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2020 State of the State Address, Governor Henry McMaster

January 23, 2020

State of the State Address
As Prepared for Delivery
Wednesday, January 22, 2020
The State House, Columbia, S.C.

Mr. Speaker, Mr. President, ladies and gentlemen of the General Assembly, constitutional officers, my fellow South Carolinians: 

I begin tonight by recognizing those South Carolinians in uniform no longer with us – who gave their lives in the line of duty, and in service to us all. 

Deputy Michael S. Latu of the Marion County Sheriff’s Office;

Fire Engineer Paul Quattlebaum of the Lexington County Fire Service;

And Officer Jackson R. Winkeler of the Florence Regional Airport Department of Public Safety. 

To the families and loved ones of these three men, on behalf of all South Carolinians, we share your sadness, honor their service and wish you strength.

I am delighted to have with us once again tonight our First Lady, my bride Peggy, who is working to bring attention and energy to the areas of human trafficking, domestic violence, veterans health and animal care and adoption.  Thank you, Peggy.  Please stand and be recognized.

I would also like to thank our Cabinet members for their innovative, dedicated and sustained efforts to improve the lives and futures of our people.  We are winning because they are succeeding and there is much more to come.  Will our Cabinet members please stand and be recognized?  Thank you.

Our lieutenant governor, Pamela Evette, is meeting with businesses across the state to identify workforce and regulatory relief.  She has focused on transportation, early childhood education and preparation for the upcoming census and has encouraged us all to “Grab a Bag” and eliminate litter.

Thank you, Lieutenant Governor.  Please stand and be recognized.

I would also like to welcome the former governor of Wisconsin, who joins us tonight.  Governor Scott Walker, please stand and be recognized. 

Tonight, I’m proud to tell you that the state of the state is strong.  South Carolina is winning. 

Since I last spoke to you in this forum, things have changed.  Our state has gotten stronger, but so have others.  We are today in the fiercest economic competition we have ever seen.  It is with the other southeastern states, which are experiencing the greatest growth in the nation.  But we have all we need to win.  And we shall.

The nation’s economy is booming and so is ours.  We are roaring into the twenties with a vibrant economy and a growing population.  In the last three years alone, we have announced nearly $10 billion in new capital investment and almost 35,000 jobs.  

More people are working in South Carolina than ever before, unemployment is at a record low, and personal income growth is the highest ever.  We are consistently rated as one of the best places in the country to live, work and raise a family.

Business growth in South Carolina is the business of South Carolina, and I’d like to recognize some of our companies here tonight:

Representing Adornus Cabinetry, Mr. George Mejias, CEO, and his wife, Mrs. Maria Mejias; 

Representing GE Appliances, a Haier Company, Mr. Frank Scheffel and Mr. Bill Good; 

Representing Spartan Motors, their counsel, Ms. Stephanie Few; 

Representing McCall Farms, Mr. Marion Swink and his wife, Mrs. Frances Swink;

And, representing Lockheed Martin, Mr. Ben Peat and Mr. Nick Mesenberg. 

Ladies and gentlemen, please stand and be recognized. 

Among the General Assembly’s steps forward last year were a record number of my recommendations to you, which you accepted.  After careful consideration, I offer these to you tonight.

Last year our budget from state funds totaled $9.33 billion.  This year, we are expecting to exceed those revenues by a whopping $1.8 billion.  As with the growth in the nation’s economy, most economists were surprised.

Last year, we returned $67 million to the taxpayers in a one-time rebate check.  It was well-received.  This year, I propose that we return twenty-five cents of every surplus dollar to the taxpayers through rebates and tax cuts.  It’s their money. 

Many people don’t believe it but reducing taxes in fact results in tax receipts increasing, not decreasing.  It happened when President Kennedy did it, again when President Reagan did it, and it is happening now, under President Trump.  North Carolina and Georgia, two of our strongest competitors, have just done it, bringing their income taxes down lower than ours.

