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Budget
The Senate passed its version of the $15.4 billion budget bill (H. 5126) this week. The budget increased funding to the Local Government Fund (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. The budget also includes $12 million for the Rural Stabilization Fund, the same amount allocated last year. There is also no increase in employer premiums under the State Health Plan for FY 2026-27.
Items funded in the Senate’s budget include:
- $67 million to cover a 2% base pay increase for state employees;
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$308.7 million for income tax relief (see H. 4216);
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$247.667 million for property tax relief via the homestead exemption increase the Senate passed earlier this year (see S. 768);
- $750,000 in recurring money for PTSD treatment for first responders;
- $3 million in recurring money to Labor, Licensing and Regulation for the V-SAFE Fund;
- Almost $5 million in recurring money for the Firefighter Cancer Benefit Plan;
- $2.5 million in total funding to the Department of Behavioral Health and Developmental Disabilities for the Alternative Transportation Program;
- $443,747 in recurring money to the Councils of Governments for financial support staff;
- $1.2 million in additional recurring funding for aid to public library systems;
- $10 million in one-time money to the Department of Parks, Recreation and Tourism for beach renourishment grants, $275,000 in recurring funding for destination-specific marketing grants, and $10 million in one-time money for the “Play it Forward” request for the sustainable funding of South Carolina State Parks;
- $6 million in one-time money to the Rural Infrastructure Authority for the Rural Infrastructure Fund and $6 million in one-time money for the statewide water and sewer fund;
- $2 million in one-time money to the Department of Natural Resources for Conservation Districts;
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$5 million in one-time and $1 million in additional recurring money to the Department of Commerce (SC Commerce) for LocateSC site readiness, as well as $5 million in one-time money for “Rural Development” (see proviso 50.28 below);
- $20 million in one-time money to the Department of Agriculture (SCDA) for the Growing Agribusiness Fund;
- $15 million in one-time money to the State Board for Technical and Comprehensive Education for the “ReadySC” program;
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$1.5 million in recurring funding to the Department of Environmental Services (DES) for AI Modernization of Permit Processing (see proviso 55.26 below);
- $72.8 million in one-time money to the South Carolina Emergency Management Division (SCEMD) for Federal Emergency Management Agency matches for federally declared disasters, $5 million in one-time money for the SC Public Assistance Program, and $5 million in one-time money to supplement Emergency Management Performance Grants;
- $10 million in one-time money to the Office of Resilience for statewide mitigation projects and $1 million in one-time money for the “Bridge Box Flood Monitoring Program;”
- $22 million to the Conservation Bank for land conservation;
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Nearly $190 million in one-time money to the South Carolina Department of Transportation (SCDOT) for bridge modernization, $12.5 million in one-time money for the road buyback program (see proviso 84.18 below), and $5 million in one-time money for off-interstate litter pickup;
- $200 million in one-time money to County Transportation Funds for the County Transportation Committee Acceleration Program;
- $30 million to the Division of Aeronautics for airport development programs;
- $10 million in one-time money to the Judicial Department for modernizing the case management system;
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Approximately $12.5 million in total to the State Law Enforcement Division (SLED) for the service contract for an 800 MHz radio system (see proviso 117.200 below);
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$691,000 in recurring money to the Commission on Indigent Defense for public defender technology and digital storage (see proviso 61.14 below);
- $10.5 million in one-time money to the Election Commission for statewide voting system upgrades;
- $3 million in one-time money to the Department of Veterans Affairs for the Military Enhancement Fund; and
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$5 million in one-time money to the South Carolina State Housing Finance and Development Authority (SC Housing) for the “Made it Home!” program relating to affordable housing (see proviso 42.7 below).
Please thank the members of the Senate for keeping their promise to counties and working to return much-needed funding to county governments throughout the state! The Senate budget includes three SCAC policy positions—an annual increase to the LGF, a minimum grant of $200,000 per county in the Aid to County Libraries, and funding for affordable and workforce housing.
