These provisos deserve attention

One often overlooked part of the state budget is the long list of “provisos”, which are supposed to be directives for how state dollars should be spent. Legislators often deviate from the original intent of provisos to insert parts of legislation that failed to pass each chamber, create study committees, or other policies that have nothing to do with the allocation of funds.

The House Ways and Means Committee starts with the list of provisos from last year and will edit it; adding language, deleting entire line items, leaving directives in, and sending it to the House for a vote. The budget then moves to the Senate Finance Committee to undergo the same process, the full Senate votes, the House has another chance for amendments, then the Senate can concur or not concur; they usually do not concur which results in a conference committee comprised of three legislators from each chamber.

Below is a breakdown of notable budget proviso changes, both good and bad. The criteria for this judgement is weighed against the principles of the SC Policy Council: limited government, individual liberty, free markets, and traditional SC values. Additional consideration is given to how a proviso relates to budgeting for a single fiscal year, or if it should be a separate piece of legislation with its own process to become permanent law.

Many of the 118.21 proviso line-item spends are egregious, but rather than a dissect that clear and direct abuse of taxpayer dollars, the purpose of this report is to analyze budget directives.

For a separate analysis of good and bad FY26-27 provisos that were vetoed by the governor, click here.

Good proviso actions

1.112 Capping teacher superintendent termination settlements

This proviso was amended to include a cap for new school district superintendent contracts. It stipulates that any new contract must cap termination settlements to no more than one year’s salary or the remainder of the contract value, whichever is less.

1A.55 Limitations on grant recipients

Establishes new rules for the grants committee and the grant recipient, continuation and exit. Grants are now limited to three years, must have detailed applications, annual reporting, and performance data reporting. Grants will have to meet strict eligibility standards and will be evaluated under a uniform framework for metrics, continuation of thresholds, and possible independent review.

38.28 Preventing childcare provider fraud in DSS

Requires the Department of Social Services to submit a report to the Legislature by February, 2027 on efforts to combat childcare provider fraud. An assessment of recipients of the South Carolina Child Care Scholarship Program or other departmental grants will be required. DSS will have to explain their fraud mitigation measures, incidents of fraud, corrective actions taken, funds recovered, and prosecutions.

55.27 Roadmap for streamlining SMRs

The Department of Environmental Services (DES) has been directed to develop a plan to fast-track permitting for advanced nuclear technologies and radioactive isotope technologies. The most notable technologies to streamline are small modular reactors (SMRs) and microreactors. DES will submit a roadmap report to the Legislature by December 2026.

84.18 Road buyback program

The recent SCDOT modernization bill had the road buyback program removed, in which it was later added to the state budget. This is a voluntary program funded with $12.5M in which the state identifies roads that no longer serve a statewide purpose and can be transferred to a county or municipality. The money will be used to assist with the costs of maintaining and improving the roads upon transfer. A list of road transfer recommendations will be due to the legislature ang governor by February 28, 2027.

117.215 (deleted) Allow private pipeline companies to use eminent domain

SCPC was glad to see this bad proviso, that was unrelated to budgeting, get removed. Private pipeline companies were set to have the right to use eminent domain without being part of a public utility.

117.219 Ethics filing must identify public entity and amount paid

This proviso adds clarifying language that bolsters transparency was added to the state budget. Ethics filings from public officials will now have to identify the amount of income they receive from an identified state or political subdivision body, agency, board, commission, or entity.

Bad proviso actions

1A.75 Creating public policy institute at USC

This new institute is a conflict of interest, as it is a government funded entity tasked with studying and reporting on decision-making by the very government that funds it. The University of South Carolina, outside of the institute, receives government funds already, and any report on legislative decision making can be expected to be completely bias. Ironically, there is also already a Legislative Audit Council appointed by legislators that is widely ignored by legislators. It appears the new USC Institute of Public Policy will receive at least $1.8 million annually.

49.19 Film tax incentives & 49.24 Film tax incentives for post-production

Proviso 49.19 allows film producers to tap into a $2 million slush fund for rebates if their project costs between $250,000-$999,999. If qualified their rebate will be 25% of all production costs. Frankly, that’s a low dollar production cost. Why are we subsidizing indie films, if any at all? 49.24 provides an additional pool of $2 million to pull rebates from for post-production costs of the same price range.

50.29 (deleted) Would have prevented Department of Commerce from entering into open-ended incentive agreements

This proviso would have defined maximum expenditure amounts, representing the total funding authorized for a project. There should be no taxpayer-funded incentives going to corporations. If there are to be incentives, they certainly should not be open-ended.

50.30 (deleted) Would have limited funding to Scout Motors to the initial $1.3 billion

The House removed this proviso which further ensured that more money, most notably the $150 million cost overrun, can be appropriated to the initial Scout Motors deal under Act 3 of 2023.

50.31 (deleted) Would have prevented new use of economic development funds for data centers and required reporting on past use

It is neither the job of the state nor localities to use taxpayer dollars to recruit data centers or any private entities for that matter. Data centers are already given sales tax exemptions on their equipment and use the generation capacity that ratepayers funded; do they really need to be given more money? Why can’t we have a report on how much money has been gifted to data centers?

117.182, 117.205 and 117.224 Elimination of vacant FTE positions

These provisos would have eliminated vacant full-time employee positions, with 117.182 targeting 25% of vacant positions, while 117.205 and 117.224 would have eliminated positions that had been vacant for more than 12 months. Under 117.205, agencies could have retained 5% of those positions or a minimum of 10, whichever was greater. Vacant positions may indicate that an agency no longer needs the position, yet agencies and legislators often seek to preserve them for potential future hiring, allowing agencies to maintain authorized staffing levels and the size of the state bureaucracy.

117.225 (deleted) Would have prevented legislators from receiving appropriated funds from the budget with the exception of legislative compensation unless ethics committee approves before, results in penalties otherwise

This proviso was a good faith effort to bring transparency, trust, and accountability to the General Assembly. The State of South Carolina has historically struggled in this area. It was not surprising that this proviso was defeated, unfortunately.

Why provisos matter

Provisos are intended to provide directives for how state dollars are spent, but legislators increasingly use them to create policy, establish programs and make decisions that have little to do with the allocation of funds. This allows policies that might otherwise face greater scrutiny as standalone legislation to be inserted into the budget process.

As the examples in this report demonstrate, provisos can be used for good purposes, such as increasing transparency, holding agencies accountable and eliminating unnecessary government positions. But they can also be used to expand government or circumvent the normal legislative process.

The General Assembly should keep the budget focused on the budget. Provisos should direct the expenditure of funds for a single fiscal year, while permanent policy changes should be debated and passed as separate legislation. Doing so would make the budget process more transparent, accountable and consistent with the principles of limited government.