There’s a misconception that our “effective rate” after deductions is lower than those of our neighbors.  This misconception was explained in the 2018 study by the Tax Foundation for the South Carolina Chamber of Commerce and found to be just that: a misconception.

A direct comparison of effective rates and actual taxes in North Carolina and Georgia shows that our taxes are lower only for low-income filers – many of whom are on Medicaid or are Medicaid-eligible. 

South Carolina has the highest personal income tax rate in the southeast and the twelfth highest in the nation.  Seven states have no income taxes at all.  Taxes of all kinds at all levels add up quickly – little by little – to smother growth.  Money spent by the people who worked to earn it goes farther, more efficiently and produces more dividends for them and us than the same dollars spent by the government.  

Therefore, I ask that we cut our state’s personal income taxes by $160 million this first year, for a total of $2.6 billion over five years.  This means a 15% across-the-board tax reduction for all personal income brackets, keeping us competitive with our neighboring states.

This year, with a $1.8 billion surplus, if we don’t cut taxes and send money back to the people, shame on us. 

I ask that we send $250 million from the surplus back to South Carolina taxpayers in the form of a rebate check – an average of $200 per taxpayer.  

And for the third year in a row, I ask that we honor the service and sacrifice of our men and women who served in uniform – veterans, first responders, law enforcement officers, firefighters and peace officers – by no longer taxing their retirement pay.  

This commitment to our veterans will help us in protecting and expanding missions at our state’s military bases.  As for law enforcement, firefighters and first responders, it will help keep them on the job, aid recruitment and show our appreciation for their service. 

Joining us tonight are men and women from the South Carolina National Guard and from our state law enforcement agencies who walk the thin blue line every day.  We cannot prosper without them.  Please stand and be recognized.

The path to prosperity goes straight through the classroom.

Last year we took bold steps in education reform to empower the next generation’s workforce.  We invested in our classroom teachers, in rural schools, in keeping our children safe and secure.   

This year our continued investment must be the most significant ever.

Teachers are leaving the classroom, most before their fifth year.  

Last year, we raised the salaries of all South Carolina teachers.  This year, I ask you to give each teacher an additional $3,000 dollar raise – which equates to an average 7% raise per teacher.

The impact of this investment will be dramatic and immediate.  South Carolina will vault into the “top 25” national ranking for average teacher pay.  We now rank 41st.  We will surpass the southeastern average for the first time in many of our lives.  And the minimum starting salary for new teachers will have jumped 26% in the last three years, to $38,000.  

These are critical investments.  They will help attract the best and the brightest young people into the profession and keep our highly successful and experienced teachers where they are needed the most: in the classroom.

Tonight, we are joined by several of our most successful and experienced teachers.  As I say your name, please stand and be recognized. 

Ms. Ali Hendrick from Dutch Fork High School is a social studies teacher and former Lexington/Richland School District 5 Teacher of the Year; 

Ms. Tiffany Hobart is the current Teacher of the Year for Pickens Elementary in Pickens, South Carolina, where she teaches 4K; 

Ms. Chanda Jefferson is the South Carolina Teacher of the Year for 2020. She teaches biology and science at Fairfield Central High School;

Mr. Jeff Maxey is a special education teacher in Anderson School District 3 and former state Teacher of the Year for 2019; 

And, Ms. Laura Privette is a school counselor at North Hartsville Elementary, and former Darlington School District Teacher of the Year. 

Ladies and gentlemen, thank you for your service to our state. 

By the age of four, the average lower-income child in America has heard about 40 million words in his or her lifetime; the average upper-income child – 70 million.

This “30-million-word gap” dramatically affects a child’s ability to learn.

Our lower-income five-year-old children are increasingly entering kindergarten unprepared and lacking the necessary literacy and language skills.  

They are unlikely to ever catch up.  By the third grade, they are “at risk,” and less likely to graduate or obtain the skills necessary to enter the workforce and contribute to our economy and their own success.

The facts are clear: to change the path of a child’s future, to enhance the prosperity of our economy, to maximize the success of our state, we have to make sure that every student is ready to learn when he or she enters the classroom.