The Senate adopted the following provisos referenced above regarding direct appropriations:
27.1. (LIB: Aid to County Libraries Allotment) Allots funding to each county on a per capita basis according to the official 2020 United States Census, as aid to the county library. No county will receive less than $200,000 (updated from $150,000 in FY 2025-26). Counties will receive their allocations in two equal parts.
42.7. (HFDA: Workforce Housing) Authorizes SC Housing to use any appropriated funds for the “Made it Home!” program to address the lack of affordable homeownership across the state by facilitating the new construction of affordable single-family homes. SC Housing is authorized to spend federal or other funds for the same purpose. SC Housing shall develop program guidelines, reporting requirements, down payment assistance, and homebuyer eligibility requirements and establish criteria for awarding distribution to participating partners. Also, SC Housing may establish a fund separate from the state General Fund that consists of monies received or authorized and any other sources of revenue, public or private, including donations for the purpose of the program. Any of the remaining $5 million appropriated to the First-time Homebuyers Workforce Housing Program in the FY 2025-26 budget may be carried forward for this purpose.
50.28. (CMRC: Rural Development) Specifies that from funds appropriated to SC Commerce for rural development, all allocations must be used for projects in Tier III and Tier IV counties, as well as census tracks that qualify as Opportunity Zones in Tier I and Tier II counties. Maximum awards for these community and rural development projects are $1.5 million and require a 10% match.
55.26. (DES: AI Pilot Program) Requires DES to develop and implement a framework to identify, pilot, and scale artificial intelligence solutions that improve efficiency, transparency, and service delivery in environmental permitting to support modernization.
61.14. (INDEF: Public Defender Technology and Digital Storage) Provides $691,000 in recurring money to the Commission on Indigent Defense for public defender technology and digital storage that shall be apportioned among the judicial circuits in quarterly distributions. The first $360,000 is to be distributed on a pro-rata basis at $22,500 per circuit, and the remaining $331,000 is to be distributed on a per capita basis.
84.18. (DOT: Road Buyback Program) Directs SCDOT to identify and compile a list of roads in the state highway system that may be eligible for transfer in accordance with Section 57-5-80. SCDOT will evaluate roads that may no longer serve a statewide purpose and determine whether those roads are more properly maintained by a county, municipality or another appropriate political subdivision. SCDOT will consider functional classification, traffic volume, connectivity, and consistency with the statewide transportation plan when making the determination. Roads deemed eligible for transfer will be those which, in the opinion of SCDOT, no longer serve the purpose of the state highway system. SCDOT may negotiate with the governing bodies of the appropriate political subdivisions for the transfer of maintenance responsibilities for those roads. Road Buyback Program funds must be used to assist with costs related to the transfer of roads from the state highway system, including but not limited to, resurfacing, design improvements, documentation, and transition-related expenses agreed upon by SCDOT and the political subdivision. SCDOT will submit the list of identified roads, along with criteria used for selection and any recommendations regarding the transfer process, to the chairman of the Senate Finance Committee, the chairman of the House Ways and Means Committee, and the governor by Feb. 28, 2027.
117.200. (GP: First Responder Interoperability) The original proviso directs SLED to administer and coordinate First Responder Interoperability operations for the statewide Palmetto 800 radio system to enhance public safety radio communications. Appropriated funds will cover radio user fees for eligible state agencies and first responders, with allocations based on a minimum number of radios per participant. Grants will be available for county and municipal systems to improve interoperability but are subject to a required matching of funds to receive support. Any remaining funds may be used to expand the statewide Palmetto 800 system. The Senate amended the proviso to require SLED to consult with the Department of Administration, the Department of Public Safety, SCEMD, a representative from the Police Chief’s Association, a representative from the South Carolina Sheriff’s Association, a representative of the South Carolina State Firefighter’s Association, and a representative of the South Carolina Emergency Medical Services Association to establish a baseline number of radios used by each Palmetto 800 participant based on criteria such as the jurisdictional requirements of each respective participant or association.
