COLUMBIA, S.C. (WCSC/AP) – Gov. Henry McMaster told state lawmakers South Carolina’s state government is in the strongest fiscal condition ever and that the state has opportunity “like we have never seen before.”
McMaster delivered his fifth State of the State address to state senators and representatives at the Statehouse Wednesday.
“We have the largest budget surplus, the largest rainy day reserve account balance, and the lowest debt in our history,” he said.
He said as of November 2021, there were 18,000 more workers in the state employed than in February 2020. The state’s gross domestic product increased 10% during the COVID-19 pandemic and has increased 26% over the last five years, he said.
“During the COVID-19 pandemic, many states shuttered their economies, closed businesses, and enacted draconian restrictions, many of which continue to this very day. We took a better approach. We never closed. Through our reasonable steps of limited, measured, and temporary actions, we have been able to combat the virus without crippling our economy,” he said. “Also, by being careful and conservative and freezing new spending in 2020, not only did we avoid cutting services, raising taxes, or borrowing money, we saw our State’s booming economy create a large amount of new surplus revenues in 2021.”
McMaster: State faces challenge of ‘dangerous, irresponsible, unconstitutional behavior’ of feds
McMaster criticized President Joe Biden’s administration, calling the past year “alarming and unprecedented.”
“On his first day in office, President Biden canceled the immigration policies established by President Trump, and halted construction of the border wall, thus surrendering our own nation’s sovereignty and security to millions of illegal and undocumented immigrants, including human traffickers, drug dealers, and foreign agents, who have freely crossed our southern border,” McMaster said. “The resulting lawlessness and chaos required us to deploy troops from the South Carolina National Guard to defend the border, and to protect our state and others from the danger posed by the cartels and traffickers.”
He said the Biden administration took aim at South Carolina’s “pro-life and pro-family policies.
“They challenged my policy of preventing taxpayer dollars from going to abortion providers like Planned Parenthood, which sued to overturn our Heartbeat Law and to stop the State from protecting the most precious of rights – the right to life,” he said. “They attacked South Carolina’s faith-based foster care providers like Miracle Hill, despite a recent U.S. Supreme Court ruling that upheld the right of faith-based foster-care providers who choose to work with parents holding similar religious beliefs. They even canceled South Carolina’s requirement that Medicaid recipients must work, volunteer, or attend school to receive benefits. While at the same time, the Biden administration was paying people on unemployment to stay at home rather than return to work or get a job.”
He said Biden “and his liberal allies” sued to force the state to adopt universal mask mandates in public schools, despite clear constitutional authority to the contrary.
Finally, he said, the Biden administration “illegally attempted to impose vaccine mandates on private citizens all across the country, in clear violation of constitutional authority and of common sense.”
“Thankfully, President Biden has been about as successful in defending his mandates in court as he has been selling them to the American people,” McMaster said. “Despite this barrage of unwarranted challenges, we will continue to grow and prosper. We will not let the federal government violate the Constitution and dictate decisions that rightly belong to South Carolina and her people. We will fight to defend the Rule of Law, preserve our State’s sovereignty, and reject efforts to destroy individual liberty, wherever they occur.”
McMaster recognized Attorney General Alan Wilson, whom he called “a determined warrior.”
McMaster: Surplus, federal funds provide ‘once-in-a-lifetime opportunity’
The governor said South Carolina’s booming economy, with almost $3 billion in surplus revenue, along with the $2.4 billion in ARPA funds presents “a once-in-a-lifetime opportunity.”
“We know that the competition for jobs and investment is fierce, both nationally and globally. We cannot be complacent. We must act,” he said. “We must make big, bold, and transformative investments in the areas of education, infrastructure, workforce, and economic development to strengthen the foundations of our prosperity for generations to come.”
McMaster said his executive budget places $500 million into the state’s “rainy day” reserve fund for the second year in a row. By saving this money instead of spending it, something he said served the state well last year, the size of the reserves would double, leaving the state prepared for “any future economic uncertainties, should they arise.”
He again called for state lawmakers to reduce the state’s income tax by one percent over five years.
“Despite our great successes, South Carolina’s marginal income tax rate of 7% is the highest in the southeast and the 12th highest in the nation,” he said.
He cited income tax rates across the southeast. While Tennessee and Florida have no state income tax, he said Louisiana has a 6% rate, Arkansas’s income tax rate stands at 5.9% and Missouri taxes at 5.4%. Georgia and Virginia, he said, have income tax rates even lower at 5.75%, and North Carolina has a 5.25% rate. The Tarheel State, he said, just passed legislation to cut its tax rate again. Alabama, Mississippi and Kentucky each have income tax rates at 5%, he said.
“This makes South Carolina less competitive for new jobs and capital investment,” he said. “A tax cut has the impact of a pay raise; and more money in the pockets of our people to spend is a catalyst for even more economic growth and prosperity. Ladies and gentlemen, we have almost one billion dollars in surplus recurring revenue available for this state budget. Our State’s booming economy will likely create more. Our work will not be done this session unless I am able to sign an income tax cut into law.”
