COLUMBIA, S.C. — The South Carolina Senate Finance Committee is getting ready to work on the state budget with a big question to answer — how will it pay for $2 billion in proposed income tax cuts and rebates?
The committee will work this week, starting Tuesday, on the state's nearly $14 billion spending plan for next fiscal year. Members are expected to include much of what was in the House's spending plan, such as raises for state employees and many law enforcement officers and a lot of money to expand interstates, repair bridges and repave roads.
But the House's plan only had $600 million set aside for an income tax cut to bring the state’s top rate from 7% to 6.5% and collapse all other rates to 3%.
Senate Finance Chairman Harvey Peeler is proposing a $2 billion cut and the Senate has already unanimously agreed. Half would go toward cutting the top income rate from 7% to 5.7%. The other $1 billion would provide rebates of up to $100 to anyone who files an income tax return, regardless of whether they ended up paying state income tax.
The extra money will have to be found somewhere to pay for the Senate's plan. The South Carolina General Assembly is required to pass a balanced budget.
Even Democrats have been behind the tax cut talk as a combination of a booming population growth and the economy, federal stimulus money, and savings in case the COVID-19 economic downturn was catastrophic gave lawmakers an extra $4.5 billion to spend in the 2022-23 budget. About $3 billion is in one-time money, while the rest is in taxes and fees the state can expect to collect each year.
Chances are neither the House nor the Senate will agree to the other chamber’s plan, so a small group of lawmakers will negotiate the differences as they also work out the state’s $14 billion budget next month.