Statehouse Update February 3-5

Update 2/4/26: Adjustments were made to this summary to reflect developments that occurred during the week.

After another snowy weekend in South Carolina, lawmakers in the Senate are starting to work on data center reform with a major reform bill scheduled for committee this week. The House has unveiled its Department of Transportation proposal, an alternative to the Senate proposal currently in subcommittee. It remains to be seen which proposal will be the avenue lawmakers pursue. Additionally, there are some interesting education reforms making their way through committees in both chambers.

Taxes and spending

Income tax H.4216 – Establishes two new tax brackets (1.99% up to $30,000 and 5.39% for anything above), eliminates all standard and itemized deductions, and adds a graduated deduction of up to $30,000 for those earning under $110,000. Also conditionally lowers the top marginal tax rate until it reaches 1.99%, then lowers the total tax rate until it reaches 0%. This bill is on the Senate floor.
Homestead exemption S.768 – Raises the homestead exemption to $150,000 and adds a five-year state residency requirement. Taxpayers currently exempt will be grandfathered in. This bill is on the Senate floor.
Small business tax cuts H.5006 – Provides tax exemptions on the first $10,000 of net depreciated value of business personal property owned by a small business. This bill also allows SC-based corporations to exclude up to $50 million in equity contributions from license tax calculations under specific conditions. The House Ways and Means Committee is scheduled to hear this bill on Tuesday, Feb. 3 at 1:30pm. Update: This bill has advanced to the House floor.

Judicial reform

Judicial selection reform H.4755 – Authorizes the Governor to appoint all 12 members of the Judicial Merit Selection Commission (JMSC), eight of which must be members of the SC Bar in good standing, and no more than four can be law enforcement professionals. This bill also prohibits current lawmakers from serving on the JMSC, and former lawmakers must wait two years after leaving office. Last week, the House Judiciary Committee advanced this bill to the House floor.
Magistrate reform H.3530 – Requires the JMSC to review magistrate candidates. Also expands magistrate jurisdiction to civil cases up to $25,000 and criminal offenses punishable by up to $25,000 in fines or one year of imprisonment, and all future magistrate appointees must be attorneys in good standing with the South Carolina Bar. Finally, this bill imposes a 14-day limit on magistrate holdover service before the Governor must appoint a temporary replacement. The House Judiciary Committee is scheduled to hear this bill on Tuesday, Feb. 3 immediately after the House adjourns. Update: This bill has advanced to the House floor.

Education

ESA approved items S.692 – Updates the Education Scholarship Trust Fund by removing previously approved personalized learning expenses, specifically home-based programs. It also eliminates certain additional parent reporting requirements and removes the provision allowing a parent’s signature alone to satisfy South Carolina’s compulsory school attendance law. A Senate Education subcommittee is scheduled to hear this bill on Wednesday, Feb. 4 at 10am.
Private providers in school H.3974 – Parents can request authorization for a private medical provider to perform necessary services for their child at a public school during school hours. Local school districts are required to consider requests on a case-by-case basis. The State Board of Education will develop parameters for private providers that are approved to operate during the school day. A Senate Education subcommittee is scheduled to hear this bill on Wednesday, Feb. 4 at 11am. Update: This bill has advanced to the full Senate Education Committee.
Grading floors ban H.5073 – Prevents schools from assigning a student a minimum grade that exceeds his or her actual achieved score. Also establishes a task force of education officials to evaluate and propose changes to the Uniform Grading Policy. This bill has been introduced and referred to the House Education and Public Works Committee.

Regulation

Small business regulatory freedom H.3021 – For every new regulation introduced, two existing regulations must be removed, aiming to reduce regulatory requirements by 25%, and changes the regulatory review process to prevent major regulations from persisting without legislative approval. Also ends the practice of judicial deference. Click here to read the Policy Council's full bill analysis. A Senate Judiciary subcommittee is scheduled to hear this bill on Thursday, Feb. 5 at 10am.

