Statehouse Update May 12-14

Update 5/14/26: Adjustments were made to this summary to reflect developments that occurred throughout the week.

With one week of the legislative session left, both chambers are making a final push to pass last-minute legislation on taxes, education, and legal reform. The state budget and a bill overhauling the Department of Transportation (SCDOT) are scheduled for conference committees. It is possible that more bills will end up in conference committee.

Last week, a bill banning grading floors was sent to the governor's desk for his signature. Lawmakers in the House have also initiated redistricting efforts similar to Florida and Tennessee. It is unclear if the Senate will take up the measure.

Taxes & spending

Small business tax cuts and homestead exemption H.5006 – Provides tax exemptions on the first $10,000 of net depreciated value of business personal property owned by a small business. Also allows local corporations to exclude up to $50 million in equity contributions from license tax calculations under specific conditions. The Senate amended the bill to includes changes to the homestead property tax exemption, raising the exemption to $75,000 of fair market value for qualified five-year residents (65 or older), and $150,000 for qualified ten-year residents and residents who claimed an exemption on their 2025 taxes. All future recipients will have to abide by the residency requirements. This bill is on the House floor.
Insurance tax credits and fraud protection H.4817 – Increases the maximum amount of the residential retrofit individual income tax credit for a taxpayer’s legal residence from $1,000 to $2,000, and increases the maximum individual income tax credit for excess insurance premium taxes paid for property and casualty insurance from $1,250 to $3,000. The bill expands the allowable uses of Catastrophe Savings Account funds that are eligible for the individual income tax deduction and establishes an annual Disaster Preparedness Sales Tax Holiday to initially be held from Friday May 2, 2026, through Sunday, May 4, 2026. This bill also increases the insurance fraud oversight, investigation, and enforcement responsibilities of the Department of Insurance and transfers certain responsibilities to the Attorney General and SLED respectively. This bill is on the Senate floor.
Municipal sales tax hikes S.866 – In counties that do not currently impose a local sales tax, municipalities can enact a sales and use tax of up to 1%, subject to a referendum. The revenue would be used to provide property tax credits for owner-occupied homes and to finance certain projects. The bill specifies how the tax must be imposed and administered, and how the property tax credit is calculated. This bill is on the House floor. Update: This bill has passed both chambers and heads to the governor for his signature.
Lawmaker pay raise S.933 – Raises lawmaker pay to $47,500 with a mechanism for future raises based on the CPI capped at 5% every two years. This bill is on the House floor. Update: This bill has passed both chambers and heads to the governor for his signature.

Data centers

Comprehensive 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. Click here for the latest Policy Council analysis of the bill. This bill is on the Senate floor.
Data center tax breaks H.5122 – Grants a sales tax exemption for supplies purchased by internet service providers, including data centers 50MW or more that primarily support telecommunications services. This bill is on the Senate floor. Update: This bill has passed the Senate as amended and heads back to the House for consideration of Senate amendments.

Transportation

SCDOT modernization S.831 – Designates the Transportation Secretary as the sole governing authority of SCDOT, eliminating the Commission and transferring all of its responsibilities to the Secretary and four deputy secretaries accountable directly to the Secretary. Brings the federal National Environmental Policy Act (NEPA) permitting process to the state, shifting accountability to SCDOT. The bill introduces public-private partnerships to allow for private companies to help finance road projects, freeing up more state capital for repairs and maintenance. These projects would be funded via toll roads or choice lanes added onto existing roads. The bill does not allow for existing roads to be converted entirely into toll roads. Strengthens internal audits and requires an external audit every four years. County Transportation Committees (CTCs) are no longer required to spend a portion of their funds on the state highway system. CTC plans must include specific project selection criteria and must be updated at least every four years. CTC members must abide by the State Ethics Act and are required to live in the county they serve. Finally, the bill allocates $15 million of existing SCDOT funds to pothole mitigation program so the public can report potholes on the state highways via an app. This bill is scheduled for conference committee on Tuesday, May 12 at 10:30am. Update: The conference report reintroduced the requirement for CTCs to spend 33% of their funds on the state highway system. Both chambers adopted the conference report, passing the bill and sending it to the governor for his signature.

