October 1, 2022

The Nerve

Where Government Gets Exposed

Most of $4.6 billion surplus to be spent under lawmakers’ plans

By RICK BRUNDRETT

If state lawmakers decided to refund taxpayers the expected $4.6 billion surplus for the fiscal year that starts July 1, it would work out to roughly $900 for every man, woman and child in South Carolina.

So far, though, lawmakers have floated smaller tax-relief proposals with the estimated $1.5 billion in new recurring revenue and $3.1 billion in nonrecurring funds for fiscal 2022-23, as forecasted by the state Revenue and Fiscal Affairs Office.

For example, under a plan approved Tuesday by the Senate Finance Committee, one-time rebates would range from $100 to $700 per tax filer with $1 billion, or less than a quarter, of the projected windfall. There were about 2.6 million individual tax returns filed for tax year 2020, state Department of Revenue records show; in comparison, South Carolina’s official population as of April 1, 2020, was 5.1 million.

Both the House and Senate have proposed lowering state income-tax brackets, though the South Carolina Policy Council – The Nerve’s parent organization – has pointed out, among other things, that a House proposal to cut the top 7% tax rate to 6% would be fully implemented by 2027 only if state economists forecasted a minimum 5% increase in general fund revenues in each year of the five-year period.

The total fiscal 2022-23 state budget, which includes federal, state and “other” funds, would be $38.2 billion under the House Ways and Means Committee’s version – a $5.8 billion, or 18%, hike from this fiscal year’s approximately $32.4 billion budget. The full House is scheduled next week to begin debating the budget.

For now, the bottom line is that lawmakers want to spend most of next fiscal year’s expected surplus instead of giving it back to taxpayers.

The Ways and Means budget version designates $604.2 million out of $1.608 billion in anticipated new recurring funds for income tax relief. But none of the $3.44 billion in actual and estimated nonrecurring funds, including $525 million from the Savannah River Site settlement with the federal government, would be refunded to taxpayers, under the Ways and Means plan.

And there’s plenty of questionable spending in the Ways and Means budget version.

The S.C. Department of Commerce, for example, would get $83 million in state surplus funds toward its proposed, secretive $150 million “Strategic Economic Development Infrastructure” program – $70 million of which, as The Nerve revealed, would be spent on projects benefiting corporate giants Boeing and Volvo, with part of the remainder possibly to be used for a project tied to internet search giant Google.

The Ways and Means budget version separately earmarks $25 million in surplus funds for “Camp Hall Rail,” which, as The Nerve reported, would be used toward constructing a railroad line at the Camp Hall Industrial Park in Berkeley County to serve the Volvo automotive plant; and another $22 million to “International Boulevard Diversion,” which would relocate the entrance road at Charleston International Airport in North Charleston to accommodate future expansion plans at the Boeing aircraft assembly plant.

Boeing, which has received hundreds of millions of dollars in taxpayer-backed incentives, also would benefit from relocating a radar facility at Charleston International Airport, to be funded with $20 million out of surplus funds under the Ways and Means budget version. That project was part of Commerce’s proposed “infrastructure” program, as The Nerve reported.

In addition, House budget writers designated $25 million in surplus money to Commerce – $8 million more than what the agency requested – for its “closing fund.” As The Nerve has revealed, the fund has been used to award millions to large corporations – typically discussed in secret by the state Coordinating Council for Economic Development, which is administered by Commerce and chaired by Commerce head Harry Lightsey.

At the S.C. Department of Parks, Recreation and Tourism, $15 million and $4 million in surplus funds would be designated for “destination specific grants” – typically awarded to tourism organizations on the coast and in Columbia and Greenville – and “regional tourism advertising,” respectively, under the Ways and Means budget version.

House budget writers also appropriated $300,000 in new recurring money and nearly $4.4 million in surplus funds through the state Department of Archives and History for the “South Carolina American Revolution Sestercentennial Commission,” a legislatively controlled committee created in 2018 to recognize the 250th anniversary of the American Revolution.

The Nerve in November revealed that the department was advertising for an executive director for the commission at an annual state salary ranging from $90,000 to $100,000. For this fiscal year, lawmakers earmarked about $1.5 million out of state surplus funds for the commission; the department requested nearly $10 million – most of it from surplus funds – for the commission in its annual budget request for next fiscal year.

Brundrett is the news editor of The Nerve (www.thenerve.org). Contact him at 803-3948273 or rick@thenerve.org. Follow him on Twitter @RickBrundrett. Follow The Nerve on Facebook and Twitter @thenervesc.

Nerve stories are free to reprint and repost with permission by and credit to The Nerve.

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