In 2006, the General Assembly funded full-day, four-year-old kindergarten programs for Medicaid-eligible children in public schools and private child care centers.  Currently, 62 school districts are eligible to participate; 17 districts are not.  

This leaves 13,000 lower-income, “at risk” children in 17 urban and suburban school districts without the option to attend full-day, four-year-old kindergarten. 

I ask that you join me in providing every lower-income, four-year-old child in South Carolina the opportunity to attend full-day kindergarten at the public, private, parochial or religious institution of their parents’ choosing.  That’s right – the parents can choose.

We will unleash the free market into early childhood education through parental choice.

We will eliminate red tape and regulations while increasing the reimbursement rate – that is, the money that already follows each child – to the school the of the parents’ choice.

The time is now to act, to take dramatic and decisive action – to secure our prosperity for generations to come, and to assure all of South Carolina’s parents that their children will not be left behind.

Last year, Speaker Lucas, President Peeler and I called on the state Revenue and Fiscal Affairs office to review South Carolina’s outdated education funding formula.                     

In October, they told us what we already knew: the way we fund education is confusing, not working and no longer sustainable.  

Although there is no easy solution, we know that education reform means accountability, efficiency and transparency for local school boards and administrators.  It also means removing outdated, inefficient and confusing testing and paperwork.  And it means the consolidation of districts to reduce overhead, create efficiencies and put more dollars into classrooms.  

We must have a new path forward.  The House has passed a comprehensive education reform bill, and the Senate is currently debating their version.  I ask that these two versions be reconciled and sent to my desk as soon as possible – so I can sign it into law, and we can get to work.

We must also continue efforts to make our public universities and colleges – technical and comprehensive – more accessible and affordable for all South Carolinians.  

Last year we took a dramatic step by freezing college tuition for in-state students.  I urge you to do it again this year by providing a 5% funding increase for each institution that does not raise tuition.

With this surplus, we can also make a historic, one-time investment toward repairing our aging campus buildings and infrastructure.  We should pay down the state’s deferred maintenance costs while we can – now – rather than borrowing more money in the future to do it.

Many of our young people cannot afford college without scholarships, grants and financial assistance.  I ask you to provide an additional $164 million for need-based scholarships and grants to open the door of opportunity for those students.  

I also ask that the state pay 100% of college tuition for active duty members of the South Carolina Army or Air National Guard. 

With us tonight are several college presidents: Dr. Roslyn Clark Artis of Benedict College, Dr. Jim Clements of Clemson University and Dr. David Cole of the Medical University of South Carolina.  Please stand and be recognized. 

Recently, I had the honor of welcoming the new president of the University of South Carolina to our state.

President Bob Caslen, a three-star general, retired in 2018 after serving 43 years in uniform, leading more than 200,000 soldiers under nine commanders-in-chief and deploying six times.  He served for years as the superintendent of West Point, establishing records and success across the board.  

I’d like to tell you a quick story about Bob Caslen that he won’t tell. 

On 9/11, General Caslen was working at the Pentagon.  After Flight 77 hit the building, everyone was evacuated.  You may remember the scene.

Ignoring warnings, he ran back into the burning building to search for wounded and re-establish communications with the White House. 

President Caslen and Mrs. Shelly Caslen, please stand and be recognized.

President Caslen gave me an idea.  He suggested that we allow our colleges and universities to spend more of their privately-raised dollars for need-based scholarships.  It’s a great idea and I ask that the General Assembly embrace it.

According to U.S. News and World Report, South Carolina is ranked in the top 5% nationally for high potential job growth – especially in the manufacturing, technology, health care and engineering fields. 

However, competition for workers is fierce because there are not enough of them.  Some businesses are struggling – not for a lack of customers – but because they cannot find enough staff.

Right now – in South Carolina – we have around 70,000 jobs looking for people.  

The demand for workers in the skilled trades – plumbing, masonry, carpentry, and others – high paying jobs – is so great that our businesses have to go out of state to recruit them.  