Education

School board ethics S.70 – Requires local school boards to adopt a code of ethics consistent with standards established by the S.C. Ethics Commission and approved by the State Board of Education. This bill is on the House floor. Update: This bill has passed both chambers and heads to the governor for his signature.
Charter school accountability S.454 – Adds reporting requirements for charter schools and charter authorizers, changes the process for terminating and transferring charter authorizers, and ensures charter school authorizers are subject to the same ethics and accountability requirements as public employees. This bill is on the Senate floor. Update: This bill has passed both chambers and heads to the governor for his signature.
Workforce readiness H.3197 – Establishes the goal of 60% of all working-aged South Carolinians to have a high-quality postsecondary degree by 2032, directing public and charter high schools to offer remediation in math and literacy to high school seniors seeking postsecondary education that are not academically prepared. This bill is on the House floor. Update: This bill has been recommitted to the House Education Committee.
Teacher safety H.5483 – Increases protections for teachers when enforcing classroom rules, directing schools to have clear procedures for the referral, removal, and administrative response to students that threaten teacher safety. This bill is on the House floor. Update: This bill has been recommitted to the House Education Committee.
Physical education requirement H.3195 – Requires public schools to provide mandatory minimum periods for physical education and recess for students in four-year-old kindergarten through eighth grade beginning in the 2026-27 school year. This bill is on the House floor. Update: This bill has passed both chambers and heads to the governor for his signature.

Regulatory reform

Small business regulatory freedom H.3021 – State agencies will conduct an internal review of their regulations to determine whether they need more, less, or the same regulations. The report is submitted to the Legislative Audit Council (LAC), who will conduct their own review to ensure the proposed regulations are statutorily authorized and determine whether they are effective. Review will happen every five to eight years depending on the agency, with the schedule for each agency set by the legislature. The LAC will submit their report along with internal reports to the appropriate House committees, who will make the final say on regulation promulgation. Any regulation with an estimated cost of at least $10 million over five years must be approved by a joint resolution. The bill also ends the practice of judicial deference, prohibiting courts from favoring agency interpretations over the way a law was written. The bill as amended by the Senate is on the House floor for consideration. Update: The House amended this bill to reintroduce automatic regulation expiration in certain instances and lower the economic impact threshold to require legislative regulatory review from $10 million over five years to $1 million over five years. The amended bill has passed the House and returns to the Senate for consideration of House amendments.

Legal reform

Minimum sentence reduction H.3597 – Judges can reduce a defendant’s sentence below the legally mandatory minimum for the crime at their discretion. There is no additional language outlining when lowering a defendant's sentence below the mandatory minimums is appropriate. This bill is on the House floor. Update: This bill has been recommitted to the House Judiciary Committee.
Comptroller General constitutional amendment S.35 – Amends the State Constitution to eliminate the Comptroller General as a constitutional office and assign the duties to the Governor. The bill authorizing a referendum on this amendment to appear on the ballot this November is on the Senate floor.
Medical malpractice H.4544 – Changes the definition of an occurrence to include multiple acts without breaking the causal chain, even if those errors are made by one or more individuals or entities. The bill also directs the Revenue and Fiscal Affairs Office to raise existing damage caps annually according to the CPI. This bill is on the Senate floor. Update: This bill has received second reading.
Liquor liability S.184 – Provides definitions for visible intoxication and a basis for holding a person or establishment liable for serving alcohol to a visibly intoxicated person. This bill is on the Senate floor.
Hate crimes act H.3039 – Adds an enhancement for certain crimes if the victim is believed to have been targeted for his or her race, color, sex, gender, national origin, sexual orientation, or physical or mental disability. A House Judiciary subcommittee is scheduled to hear this bill on Wednesday, May 13 at 9am. Update: This bill was found favorable and advanced to the full House Judiciary Committee.

Elections

Redistricting H.5683 – Redraws the South Carolina congressional map. A House Judiciary subcommittee is scheduled to hear this bill on Tuesday, May 12 at 9am. Update: This bill was amended in subcommittee to include the provisions of H.5684, with technical changes made to the timeline to allow the state to adhere to federal election guidelines. The bill was found favorable as amended by the full House Judiciary Committee and advanced to the House floor.
Rescheduling primaries H.5684 – Extends the filing date to declare candidacy for U.S. House and moves the primaries for U.S. House to the second Tuesday in August. This is for one year only to allow for adjustments related to redistricting. The full House Judiciary Committee is scheduled to hear this bill on Tuesday, May 12 immediately after the subcommittee on H.5683.

Miscellaneous

Legislative Audit Council H.4337 – Gives subpoena power to the Legislative Audit Council (LAC) during their audits and investigations. Click here to learn why this is a positive step towards properly utilizing the LAC. This bill is on the Senate floor. Update: This bill passed the Senate as amended and returned to the House for consideration of Senate amendments. The House amended the bill to remove a Senate provision allowing lawmakers to serve on the LAC. The bill as amended by the House now returns to the Senate for consideration.
Tropical trade commission H.4476 – Establishes a new fifteen-member South Carolina-Bahamas Trade Commission to advance bilateral trade between our state and the Bahamas. This bill is on the House floor. Update: This bill has passed both chambers and heads to the governor for his signature.