He also called on lawmakers to re-examine issues, practices and laws he said make the state less competitive and make it difficult for our businesses and entrepreneurs to invest, grow and thrive.
“One issue in need of re-examination is in the area of civil litigation known as joint and several liability. Business owners should not be penalized for the actions of others, simply because they have money,” he said. “Nor should they be absolved of their actions. We can find a balance that provides the opportunity for justice without damaging our economy.”
State’s success causing growing pains for infrastructure
The governor said no infrastructure is more in need of “big, bold, and transformative one-time investments” than South Carolina’s roads, bridges, highways and interstates.
“Our booming economy and rapid population growth have outpaced the State’s ability to keep up with improvements to our transportation infrastructure. Utilizing a combination of $660 million in federal ARPA funds and $600 million from surplus revenue, I am recommending that the General Assembly provide no less than $1.26 billion to the Department of Transportation to accelerate construction, expansion, or improvements to our State-owned roads, bridges, highways, and interstates.,” he said. “This one-time investment of over one billion dollars will allow the DOT to accelerate the start and completion of some of their highest priority projects. Projects such as the widening of Interstate 26 to six lanes between Columbia and Charleston, the widening of Interstate 95 to six lanes in the Lowcountry, lane widening on Interstate 85 in the Upstate and the long-awaited start of construction on I-73 from the Pee Dee to the Grand Strand.”
He said the state’s Department of Transportation will have sufficient state matching funds to apply for an additional $250 million in federal funds each year for the next five years, which would allow the DOT to speed the completion of local and regional projects to relieve traffic congestion, repair or replace more than 400 bridges and enhance repaving and resurfacing on local and secondary roads.
McMaster urges education reform for 2022
The governor touted an Education Oversight Committee report that 4K enrollment increased 47% or by 4,600 children, adding there are 50 new private, nonprofit, and faith-based providers who have opened 66 new 4K classrooms. In public schools, there are 120 new 4K classrooms.
He said a recent survey by First Steps found two out of three parents said enrolling their child in a First Steps 4K allowed them to go to work or continue their own education.
“We know that parents in South Carolina must be confident that their children are safe and secure when they are at school. The presence of a certified law enforcement school resource officer in every school is more important now, than ever,” he said. “We must also recognize that a mental health crisis exists in South Carolina, especially among our young people who have weathered two years of disruptions, virtual instruction, isolation, and constant changes to normal routines. This crisis is here, right now. Students must have access to professional mental health counseling and services.”
McMaster said since 60 percent of children in the state are served by Medicaid, he directed Health and Human Services Director Robbie Kerr to initiate an immediate review of our State’s behavioral health funding and delivery system.
“Time is of the essence. We must do better,” he said.
“When the Education Finance Act of 1977 was signed into law, there were only three line-item appropriations for K-12 education. Today, there are approximately 29. This 44-year-old funding system is archaic, confusing, and inadequate.,” he said.
He called for changes to the way the state funds K-12 education, saying it must be simplified, transparent and accountable.
“State funds must follow students directly to the classroom. School districts must be held accountable for how they spend the taxpayer’s money – and graded on their results,” he said.
McMaster said he wants funds for K-12 education to be appropriated in a manner that is “simple and easy to understand.”
“School districts will receive the funds necessary to support an average ratio of 11.7 students per teacher, with an average salary of $66,524 including benefits,” he said. “In exchange, every school district must disclose how they spend every dollar, be it local, state, or federal. This information must be published online by the state Department of Education, so parents and taxpayers will know where their money is being spent.”
He said his executive budget also raises the minimum salary for a starting teacher from $36,000 to $38,000. He also said charter schools have seen explosive growth in both enrollment and demand.
“The South Carolina Public Charter School District and the Charter Institute at Erskine are expected to authorize a total of 67 charter schools for the school year starting in August,” he said. “My Executive Budget provides an additional $60.2 million to meet the growing demand of parents seeking new educational opportunities and in-person classroom instruction for their children.”
But he said he is proposing $20 million be used to create education savings accounts.
“Although some may say otherwise, we know that parents know what’s best for their children,” McMaster said. “They know the type of education environment and instruction that works best for their child’s unique needs.”
He called for more parental involvement in the classroom, criticizing U.S. Attorney General Merrick Garland for instructing the FBI to begin investigating parents who attend school board meetings.
“In the annals of dangerous ideas, that one takes the cake,” he said. “So did assertions that ‘parents have no business telling schools what they should teach.’ Parents have every right to express their concerns to a teacher, to a principal, or to members of the school board. In fact, it is their duty.”
He said a group of concerned parents contacted his office recently about a book containing age-inappropriate, sexually explicit, obscene, and pornographic images, which was available in their school’s library.
“If school personnel had performed even a cursory review in this instance, it would have revealed that the book contains sexually explicit and pornographic depictions, which easily meet or exceed the statutory definition of obscenity,” he said. “For explicit materials of this nature to have been introduced or allowed into a South Carolina school, without oversight, without public review, and without parents’ prior knowledge, is highly troubling and destroys public confidence in our schools.”