We know that economic prosperity does not require a four-year degree.   It can be achieved through two-year associate degrees and a multitude of certificates from our state's technical colleges. 

Recently, Superintendent of Education Molly Spearman and I visited a very special place called The Continuum.  Located in Lake City, The Continuum is a regional center for workforce education and training for high school students and adults.  It was created through collaboration between The Darla Moore Foundation, Florence-Darlington Technical College, Francis Marion University and local businesses. 

This state-of-the-art career center provides students with training, certifications, dual credit courses, along with business incubator space.

Superintendent Spearman proposed that we replicate this model in rural school districts – by providing a state match for collaborations between technical colleges, school districts and businesses.  I ask you to approve my budget request of $50 million for this effort. 

In this economy, when we have jobs looking for people, there is no reason for anyone who can work not to be working, including able-bodied people on public assistance.  We must leave no stone unturned to help our state’s businesses fill those jobs with skilled, educated and trained workers.

Last year, I issued an executive order requiring able-bodied Medicaid recipients to pursue 80 hours a month of community engagement, education, job training or employment. 

In December, the Centers for Medicare and Medicaid Services approved these requirements. 

“Welfare-to-Work” is one of the great successes in American public policy over the last 25 years.  There is no reason “Medicaid-to-Work” cannot be just as effective.  In South Carolina, it will be. 

By directing more resources toward enhancing workforce training, development and education than ever before, all the assets and opportunities are in place to help South Carolinians achieve and sustain financial independence and prosperity, now and in the future.  

We must also continue to invest in our infrastructure.  Our ports, roads and rail remain the central drivers of our economic prosperity. 

The South Carolina Ports Authority is a powerful economic engine.  Its container volumes have doubled over the past decade, making it the nation’s ninth busiest container port.  And it is growing.  We are now deepening the harbor.  Once this is completed, Charleston will have the deepest harbor on the eastern seaboard, allowing the huge post-Panamax ships to move even more cargo and containers into and out of our state.  The economic growth accompanying this will set even more records. 

Through the two Inland Ports in Greer and Dillon, 25% of the Port’s total volume now moves by rail to and from the marine terminals, doubling intermodal volume since 2012.  Completing the Leatherman Terminal in North Charleston will take more traffic off Lowcountry bridges and highways and onto barges and trains.

I want to thank everyone at the Ports Authority for their hard work.  In particular, I’d like to recognize Chairman Bill Stern, CEO Jim Newsome and COO Barbara Melvin.  Please stand and be recognized. 

South Carolina’s bright economic future requires an abundant supply of clean, affordable energy. Without it, we are at a competitive disadvantage. 

I believe that every member is aware of the situation facing the solvency and future of Santee Cooper.  In the coming days, the General Assembly will receive proposals and will decide Santee Cooper’s fate.  The ratepayers of South Carolina deserve that we do so thoughtfully, but without delay.   

I would like to thank and recognize Ms. Marcia Adams, director of the Department of Administration, and her entire team for their herculean efforts and their dogged persistence in keeping this process on track.  Ms. Adams, please stand and be recognized.

One of the main responsibilities of government is to provide for the safety of the people.  

We are all aware of the struggles facing the men and women working at our Department of Corrections: contraband, violence, gangs, staffing shortages, health care deficiencies.  This must change.  I ask that we invest at least $100 million dollars toward making our prisons safer and more secure, both inside and outside the fence, by replacing and repairing existing infrastructure, facilities and control systems.

We are losing valuable and experienced personnel because our agencies are unable to remain competitive with pay and benefits.  Our highways are dangerous without troopers on patrol.  Every school must have a resource officer on duty all day.  Fires must be battled and contained.  Justice requires investigations to be properly conducted.  Correctional facilities need guards.  And our waterways and lakes must remain safe and navigable.

I ask that we dedicate at least $60 million in new dollars to law enforcement, public safety and first response agencies for recruitment and retention.  This includes pay raises for troopers, SLED agents, wildlife officers, probation officers, firefighters, corrections officers, forestry and emergency services personnel.  This will also compete the placement of a school resource officer in every school in the state.