Data centers

Common sense data center regulations S.867 – Creates a statewide office under the Department of Environmental Services to manage data center applications and approve sites, reducing risks presented by local county decisions. There are financial assurance requirements, along with provisions for water usage, noise, light, buffers, and sites that can be used based on infrastructure adequacy. Also establishes a tax incentive program for brownfield site usage that's more targeted than the current incentive structure. Finally, data centers must cover their own energy costs, contracts, and infrastructure, preventing ratepayers from footing the bill. Onsite power generation is allowed. Decommissioning plans are mandatory, and energy/water usage data is public via FOIA requests. A Senate Agriculture and Natural Resources subcommittee is scheduled to hear this bill on Thursday, Feb. 5 immediately after the Senate adjourns.
Commercial data center contracts & eminent domain S.784 – Addresses both overarching protocols for utilities and targeted language regarding certain data centers. For utilities, it ensures approval for cost-saving programs or low-income benefitting programs that utilities want to implement, and requires utilities to adopt energy-efficient resources if they achieve a certain net savings rate. Also mandates a public comment period for energy infrastructure projects and heightened levels of eminent domain notifications and meetings. Commercial data centers operating at 100MW must enter into 15-year utility contracts that ensure they alone are paying all energy generation and transmission costs. Minimum billing requirements and language around unrecovered costs prevent financial obligations shifting to ratepayers. Water usage reporting is required. Incentives on computer equipment and electricity for all data centers are eliminated. This bill has been introduced and referred to the Senate Judiciary Committee.

Department of Transportation reform

S.831 – Creates a Coordinating Council for Transportation and Mobility, clarifies internal auditor qualifications, mandates DOT's long-range plan, and defines deputy secretaries' duties. It authorizes public-private partnerships, reciprocal toll agreements, conditional tolls, state immunity waivers, and municipal costs for delays. The bill transfers non-essential roads, imposes development congestion fees, adopts phased design-build and construction manager methods, and updates turnpike funding, studies, bonds (non-state debt), and issuance. Revenue includes higher EV/hydrogen fees to the Highway Fund, public charging taxes, enhanced county "C" funds oversight, procurement exemption for DOT information technology, and designating the Transportation Secretary to the Infrastructure Bank board. A Senate Transportation subcommittee is scheduled to hear this bill on Wednesday, Feb. 4 at 11am.
H.5071 – Transfers DOT leadership from the seven-member Commission to the Transportation Secretary, who will be appointed by the Governor with Senate approval. The Commission is retained in an advisory capacity. Also creates a Coordinating Council for Transportation and Mobility to enhance planning, mandating the transfer of nonessential roads to local entities with a new System Realignment Fund, introducing advanced contracting methods like phased design-build, and authorizing public-private partnerships and reciprocal agreements. The bill boosts “C” funds for counties with updated committee oversight and bonding options, increases alternative fuel road use fees directed to the State Highway Fund, imposes a new tax on public electric vehicle charging, refines toll imposition conditions, and expands procurement exemptions. A House Ways and Means legislative subcommittee will hear this bill Thursday, Feb. 5 at 9am.

Budget hearings

In addition to regular budget hearings in the House, the Joint Bond Review Committee will meet on Wednesday, Feb. 4 at 9:30am to hear proposals for new projects and updates on current ones.

The following House budget subcommittees are scheduled to meet this week:

Constitutional Subcommittee

Tuesday, Feb. 3 two hours after the House adjourns; hearing from the Comptroller General, State Fiscal Accountability Authority, State Election Commission, and State Auditor
Thursday, Feb. 5 immediately after the House adjourns; hearing from the Judicial Branch, Administrative Law Court, and Department of Environmental Services.

Economic Development Budget Subcommittee

Thursday Feb. 5 immediately after the House adjourns; hearing to review provisos.

Healthcare Subcommittee

Tuesday, Feb. 3 one hour after the House adjourns; hearing to review provisos.

Public Education and Special Schools Subcommittee

Tuesday, Feb. 3 immediately after the House adjourns; hearing a presentation from Revenue and Fiscal Affairs on state aid to classrooms, then reviewing provisos.
Wednesday, Feb. 4 at 9am; hearing from the Public Charter School District and Charter Institute at Erskine.

Transportation and Regulatory Budget Subcommittee

Tuesday, Feb. 3 an hour and a half after the House adjourns; hearing from the Board of Financial Institutions, Department of Employment and Workforce, Department of Motor Vehicles, then reviewing provisos.