State lawmakers pass 2021-22 fiscal year budget totaling some $42.6 billion

State lawmakers passed the 2021-22 fiscal year budget on Thursday, April 29, totaling some $42.6 billion.

Local Government Recovery and Rebuilding Grants
For the second year in a row TML worked with Gov. Bill Lee’s administration to secure one-time disbursements of state grants to municipalities.

In his FY21-22 budget amendment the governor proposed $200 million in non-recurring funds to provide Local Government Recovery and Rebuilding Direct Appropriation Grants to cities and counties on a per capita basis.

The House and Senate ultimately passed a budget that provides $100 million in funds for local government grants for Fiscal Year 2022.
The amount approved by the Senate and House represents a $100 million reduction in the amount proposed by Gov. Lee. However, unlike under the governor’s revised budget, the grant monies are to be available in July and may be expended on any non-recurring expense.

The main components of the local government grants contained in the Senate and House budget amendments include:

  • Each city is to receive a minimum grant amount of $15,000, plus per capita distribution.
  • Maximum grant amount for any single city or county is $5 million.
  • Grant monies may only be spent on non-recurring (one-time) expenses.
  • Monies are not required to be expended on specific uses and expenditures are not required to be consistent with any specific categories.
  • Cities and counties are not required to file a plan of the use of grant monies or a resolution from the local governing body requesting use of the grant funds.
  • Grants are to be paid out by July 31, 2021.

The reduction in local government grants was not the only element of Gov. Lee’s revised budget affected by the Senate and House amendments.
The governor’s proposed funding for broadband was reduced by $100 million.
In addition, the governor’s proposed two-week sales tax holiday for restaurant, grocery and prepared food purchases was limited to just one week, resulting in another $50 million reduction.

Sales Tax Holiday for Grocery and Restaurant Purchases
The budget includes a week-long sales tax holiday on the retail sale of food, food ingredients (grocery) and prepared foods (restaurants/catering) beginning on July 30, 2021, and concluding at midnight on Aug. 5, 2021. The sales tax exemption afforded during this period does not apply to the sale of alcoholic beverages, tobacco, candy, or dietary supplements.

The sales tax exemption provided during this period applies to both the state and local option sales tax; however, the budget includes a hold-harmless provision, which provides for the reimbursement of the local share derived from such purchases. This is similar to the hold-harmless reimbursement provided to local government for other sales tax holidays.
Gov. Lee proposed creating a two-week sales tax holiday on grocery and restaurant purchases, but the Senate and House passed budgets limit the sales tax holiday to one week.

Investment in Broadband
Gov. Lee’s revised budget provided for a $200 million investment for broadband. These funds were intended to further the Lee Administration’s goal of ensuring all communities are served.

The budget adopted by the Senate and House reduce the level of state investment in broadband to $100 million in the upcoming fiscal year. However, it should be noted that the state will receive federal funds, under the American Rescue Plan, that may be utilized to enhance accessibility to broadband.
Senate Finance Chairman, Bo Watson, indicated that the $250 million derived from these separate reductions would be expended on a one-time payment to the state’s legacy pension plan (TCRS).