Templeton

Catherine Templeton, a Republican candidate for South Carolina governor, speaks to the First Tuesday GOP lunch club in Columbia on Tuesday, Feb. 6, 2018. Jamie Lovegrove/Staff

COLUMBIA — As Catherine Templeton travels around South Carolina making the case for why she should be the state's next governor, the Mount Pleasant Republican often makes a pointed accusation about incumbent Gov. Henry McMaster.

Shortly after McMaster took over from former Gov. Nikki Haley, Templeton claims he approved "the largest tax increase in modern history," an argument she reiterated Tuesday at a luncheon with Midlands Republicans. 

McMaster's campaign denies the assertion that has become a staple of Templeton's stump speech. So what is Templeton talking about?

She told the luncheon that she was not talking about the state's first gas tax increase since 1987 that was passed by the Legislature last year. McMaster did not sign that legislation. It went into law because the General Assembly voted to override the governor's veto.

Instead, when pressed by an audience member, Templeton said she was referring to a bill that was intended to fix the state's ailing pension system. That one did get McMaster's stamp of approval, but it did not include any new taxes. 

The pension bill, which was intended to address more than $20 billion debt that has amassed since 1999, increased government employee and employer contributions to boost funding. Once the hikes are fully phased in by 2022, employers will contribute $827 million more into the system annually than they currently do.

But in addition, last year's state budget included $150 million to help cover the costs of the change. That total fully covered the 2017-18 rate hike for most state agencies and covered half the increase for other employers in the system, including colleges and local governments. 

While the law does not levy any new tax, Templeton argues that the increase in spending on pensions as part of the state budget will end up getting passed on to the taxpayers in the long run. Smaller cities might have no other choice but to raise taxes, her campaign said.

"We fund the government with our tax dollars, and increasing the amount of money that is required is a tax increase," Templeton said. "I can understand why Henry McMaster would not like for this to be called a tax increase because it does not fit well for his politics."

However, the $150 million in last year's budget came from existing funds. There was no new tax increase. The Legislature had more money at its disposal to dole out in the budget because of a $370 million influx from economic growth.

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McMaster campaign spokeswoman Caroline Anderegg said Templeton "either doesn't understand basic finance, or she continues to make things up."

Counting the pension bill as a "tax increase" makes no sense, Anderegg said. Using that logic, she added, means other programs paid with existing money would also count as "tax increases," including Haley's $180 million education plan that added reading coaches and classroom technology in 2014.

Rather than the changes in the pension bill, Templeton suggested the state extend how long a government employee works before starting to collect a pension.

She also called for the state to move to a defined contribution plan — like a 401(k) that requires employees to put in their own money — rather than a defined benefit plan that makes employers provide the funds. McMaster has offered a similar solution.

Follow Jamie Lovegrove on Twitter @jslovegrove.

Jamie Lovegrove is a political reporter covering the South Carolina Statehouse, congressional delegation and campaigns. He previously covered Texas politics in Washington for The Dallas Morning News and in Austin for the Texas Tribune.