The Senate adopted the following new and amended provisos of interest:
50.IP. (CMRC: Data Center State Incentive Prohibition) Prohibits any funds appropriated or authorized for use by the Coordinating Council for Economic Development—including but not limited to the Closing Fund—or appropriated or authorized the department for any other purpose, to be used to recruit, locate, expand, or construct a data center in South Carolina. This proviso would apply to any project for which an incentive agreement was not in place at the beginning of the current fiscal year. The Department of Commerce will provide a report to the General Assembly by Jan. 15, 2027, identifying any data center projects that applied for or received incentives in any previous fiscal year and summarizing the total value of these incentives.
55.CDC. (DES: Commercial Data Center Water Use Reporting) Requires data centers that consume more than three million gallons of water per month to report annual water usage, including the water source used, volume used, and the amount of water discharged, to DES. Data centers are further defined as any large-scale computing facilities with a contractual peak electricity demand of 50 MW or more and excludes telecommunication company infrastructure and facilities where computing is only incidental to another primary business. All reports must be public, and civil penalties could be assessed against data center companies of up to $1,000 per day for any failure to report and up to $10,000 for inaccurate reporting.
60.3. (PCC: Judicial Circuit State Support) Provides funding for the 16 judicial circuits across the state. The first portion of the appropriated funds shall be distributed based on population according to the current official census. The second portion of the funds shall be distributed on a pro rata basis. Payments must be made to each circuit as soon as possible after the beginning of each quarter. The Senate amended the proviso to increase the total funding for the first portion of appropriated funds from $7,632,961 to $8,432,961 and to increase the second portion of the appropriated funds from $2,919,041 to $4,659,041.
67.6. (DJJ: Juvenile Arbitration/Community Advocacy Program) Requires that funds appropriated for the Juvenile Arbitration Program shall be retained and expended by the Department of Juvenile Justice (DJJ) to provide juvenile arbitration services through the 16 judicial circuit solicitors’ offices as well as administrative and personnel costs for the programs. The Senate amended this proviso to increase the amount disbursed by DJJ to solicitors to administer the Juvenile Arbitration Program from $60,000 to $141,875 per judicial circuit and deletes a provision which provided $350,000 to the First Judicial Circuit for the Community Advocacy Program.
108.RTW. (PEBA: PORS Return to Work) Increases the earnings limitation to $80,000 for members of the Police Officers Retirement System (PORS) who return to work after at least a 90-day absence. However, law enforcement officers holding a supervisory rank at the time of retirement would be ineligible to return to a supervisory position. SCAC worked with members of the Senate to defeat a separate proviso that would have required employers' contribution rates to increase by 0.76% ($150 million).
117.JRSC. (GP: Joint Recycling Study Committee) Establishes a 12-member study committee, with members selected from Senate, House, and state agency leadership, to review the existing Strategic State Plan for Litter and recommend implementation of a Strategic State Plan for Recycling, including any related recommendations to the Take Palmetto Pride in Where You Live Commission. This study committee will examine, among other things, the costs to local governments of managing litter, illegal dumping, and recycling, as available; existing state and local recycling programs, public awareness efforts, and enforcement measures, including the effectiveness of penalties and fine collection; the sufficiency of current state laws and local ordinances on litter prevention, cleanup, and recycling; and the cost to local governments of implementing a recommended recycling plan. One of these members would be a gubernatorial appointee representing local government interests. The study committee must submit a research-based statewide action plan to the governor, speaker of the House, president of the Senate, and the chairs of the House Ways and Means and Senate Finance committees by March 1, 2027.
117.HEPT. (GP: Property Tax “SLASH” Notification) Requires that every property tax notice or assessment on real property must include an itemized list of any homestead exemptions received by the taxpayer and a notation of “State Legislature Aiding in Saving Homes” (SLASH), the amount in which the individual’s property tax bill was reduced, and in the amount, if any, in which the state reimbursed the local taxing jurisdictions on behalf of the individual.