Parents must know what their children are hearing, seeing, and learning in the classroom, he said.
McMaster: State must deal with ‘historic labor crisis’
McMaster said the ongoing labor crisis has affected every sector of the state’s economy.
“With one hundred thousand open jobs, there is a paycheck waiting for anyone willing to work,” he said.
He praised SC Future Makers, a first-in-the-nation program connecting students with internships, apprenticeships and career opportunities across the state. He said the program has reached almost every high school and is available to all 16 state technical colleges and is now engaging the state’s military community.
He asked lawmakers to invest $124 million to expand the Workforce Scholarships for the Future program, which allows residents to earn an industry credential or an associate degree in high-demand careers in manufacturing, healthcare, computer science, information technology, transportation, logistics or construction.
“Access and affordability to higher education are essential to ensuring that our state has the trained and skilled workforce to compete for jobs and investment in the future,” he said. “That means higher education – our colleges, universities, and technical colleges – must be accessible and affordable for the sons and daughters of South Carolina.”
He said his executive budget again freezes college tuition for in-state students, “in exchange for an indexed appropriation based on the number of in-state students enrolled at each public institution.” Funds for deferred maintenance are also distributed pro-rata and based on a school’s in-state enrollment, he said.
He also challenged lawmakers to invest an additional $4.3 million in lottery proceeds to enhance scholarships for college transition programs offered at Clemson, Coastal Carolina, the College of Charleston, the University of South Carolina and Winthrop University.
From law enforcement to broadband, McMaster lays out additional funding priorities
The governor proposed $500 million in federal funds to transform water, sewer and stormwater systems in the state’s poorest counties to upgrade or replace deficient rural water or wastewater systems and to incentivize large systems to connect with smaller and faltering systems.
He proposed $400 million in federal funds for the State’s Broadband Infrastructure Program being overseen by the Office of Regulatory Staff. He said from health care to education, more people are working or learning from home, which makes quality internet service “a necessity for the prosperity of our state and people.”
To work to protect the state’s coastline, he asked the General Assembly to provide the state Office of Resilience with $300 million in federal funds. A portion of these funds, he said. should be used to complete the construction of homes in the Pee Dee destroyed by Hurricane Florence, as well as completing green stormwater mitigation projects throughout the state. He also wants the Office of Resilience to identify pristine coastline properties and tracts where public access may be in jeopardy of being lost, or destroyed by flooding, erosion, or storm damage. He also said funds should be used for a complete remediation and removal of hazardous materials from the hull of the USS Yorktown, including hundreds of thousands of gallons of old petroleum, polluted ballast waters, and polychlorinated biphenyl compounds, or PCBs, that were not removed from the ship’s 428 vessel tanks and compartments by the Navy.
He challenged lawmakers to allocate $300 million to complete construction of the new Navy Base Intermodal Container Transfer Facility “on time and debt free.”
He urged that the state must maintain a robust law enforcement presence and properly “fund the police,” proposing $31 million for law enforcement, public safety and first response agencies for recruitment and retention pay raises; as well as $21 million for grants to local law enforcement agencies for additional body cameras and bulletproof vests.
For career military veterans and South Carolina law enforcement officers, firefighters and peace officers, he called on the General Assembly to eliminate all state income taxes on retirement pay, noting that decision-makers at the Department of Defense take note of such actions or inactions when they make decisions on base closures, realignment and new missions for the nation’s military.
“Our state’s military installations are at risk, like all others,” McMaster said. “It is past time for the General Assembly to act on this issue. Before it is too late.”
He called for re-examination of state employee compensation, saying “across-the-board pay raises for state employees are less effective than those based on performance, merit, success or longevity.” He proposed taking $46.6 million designed to provide a two-percent across-the-board raise and use that funding for merit-based raises instead.
He also wants state lawmakers to create an Election Integrity and Compliance Audit Program at the State Election Commission.
“The right to vote is the single most important right protected by the United States Constitution,” he said. The program would set teams of auditors, working for the State, conducting regular and routine examinations to confirm the integrity of elections conducted on the state and local level.
He called for ethics reform as well, in the form of an expansion of resources and authority of the State Ethics Commission and the Office of the Inspector General.
“The public should know if their tax dollars are being spent properly by the recipients, like a school district or a non-profit organization,” McMaster said. “The public should also know who is getting paid to influence decisions made by county, municipal, or school board officials. These paid advocates should be required to register with the State Ethics Commission as lobbyists, just like those who are paid to lobby the legislature. What’s good for the Statehouse – is good for the Courthouse.”
He ended his speech with this message to lawmakers:
Let us seize this moment by thinking big, by being bold, confident and by making transformative investments. In this way, I believe we will set our State on a course that will provide the opportunity for prosperity, success, and happiness for generations of South Carolinians. Let us continue working together. Let’s keep winning. I believe in South Carolina and I believe in America. And I believe in each and every one of you. The best is yet to come.
Copyright 2022 WCSC. The Associated Press contributed to this report. All rights reserved.