South Carolina Senator Wants To Give $1.8 Billion ‘Anomaly’ Back To Taxpayers

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Last month, I reported exclusively on the latest “anomaly” tied to South Carolina’s ballooning state budgets: An extra $1.8 billion sitting unused in a “flow-through” account for the past five years.

Given the extent to which “Republican” supermajorities in Columbia, S.C. have been blowing through tax dollars of late, I immediately called upon them to return this unexpected surplus to the taxpayers and business owners of the state, many of whom are struggling to make ends meet in our current hyper-inflationary climate.

To recap: The Palmetto State’s special interest-led uniparty blew a record $38.8 billion of your money in the current fiscal year budget – which ends on June 30, 2024. They are currently in the process of writing the budget for fiscal year 2024-2025, which according to our sources could eclipse $40 billion (not counting the new windfall).

Aside from a modest modicum of relief provided two years ago, not a penny of the new money flowing into state government has gone back to the people who provided it – which, sadly, is par for the course in the Palmetto State.

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Despite campaigning as “conservatives,” GOP members of the S.C. General Assembly have grown government faster than taxpayers’ ability to pay for it for decades, repeatedly ignoring calls for broad-based income tax relief while consistently embracing bloated, ineffectual bureaucracies and crony capitalist schemes.

As of January 1, 2024, the Palmetto State’s top marginal rate of 6.4 percent is fourteenth highest nationally – and the highest in the southeast. Also, unlike neighboring North Carolina and Georgia – which are still lowering their top marginal rates – South Carolina has failed to transition to a fairer “flat tax” on individual income.

Compounding the problem? In addition to its job-killing income tax rate, South Carolina has a higher combined state and local sales tax rate than regional rivals North Carolina, Florida, Georgia and Virginia – further cementing our competitive disadvantage.

One state senator told his colleagues this week the discovery of this $1.8 billion represented an “opportunity” to move the Palmetto State in a more competitive direction vis-à-vis its tax code. According to state senator Sean Bennett of Summerville, S.C., the money shouldn’t be spent but rather placed in a “tax relief trust fund.”

“South Carolina’s tax policy is broken,” Bennett told me. “We should protect these newly discovered funds from the appropriations process and use them to bridge to a tax system that treats all citizens fairly.”

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Bennett also told me the Palmetto State needed to undertake a “significant shift from antiquated practices which makes the political will to accomplish (reform) difficult to muster.”

I concur … on both counts.

Unfortunately, fiscally liberal GOP members – most notably state senator Larry Grooms – are already seeking to shovel this money into the bureaucratic Sarlacc pit at the S.C. State House, arguing the recently discovered funds are already “obligated.”

“We need to lock it up, we need to continue to identify where these monies rightfully belong,” Grooms said this week during debate on the floor of the Senate, according to a report from Joseph Bustos of The (Columbia, S.C.) State newspaper.

“Lock it up?” Really?

And excuse me, but … “rightfully belong?“

Once again … these monies rightfully belong to taxpayers. Period.

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RELATED | SEEKING A SUSTAINABLE SOUTH CAROLINA BUDGET

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Assuming all $1.8 billion of the recently discovered “anomaly” were to be earmarked toward tax relief, individual filers could see a significant impact on their bottom line in the coming year.

In 2022, lawmakers divvied up $971 million worth of rebates to an estimated 1.44 million taxpayers. These rebates – which were capped at $800 – would have averaged out to $675 per taxpayer, if doled out evenly. Assuming a similar pool of recipients got rebates this go-round, the potential windfall associated with a full refund of the anomaly would average a little more than $1,250 per taxpayer.

Obviously, a one-time rebate of that size would make a huge difference to a huge number of South Carolinians … as would bolstering the anemic, incremental top marginal rate reduction approved in 2022 to bring out state more in line with its regional peers.

Bottom line? It is time for “Republicans” in the S.C. General Assembly to “walk the walk” when it comes to the fiscal conservatism they love to preach on the campaign trial. And nothing short of a full refund of this surprise surplus will do. Count on us to keep our audience in the loop as to which lawmakers (like Bennett) are standing for beleaguered taxpayers and which ones (like Grooms) are perpetuating the excesses of our failed bureaucratic state.

Which reminds me: Filing for partisan primary races in South Carolina begins at 12:00 p.m. EST on March 16, 2024 and closes on April 1, 2024. Every member of the state legislature needs to decide where they stand on this critical question between now and then.

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ABOUT THE AUTHOR …

Will Folks is the founding editor of the news outlet you are currently reading. Prior to founding FITSNews, he served as press secretary to the governor of South Carolina and before that he was a bass guitarist and dive bar bouncer. He lives in the Midlands region of the state with his wife and seven (soon to be eight) children.

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