COLUMBIA — South Carolina legislators will have an additional $1.8 billion to spend next year, pushing the state budget to an all-time high $10 billion, due to a growing economy and large surpluses, according to revenue projections adopted Friday.
The estimates approved by the state Board of Economic Advisors are what lawmakers will use to craft their spending plans for the fiscal year that begins July 1.
"It’s good news from the perspective of our economy in South Carolina," said House Ways and Means Chairman Murrell Smith, R-Sumter. "We are moving in the right direction, people are wanting to locate here, businesses are wanting to locate here, and people are enjoying success here financially."
Smith, whose committee starts the budget-writing process, said the extra money could help increase teacher pay and address crumbling infrastructure.
“You listen to economists nationally talk about the slowdown and that the economy is easing, and the news we received today shows that is not on the horizon in South Carolina, at least in the short term,” he said.
The infusion is partly due to strong consumer confidence, as residents and businesses spend more, said Frank Rainwater, director of the state's Office of Revenue and Fiscal Affairs.
About $1 billion of the additional revenue is non-recurring, meaning it should be spent on one-time expenses, such as security upgrades at South Carolina's prisons, and long-deferred maintenance at public buildings, a multibillion-dollar problem.
The other $800 million could go toward continuing costs, such as raises for state employees and teachers.
House Speaker Jay Lucas pledged earlier this year to bring teachers' average salary in South Carolina up to the national average within five years. Legislators put $159 million in this year's budget to increase all K-12 teachers' pay by at least 4 percent to start that multi-year effort.
But state employees deserve long-overdue raises, too, said Carlton Washington, director of the State Employees Association.
In 2015, legislators put $300,000 in the budget to study employee pay and promised to act on the findings. Instead, legislators shelved the report. Released in 2016, it showed state employees are underpaid compared to public workers in other states and even to their counterparts in South Carolina’s cities and counties.
"Teachers are critical, but we also know legislators know state employees are critical as well and they’re on the front line every day," including regulating hospitals and restaurants, keeping the public safe and improving roads, Washington said, noting the turnover rate at most agencies exceeds 15 percent.
"This is very important to maintaining a workforce of qualified people who will stay in the saddle longer than one or two years," he said.
Legislators put $20 million in this year's budget to provide state employees making less than $70,001 a $600 one-time bonus.
Legislators will have to prioritize from a long list of needs. State agencies' budget requests, to be released later this month, likely will far exceed the additional money available.
But the collective $1.8 billion is almost double the additional money legislators had to work with for the current budget that took effect July 1.
About half of the $1 billion in one-time money comes from reserves — money legislators set aside in case of an economic downturn that wasn't needed. The other half is money predicted to come into state coffers this fiscal year above the state's Board of Economic Advisors' earlier projections.
The budget has risen steadily since the Great Recession forced mid-year cuts. A decade ago, the state's general fund was $5.3 billion.
Gov. Henry McMaster, who will roll out his proposed spending plan early next year, indicated on Twitter Friday how he expects lawmakers to handle the windfall.
“Prosperity requires fiscal restraint and conservative stewardship of taxpayer dollars," he wrote. "A surplus means prioritizing and funding the state’s most critical needs, then returning the rest to the taxpayers or cutting taxes. This is what I intend to do with my executive budget in January.”