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Budget
The House Ways and Means Committee passed the appropriations bill, H. 5126 out of committee Wednesday. The House is scheduled to debate the bill on the floor the week of March 10. The committee increased funding to the LGF by $15,294,812 statewide. This represents full funding to the LGF under the statutory formula. See the estimated LGF county allocations for FY 2026-27. Below is one new proviso and one substantially amended proviso of note to counties adopted by the Ways and Means Committee. SCAC staff will release a full review of the state budget once it is debated and passed by the full House.
113.ecp. (AS-TREAS: Employment Contracts and Political Subdivisions) A political subdivision receiving aid from the LGF may not include a term in any contract of employment allowing for a settlement amount to be paid by the subdivision as part of the mutual dissolution of the contract that exceeds one year’s salary or the remainder of the contract value, whichever is less.
67.16. (DJJ: Capital Expenditure Charge) The House Ways and Means Committee amended this proviso at the request of municipalities. Local governments, except for municipalities with populations of 3,000 or less, using the juvenile detention services provided by DJJ would pay a capital expenditure charge of $125 per day per child not to exceed 25 days to the department for new admissions after July 1, 2025, to cover capital expenditures and investments in the facilities that house juveniles. Municipalities with populations of 3,000 or less using the juvenile detention services provided by DJJ would pay a capital expenditure charge of $50 per day per child not to exceed 25 days to the department for new admissions after July 1, 2026, to cover capital expenditures and investments in the facilities that house juveniles.
This capital expenditure is in addition to the per diem charge of $50 that offsets operating expenses. If full funding is not received from the local governments, then the remainder of the funds due shall be transferred to the department from the LGF on behalf of such local governments. The transfer to the department on behalf of the local government shall be deemed to have been distributed to the local government.
Homestead Exemption
S. 768, as introduced, would increase the homestead exemption from $50,000 to $100,000 and lower the age requirement to 60. The Finance Committee amended the bill to add a five-year South Carolina residency requirement beginning in property tax year 2026-27. The amendment also keeps the age requirement at 65 but increases the exemption for those who currently reside in the state to the first $150,000. Lastly, the amendment gives counties authority to further increase the exemption through ordinance, but any taxes not collected from the extra increase would not be eligible for reimbursement from the Trust Fund for Tax Relief. The amended bill represents an SCAC Policy Position.
Status: The Senate continued debating the bill on the floor, ultimately adopting the following amendments:
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Requires a property tax notice or assessment to include an itemized list of any homestead exemption received by the taxpayer and a notation of State Legislature Aiding in Saving Homes, the amount the individual's property tax bill was reduced, and the amount, if any, the state reimbursed the local taxing authorities on behalf of the individual;
- Changes the exemption to $75,000 for those who have lived in South Carolina for the past five years and $150,000 for those who have lived in South Carolina for the past 10 years;
- Further amends the residency requirement from the proceeding five- or 10-year requirement to a requirement that the resident has lived in South Carolina for five or 10 years “at any time” before the application; and
- Further amends the residency language for those seeking the exemption to require the taxpayer to have filed an income tax return documenting that they have lived in the state for five years.
These last two amendments were adopted during third reading on the Senate floor with minimal debate. SCAC has received several questions and concerns about the logistical implications of these amendments and will report back once we receive clarification.
Boat Taxes
H. 3858, as introduced, would have given boat owners a 50% property tax reduction on boats registered and titled in South Carolina and eliminated the titling and taxing of all outboard motors with no way for county auditors to track their transfer. As passed by the House in 2025, the bill would lower the property tax reduction from 50% to 42.8571% statewide, except for houseboats. The property tax reduction must be phased in over three equal installments and would be applicable for property tax years beginning after 2026. This legislation would not apply to counties that have already lowered the assessment ratio on boats to 6%. Any local ordinances doing so would be repealed after Jan. 1, 2030, once the legislation is fully phased in.
Status: The Senate Finance Committee adopted an amendment to require that outboard motors continue to be registered to allow counties to track the motors’ transfer. The committee then gave the bill a favorable report, as amended, and it is pending second reading on the Senate calendar.
Investment Funds
S. 420 would allow a qualified retiree post-employment benefit trust to invest in notes, bonds, debentures, or other debt instruments issued by a U.S. corporation, provided that the instruments are rated in general categories by no fewer than two nationally recognized credit rating organizations.
Status: The Senate Finance Committee amended the bill and gave S. 420 a favorable report as amended. S. 420 is now pending second reading on the Senate calendar.
Abandoned Buildings Tax Credit
S. 853 was filed in response to a revenue ruling by the S.C. Department of Revenue requiring that buildings eligible for the tax credit be income-producing.
Status: The Senate Finance Committee gave S. 853 a favorable report, and the bill is now pending second reading on the Senate calendar.
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