The ball is in the South Carolina State House’s court following Gov. Henry McMaster’s line item veto announcements.
The fiscal year 2026-2027 budget totals $15 billion. McMaster vetoed 14 line items, including one funding the Youth Challenge program, which closed in June. Most of the remainder had been addressed in other legislation.
One veto of significance dealt with a pledge for construction of the Scout Motors, a Volkswagen subsidiary that produces electric vehicles, facility in Richland County. Construction work on the $2 billion production center began in 2024.
State Senator Tom Young (R-District 24) from Aiken told ABD the $150 million would cover a cost overrun for the project.
“What the General Assembly did is, we started a Legislative Audit Council review that’s going on now,” he explained. “The budget proviso was intended to keep the money from being paid until the Legislative Audit Council review was completed. By his vetoing that proviso, the money will likely be paid before the review is completed. There is a chance that the legislature may return at some point to override or to consider an override of that veto.”
Before the Senate can act, the state house must return to session to begin considering an override.
Scout Motor is not responsible for the overrun. It is connected to an environmental report the state promised to provide, and the $150 million would likely be paid with taxpayer funds.
McMaster said withholding the payment, even briefly, can harm the state’s reputation as a good place to do business.
“We must pay those to whom the state has obligated itself,” said the governor. “I think it is bad business policy. It hurts our reputation as a handshake state where people can depend on us. The money needs to be paid. We can still have the inquiry, but we owe the money. We have to pay it.”
This was McMaster’s 10th and final budget as he wraps up his second term in office. Young said the FY 2026-2027 plan reflects the governor’s priorities.
“His push to raise starting teacher pay in South Carolina. Number one,” he began. “His efforts to preserve South Carolina’s natural resources, which, with the growth that the state is experiencing, is very important that we embrace those measures, and then finally, the leadership that he has shown in the area of economic development with the 938 projects with over $54 billion and over 101,000 jobs announced during that time frame.”
Two items in the spending plan are designed to keep the Palmetto State on track to have a skilled workforce, trained and ready to step into any type of business.
The budget continues for a seventh year a freeze on college tuition. That will be coupled with the Meeting Street Scholarship Fund, committing $18.7 million in lottery revenues to support good students who are not eligible for Pell grants.
Additionally, the budget provides $95 million to the South Carolina Workforce Industry Needs Scholarships (SC WINS) program, available for students at the state’s technical colleges.
“I think it’s important that we do what we can to try to make sure that the cost of college education remains within the reach of South Carolinians, and we need to also emphasize the benefits that people can get by going to a technical college,” said Young. “There’s a lot of job opportunities across the state in areas that someone can learn a skill in a technical college and then be hired in the workforce all across South Carolina. We have an outstanding technical college system.”
In the six years since the WINS program was started, 150,000 students have been trained and certified in high-demand careers like manufacturing, nursing, computer science and construction.
In his news conference announcing the vetoes, McMaster noted that 92% of what was in his original budget proposal is in the final FY 2026-2027 budget. That includes a reduction in the personal income tax, increased pay for teachers and law enforcement, and expanding the homestead exemption to $75,000 for homeowners over age 65, blind or permanently disabled.
ABD has contacted Speaker Murrell Smith’s office and asked about calling the House back into session to consider overriding the veto of the withholding of payment for Scout Motors.
