McMaster clears the way for $150 million Scout Motors payout in final budget vetoes

South Carolina Gov. Henry McMaster struck 14 items from the state’s $15 billion budget for fiscal year 2026-27 on Monday, including a legislative hold on money owed for cost overruns at the Scout Motors site in Blythewood.

The Scout Motors hold

Lawmakers had written language requiring the state to wait for a Legislative Audit Council review of Department of Commerce spending at the electric vehicle site before releasing roughly $150 million to cover overruns. That review was not due back until roughly mid-December. McMaster erased the requirement, saying contractors and vendors who have finished work should not be left waiting and that failing to pay them would damage South Carolina’s standing with businesses that expect the state to honor its commitments.

The move drew immediate pushback. Sen. Tom Davis, a Beaufort Republican who championed the delay, said the veto assumes the money is due right now, and it is not. Releasing funds before auditors finish, he said, will only deepen public doubts about how the project has been managed. Davis noted the budget left about $380 million unspent that lawmakers could use once the review is done.

The overruns have been a sore point with taxpayers since they surfaced in January. The state already committed $1.3 billion in 2023 to land the manufacturer, including $70 million set aside for potential overages that Commerce has since spent. The department has attributed much of the increase to a five-month delay in securing federal permits for work on wetlands. The audit into whether Commerce mishandled the project is still pending.

McMaster also killed a related clause that would have required every agency to seek legislative approval before authorizing any spending beyond what was originally budgeted, saying it could stall highway and college construction projects and drive costs higher.

What else was cut

Only one veto struck actual dollars: $800,000 for the South Carolina Youth Challenge Academy, a National Guard program that closed after its final class graduated in June. The other 13 removed provisos, the clauses that dictate how agencies spend. Eight involved the Department of Education, most of them made redundant by laws passed earlier this year on charter school accountability, student privacy, assessments and school bathroom use. Another canceled forgiveness of a $350,000 grant issued to the town of Pacolet in 2013.

Missing from the list were earmarks, McMaster’s usual target. This year’s budget contained no legislator-sponsored local projects at all, and the governor said he hopes future budgets follow suit.

What stayed in

McMaster said the plan reflects 92% of his executive budget. Surviving items include a cut in the top income tax rate from 6% to 5.21%, a homestead exemption increase from $50,000 to $75,000 for homeowners 65 and older, those permanently disabled and those legally blind, and a $2,000 raise at every step of the teacher salary scale, lifting starting pay to $50,500.

Also funded: school resource officer grants, expanded full-day 4K, a seventh consecutive in-state tuition freeze, $95 million for SC WINS scholarships, $88 million for conservation, $377 million for roads and bridges, and $8.3 million for law enforcement pay and hiring.

Because the fiscal year began July 1, the budget took effect as soon as the vetoes were issued. Lawmakers are not expected to return to Columbia for override votes. This was the 10th and final budget of McMaster’s tenure, and voters will choose his successor in November.