the HWM Budget agreed with Governor McMaster’s proposal and appropriated $2M for a study on the future of the higher education system.
4. State employees. The HWM Budget, for the first time in 13 years, would require a premium increase paid by state employees for the state health plan. It appropriated $89.3M to the Public Employee Benefit Authority (PEBA) for increased costs of the state health plan, which would be paired with a $36.76 per subscribe per month premium increase. The Executive Budget recommended $112.2M for the state health plan annualization and holds employee premiums flat for the 13th consecutive year.
However, the HWM Budget includes an across-the-board state employee pay increase equal to the minimum salary in new state pay bands or 2%, whichever is greater. This proposal has a cost of $66.5M in State recurring funds. Governor McMaster has preferred merit pay increases appropriated at the agency level to give them flexibility in deciding how to distribute new compensation dollars.
5. Bridges. The HWM Budget appropriates $200M in State nonrecurring funds to DOT for the state’s bridge repair and replacement programs; Governor McMaster proposed $100M so it is highly likely another large infrastructure investment is forthcoming.
6. K-12 education. The HWM Budget increased State Aid to Classrooms by $112M recurring general and EIA funds, increasing the minimum starting teacher salary by $1,500 to $48,500. However, this is less than what Governor McMaster proposed, which was a minimum teacher salary of $50,000. The Executive Budget allocated $200M to the State Aid to Classrooms budget line ($180M State recurring funds and $20M in Education Improvement Act (EIA) recurring funds. The HWM Budget allocates $35M in nonrecurring EIA funds for the purchase or lease of school buses, matching the Executive Budget. However, the HWM Budget appropriates only $24.1M nonrecurring EIA funds for instructional materials; $90M in new nonrecurring State and EIA funds was in the Executive Budget. Finally, the HWM Budget appropriates no new funding for school resource officers (SROs); Governor McMaster proposed $29.4M in State recurring and nonrecurring funds to hire and equip 177 new SROs.
7. Health and social services. The South Carolina Department of Health & Human Services (DHHS) was appropriated $81M State recurring funds for Medicaid maintenance-of-effort, increase provider rates including behavioral health and substance abuse providers, and reduce the patient waitlist 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 and the HWM Budget increased that to $150M.
8. Law enforcement agencies. Two law enforcement agencies that received significant financial support were DNR and the South Carolina Department of Corrections (SCDC).
For DNR, the HWM Budget appropriates nearly $8.5M in State recurring funds, $38.3M in State nonrecurring funds, and $5M in Capital Reserve funds. A combined $25M in nonrecurring funds were appropriated for high hazard dams, which Governor McMaster had supported with $10M in his Executive Budget. Also DNR would implement a disaster relief grant program with $12.3M in State nonrecurring funds appropriated.
For SCDC, the HWM Budget recommends $16.9M in State recurring funds and $7.5M in State nonrecurring funds to the agency to hire more correctional officers, medical personnel, pay for salary step increases, and implement the next phase of its cellphone interdiction program.
9. Department of Parks, Recreation and Tourism (PRT). The HWM Budget was very favorable to PRT: $7.7M in State recurring funds and $42.1M in State nonrecurring funds, compared to Governor McMaster’s proposal of $5.1M State recurring and $19.7M State nonrecurring. The HWM Budget appropriated additional funds for marketing programs and agency property development, but did not specifically include funds for beach renourishment, which Governor McMaster had recommended $5M State nonrecurring funds.
10. Large IT Modernization Projects. Several agencies submitted information technology (IT) modernization projects for consideration and the HWM Budget supported several large ones: $25M to the Judicial Department for its case management system; $18.5M to the Department of Social Services (DSS) for its economic services system (ESSAM); $13.1M to the Department of Employment and Workforce (DEW) for its statewide education & workforce development portal; and $10M to the Department of Public Health (DPH) for IT modernization.
