Budget heads to final vote amid unanswered questions

Last week, the S.C. Legislature’s budget conference committee approved a final version of the state budget for the fiscal year that started July 1, clearing the way for an up-or-down vote in both chambers on Aug. 11. 

The conference report includes approximately $308 million in income tax relief, $81 million in property tax reductions, and roughly $1 million in tax relief for small businesses. 

If approved, the budget would appropriate $15.7 billion in general fund spending and bring total state, federal, and “other” spending to approximately $44.4 billion. 

Notably absent from the conference report are finalized earmarks, which, unlike traditional state appropriations, do not originate through agency budget requests submitted at the beginning of the budget process. Instead, lawmakers submit individual funding requests for projects in their districts. Collectively, those requests totaled approximately $467.23 million this year, as The Nerve reported in May.  

Conference committee leaders, however, have indicated that the final earmark package will not exceed roughly $307 million. As of publication, the special review committee responsible for determining which projects will ultimately receive funding has not been scheduled to meet, nor has the membership of the committee been announced. 

An unprecedented process 

One of the most unusual aspects of this year's budget process is that the Legislature has separated earmarks from the general appropriations bill. 

Ordinarily, the budget consists of the General Appropriations Act and the Capital Reserve Fund bill, both of which follow established procedures. Earmarks, however, have traditionally been included within the General Appropriations Act itself. 

This year, members of the conference committee have outlined a different process. The special review committee will evaluate each earmark individually and determine whether to fully or partially fund or eliminate each project before sending a separate earmark measure to both chambers for an up-or-down vote. 

Based on discussions with constitutional attorneys, legislative observers, members of the media, and other individuals familiar with Statehouse procedure, none recalled this process being used previously. 

That alone does not make the process unconstitutional. It does, however, raise important legal and procedural questions. 

Under the normal legislative process, a bill originates in one chamber, is referred to committee, receives floor consideration, then repeats that process in the opposite chamber before being presented to the governor for approval or a veto. 

There are exceptions. Certain legislation may originate in committee, such as the annual appropriation bill, which originates in the Ways and Means Committee. Even then, however, legislators retain the opportunity to amend the measure on the floor, and the bill still proceeds through committee and floor consideration in the other chamber 

The process, however, outlined for the current earmark proposal appears to be different. As presently described, lawmakers in either chamber would only be able to vote yes or no on the final product without an opportunity to amend it. That would represent a significant departure from the Legislature's traditional process 

The proposal also raises questions under Article III, Section 18 of the S.C. Constitution, which requires that every bill or joint resolution be read three times in each chamber before becoming law. At present, both chambers are scheduled to convene only on Aug. 11. It remains unclear how the Legislature intends to satisfy the constitutional reading requirement if no additional legislative days are added. 

Another constitutional question involves the governor's veto authority. 

Because the review committee is expected to be a joint House-Senate committee, the resulting legislation may take the form of a joint resolution rather than a bill. 

Article IV, Section 21 of the S.C. Constitution provides the governor with veto authority over "every bill or joint resolution." However, when describing the line-item veto, the constitution refers only to "bills" containing appropriations and does not mention joint resolutions. 

If the Legislature uses a joint resolution to appropriate earmarks rather than a general bill, it is unclear whether the governor would retain the ability to exercise the line-item veto over individual appropriations. If that authority can be effectively removed by using a joint resolution, we believe it would represent a significant violation of the executive branch's primary constitutional check on legislative spending. 

Regardless of the procedural vehicle chosen, the governor should retain the ability to exercise the line-item veto over earmark appropriations. 

Unanswered questions remain 

Both chambers are scheduled to vote on the conference report Aug. 11. But because the special review committee apparently hasn’t been appointed yet or scheduled to meet, lawmakers could be asked to vote on a budget before the earmark process has concluded. 

An official budget record, called the “summary control document,” for the conference committee’s report lists many earmarks with placeholder appropriations of just $1 rather than finalized funding levels 

It would be highly unusual for the General Assembly to vote on an appropriations package without knowing the final amount allocated to each earmark. Given the unprecedented nature of this year's budget process, it remains to be seen how lawmakers intend to proceed. 

The South Carolina Policy Council will publish a comprehensive analysis of the FY 2026-27 budget to fully dive into the funding once our review is completed. 

What this process has already demonstrated is that South Carolina's current earmark system requires reform. Any review of earmarks should occur before the budget reaches the House and Senate floors, with sufficient time for public review and legislative deliberation before final passage.