It is often said that the men and women of the Highway Patrol are the face of law enforcement in South Carolina.  I ask that we direct $5 million for the sole purpose of hiring 100 new troopers by the end of the year – and paying them more than local law enforcement agencies can match.

Recently, I appointed North Charleston Police Chief Reggie Burgess to serve as the next director of the Department of Public Safety.

Chief Burgess is one of the finest leaders our state has ever produced.  His career achievements are remarkable.  I am confident that he will do an excellent job recruiting and retaining additional highly qualified troopers, addressing challenges and taking morale and public confidence to new heights. 

Chief Burgess is here tonight with his wife Tracy and their children, Reggie and Kristen.  Please join me in welcoming them.

South Carolina is proudly a military state. 

During times of national or state emergency, we call on the South Carolina National Guard to do many things.  They deploy and defend this nation.  They evacuate and secure our coast.  These brave men and women are known around the world for their service and sacrifice. 

However, the conditions of many of their armories are unsafe, unusable or inadequate for training and drill.  I have proposed a significant reinvestment to improve the condition of National Guard armories in our state.  I ask that you join me in this commitment. 

Today, we have more than 50,000 active duty and reserve military personnel.  We have eight major military installations.  And we have more than 400,000 veterans. 

We must ensure that our veterans – and their dependents – receive the benefits and services that they have earned over a lifetime of protecting our country and that they have the opportunity to utilize their talents in the civilian workforce. 

I was proud to work with the General Assembly to support legislation creating the South Carolina Department of Veterans’ Affairs to be led by a secretary to act as their advocate on the state and federal level. 

That man is here tonight: a top graduate of The Citadel with four combat tours in Iraq and service in the South Carolina House of Representatives.  

Lt. Col. Bobby Cox is joined by his wife Joscelyn and their children Reagan and Seth.  Please stand and be recognized. 

Today is the anniversary of the United States Supreme Court’s decision in Roe v. Wade. 

Ladies and gentlemen, the right to life is the most precious of rights – and the most fragile.  We must never let it be taken for granted.

For the third year in a row, my budget includes a proviso preventing the funneling of taxpayer dollars to abortion providers like Planned Parenthood.

And you are now considering two important pieces of legislation.  Both will protect the sanctity of life – through heartbeat or personhood.  It’s time to take a vote.  Send them to me and I will immediately sign them into law.  

Ladies and gentlemen, we face recruitment and retention challenges not only with teachers, troopers, soldiers and guards – but also with valuable talent at our state agencies. 

Our booming economy and record-low unemployment sometimes put agencies at a disadvantage against the private sector.

Government should take some lessons from successful businesses. 

I am convinced that across-the-board pay raises for state employees are less effective than those based on performance, merit, success or longevity. 

I ask that you provide $33 million – almost the equivalent of a 2% across-the-board pay raise – and direct that those funds go to agency directors to be used for merit-based raises.

Excessive government regulation is “the number one cause of death” for businesses both large and small, and also the bane of investment. 

Two years ago, I issued an executive order instructing state agencies to evaluate – before issuing regulations – any unintended consequences or undue burdens they may place on South Carolina’s businesses.

This year, Senator Tom Davis has agreed to sponsor legislation that would require the Governor’s Office to submit to the General Assembly on an annual basis, recommendations for the elimination, withdrawal or modernization of any statutes, regulations, policies, protocols, boards, commissions, offices, positions or practices.

I have asked Lt. Governor Evette to implement this law upon enactment – and to seek input and suggestions from businesses on what to eliminate, change or modify.

I ask you to work with us – to unleash innovation, investment and emerging technologies by passing this bill promptly. 

That brings us to our state pension system.  We have all been hearing the alarm bell for years.

We must maintain our commitment to the 11.5% of South Carolinians who rely on the state retirement systems and we must also protect the taxpayers from bearing any additional financial burden caused by inaction or indecision or anything else. 

The best answer is a date-certain transition away from “defined benefit” pension plans to “defined contribution” plans for new state employees.

