FY 2025-2026 Budget Brief: Senate Finance Version
The Senate Finance Committee (SFC) adopted its version of the FY 2025-2026 General Appropriations Bill and Capital Reserve Fund Bill on April 9, 2025. The top-line figures are as follows:
$40.3B total funds;
$14.4B State recurring and nonrecurring funds (general funds, including Capital Reserve Fund of $369.7M);
$13.4B Other recurring and nonrecurring funds (other state funds such as lottery revenues);
$12.5B Federal funds (formula and grant funds).
For comparison, below are the top-line figures for the House passed budget
$43.2B total funds;
$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 Senate floor the week of April 21.
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. To read our review of the FY 2025-2026 House Ways & Means version of the budget, which later became the House version, click here -it’s less than a 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.
Thanks for reading; we welcome your feedback and commentary! This post is 1,404 words or less than a 6 minute read.
Resources
FY 2025-2026 SFC Summary Control Document
FY 2025-2026 House Summary Control Document
FY 2025-2026 Summary Control Document (Executive Budget)
Big Ticket Items
1. Individual Income Tax Relief. The SFC Budget provides $290.5M in additional individual income tax relief by accelerating the scheduled tax cuts required by the Comprehensive Tax Cut Act of 2022 from 6.3% to 6.0%. The tax rate in the current tax year is already 6.2% but it was not a permanent reduction, so without action the rate could increase, which accounts for approximately $97M of the $290.5M in the SFC Budget.
The House budget cut income taxes by $211.6M, ensuring a top rate of no more than 6.2% but didn’t specify an actual income tax rate. The Executive Budget proposed cutting the income tax rate from 6.3% to 6.0%.
Under any scenario, income taxes will be cut by the General Assembly this year. The only remaining question is “how much” and it seems very likely the rate will be cut to 6.0%.
2. Disaster Relief. The SFC Budget appropriates $247M in State nonrecurring funds to four disaster relief programs: $198.7M to the South Carolina Emergency Management Division (EMD), $25M to the South Carolina Department of Transportation (DOT), $13.3M to the Department of Natural Resources (DNR), and $10M to the South Carolina Office of Resilience (SCOR).
The HWM Budget appropriates $322.7M in State nonrecurring funds for four disaster relief programs: $222.4M to 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 House and SFC Budgets 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 SFC Budget appropriates $46.7M for undergraduate tuition mitigation and supports the Executive Budget position that in-state tuition is frozen for a sixth consecutive year. The Tech College System would receive $10M for "instructional and workforce development programs” but would not be bound by the tuition mitigation proviso. USC Law School received $800,000 for tuition mitigation, and MUSC received $8.5M for tuition mitigation and the MUSC Dental School received $4.8M for tuition mitigation.
The House Budget appropriates $48.2M to the public 4-year institutions and 2-year USC branch campuses for undergraduate tuition mitigation. The House 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.
Additionally, the House budget allocated $8M recurring funds to the Tech College System for "instructional and workforce development programs," but this is not considered tuition mitigation and the Tech College System is no longer bound by the tuition mitigation proviso. USC Law School received $5.8M for tuition mitigation, and MUSC received $4.8M for tuition mitigation and the MUSC Dental School received $5M for tuition mitigation.
Over $539M in lottery funds were appropriated to various post-secondary scholarship programs in the SFC Budget, including the SC Workforce Industry Needs Scholarship (SC WINS) program with $90M, which has been a top priority for Governor McMaster. This matches the House Budget with only a few minor differences in scholarship programs. Lastly, the House Budget agreed with Governor McMaster’s proposal and appropriated $2M for a study on the future of the higher education system; the SFC Budget did not fund this request.
4. State employees. The SFC budget supports Governor McMaster’s position by holding state health plan premiums flat and appropriating $106M to cover those costs. Like the House, the SFC 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.
The House 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.
5. Bridges. The SFC Budget appropriates $100M in State nonrecurring funds to DOT for the state’s bridge repair and replacement programs, matching the Executive Budget. The House Budget appropriated $200M in State nonrecurring funds.
6. K-12 education. The House Budget and SFC Budget both increased State Aid to Classrooms by $112M recurring general and EIA funds, increasing the minimum starting teacher salary by $1,500 to $48,500. The SFC Budget allocates $30M in nonrecurring EIA funds for the purchase or lease of school buses, less than the $35M allocated in the House Budget and proposed in the Executive Budget.
There is a large difference between the House and SFC Budgets regarding instructional materials. The SFC budget appropriates $72.2M in nonrecurring funds plus $3.25M in State recurring funds for a total of $75.5M. However, the House Budget appropriates only $24.1M nonrecurring EIA funds for instructional materials.
Another significant difference is funding for school resource officers (SROs). The SFC Budget appropriates $29.4M in State recurring and nonrecurring funds to hire and equip 177 new SROs. This supports the recommendation of Governor McMaster. The House Budget appropriates no new funding for SROs.
7. Health and social services. The South Carolina Department of Health & Human Services (DHHS) was appropriated $90M State recurring funds in the SFC Budget 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. The House Budget appropriated $81M State recurring funds for the same programs.
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. Both the SFC and House Budgets increased that to $150M State nonrecurring funds.
The Department of Social Services (DSS) received $17.4M State recurring funds in the SFC Budget for child welfare programs, foster care provider rates, and child care development funds; the House budget appropriated $13.3M.
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 SFC Budget appropriates nearly $11.2M in State recurring funds and $47.6M in State nonrecurring funds. $27.7M in nonrecurring funds were appropriated for high hazard dams, which the House Budget supported with $25M. Also DNR would implement a disaster relief grant program with $13.3M in State nonrecurring funds appropriated in the SFC Budget; the House appropriated $12.3M for the same program.
For SCDC, the both the SFC and House Budgets recommend $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 SFC Budget was favorable to PRT: $8.5M in State recurring funds compared to $7.7M in the House Budget. But the SFC Budget appropriated only $21.5M in State nonrecurring funds, compared to House Budget with $42.1M. Both budgets appropriated additional funds for marketing programs, agency property development, film incentives, and beach renourishment.
10. Large IT Modernization Projects. Several agencies received funding in the SFC Budget for information technology (IT) modernization projects:
$25M to the Judicial Department for its case management system, the same amount as the House;
$18.5M to DSS for its economic services system (ESSAM), the same amount as the House;
$7.8M to the Department of Employment and Workforce (DEW) for its statewide education & workforce development portal, the House appropriated $13.1M;
$5M to the Department of Public Health (DPH) for IT modernization, the House appropriated $10M.