117.HEX. (GP: Homestead Exemption) Provides an additional property tax exemption for homeowners that are eligible for the standard homestead exemption as previously passed by the Senate earlier this session in S. 768.
117.SM. (GP: Solar Manufacturing Restrictions) Prohibits DES from permitting or incentivizing solar manufacturing facilities located on or adjacent to public school property.
117.EF. (GP: Ethics Filings – Statements of Economic Interests) Clarifies that all ethics filers reporting income received from the General Appropriations Act on the filer’s Statement of Economic Interest, including individuals affiliated with political subdivisions, must report each source, type, and amount or value of income separately.
117.DR. (GP: Debt Report) Requires any political subdivision that files reports to the State Treasurer detailing its debt status for auditing purposes, or otherwise, must also include any installment purchase of revenue bonds utilized by the political subdivision for the purpose of financing public projects. This includes reporting on the use of any appropriations from the General Fund that are passed through to local governments.
117.PTP. (GP: Property Tax Bill Payments) Allows a third party—including but not limited to individuals, corporations, and nonprofits—to pay the property tax bill for any real or personal property located in South Carolina during the current fiscal year. County treasurers and auditors must accept such payments made on behalf of the property owner of record without requiring proof of authorization from the owner, provided the payment includes the correct tax notice number, parcel identification number, or other sufficient identifying information as required by the county. Payments by a third-party will not confer any ownership interests, lien rights, or other legal claims to the property, except as existing law may allow as to adverse possession. Counties may continue to apply standard processing and convenience fees, and receipt procedures for such payments. Nothing in the proviso authorizes or shall be interpreted to authorize a tax collector to change, update, or substitute the mailing address for subsequent tax notices unless the property owner of record or the owner’s duly authorized agent expressly requests such change. This provision applies to taxes billed or due during FY 2026-27.
118.DTP. (GP: Delinquent Tax Penalty) Prohibits a county or municipality from imposing or collecting a delinquent tax penalty on any personal property tax bill that exceeds the amount of the underlying delinquent tax due. Any penalty assessed or collected in violation of this provision should be refunded to the taxpayer, and no interest shall be accrued on an improperly assessed penalty.
SCAC worked with senators to remove real property from this proviso after hearing concerns from several county treasurers.
The following existing proviso was ruled out of order during the Senate’s debate on the budget and was subsequently deleted:
108.1. (PEBA: Lottery, Infrastructure Bank, and Magistrates Health Insurance) Allows South Carolina Lottery Commissioners, State Transportation Infrastructure Bank Board Members, and their eligible dependents, to participate in the State Health and Dental Insurance Plan, upon paying the full premium costs as determined by PEBA. The proviso also allows magistrates and their eligible dependents to participate in the State Health and Dental Insurance Plan, upon paying the full premium costs, only if the county in which they are located participates in the plan.
Manufacturing Property Tax Exemption
S. 439 would increase the reimbursement cap for the 42.8571% manufacturing property tax
exemption from $170 million to $300 million. The reimbursements will continue to come from the Trust Fund for Tax Relief, and the increase in reimbursements will come from the General Fund.
Status: The House Ways and Means Committee gave S. 439 a favorable report, and the bill is pending second reading on the House 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 House Ways and Means Committee gave S. 853 a favorable report, and the bill is pending second reading on the House 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: A House Ways and Means subcommittee gave the bill a favorable report, and it will appear on the next full committee’s agenda.
Heirs’ Property
H. 4477 would allow a one-time transfer of property to qualified family members to clear the title of heirs’ property without it counting as a taxable transfer of interest.
Status: The House gave H. 4477 second and third readings, sending it to the Senate.
Special Purpose Districts Retirement
H. 4576 would expand the definition of “employer” eligible for participation in the state optional retirement plan to include special purpose districts and public works commissions already participating in the South Carolina Retirement System. The bill also would allow participating employers to elect to pick up all or a portion of an employee’s contributions for a fiscal year.
Status: The House gave H. 4576 second and third readings, sending it to the Senate.
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