I am asking that we – at the end of this year – close enrollment in the current “defined-benefit” plan.  Putting money into an open system is like trying to fill a bathtub with the drain open.  We must close enrollment first. 

As you are aware, last year – as in years past – I vetoed over $20 million in “pass-throughs” inserted into the state budget under vague, broad descriptions like “Parks Revitalization” and “Sports Marketing.”  It has become a bad habit – a routine exercise of votes and vetoes between the governors and the General Assembly. 

Clearly, these appropriations should be publicly disclosed, debated and allowed to stand on their own merits, like all other measures.  Failing that, I offer a “Plan B.”

“Plan B” suggests that equivalent funds be provided to the same agencies as last year – but with the requirement that they be awarded through a public, competitive grants process, with full reporting of all actions.

Under this plan, funds would be made available to applicants with demonstrated community support and with missions that advance the agencies’ objectives.  All applications and awards will be placed on agency web sites within fifteen days, allowing for public scrutiny and total transparency.

Maintaining the public’s trust in government, at all levels, requires transparency and accountability on how and why every single taxpayer dollar is spent. 

That also means stronger and expanded authority for the State Ethics Commission.

We must change the law to require anyone who is paid to influence decisions made by county, municipal, or school board officials to publicly register with the Ethics Commission as a lobbyist.  

And public officials in all branches of government – at all levels – must be subject to the Freedom of Information Act.  

Good government means protecting the health and well-being of our people.  That includes our young people and vulnerable adults.

In March, I nominated Mr. Michael Leach to serve as director of the South Carolina Department of Social Services (DSS).

Mr. Leach is a trained mental health clinician.  And, in less than one year, he has brought transformative leadership to DSS – reigniting the passions of his employees and reforming those processes which required re-evaluation. 

Director Michael Leach, please stand and be recognized. 

This year, we escaped the wrath of a major hurricane.  But we’ve had four major flooding disasters between 2015 and 2018 and we will have more.  

These events caused 37 deaths and harm to nearly 150,000 homes. 

Damages exceeded $800 million, with an estimated total loss of $320 million in tourism dollars.

In the one year since the creation of the South Carolina Floodwater Commission, we have

seen multi-faceted communication, collaboration and cooperation among its members – across all levels of government, academia, the military, the private sector and non-governmental organizations.  Their goal: to protect and enhance our prosperity and happiness by finding ways and means to make these waters our friend. 

Thousands of volunteer hours have gone into producing the Commission’s historic, unique report, which addresses our challenges with unprecedented scope and thoroughness.  It is time now to act. 

We must take action to address our state’s drainage systems. 

We must protect, replenish and expand our marshes. 

We must develop centralized, streamlined resiliency and response plans. 

We must ensure that local governments have the means to access much-needed recovery funds.

We must plant more native vegetation – to deter erosion and aid in groundwater infiltration. 

And we must collaborate with and support innovative efforts like those envisioned in Charleston through the Dutch Dialogues. 

Our Commission will continue its vigorous discussions regarding the flood-related challenges that we all face.  I am confident that we can be a model for other states. 

Ladies and gentlemen, South Carolina is winning.  We are in the midst of a stunning economic resurgence – with the opportunity to seize prosperity for generations to come.

We recognize our tremendous assets.  We acknowledge our challenges.

We believe in faith. We believe in family. We believe in the flag and we believe in free markets. 

We believe in liberty – in that shining city on the hill of which President Reagan spoke. 

And we know that liberty is worth fighting for. 

I’m here to tell you that our resolve will not wane and will not falter.  As your governor, my determination is stronger than ever – to fight for you, to fight for the ideals we all share, to fight for South Carolina.  There is no place I would rather be, and there is nothing I would rather do. 

This year, let us roar into the twenties with renewed purpose.  Let us be bold.  Let us act on behalf of the sons and daughters of South Carolina, so that they may receive a state as bright with promise as that which we were blessed to inherit.  

And remember, always teach the children to be proud of South Carolina!

May God bless you. May God bless South Carolina.