McMaster issues executive order halting race-based spending quotas for SC agencies

COLUMBIA, S.C. (WIS) - South Carolina Gov. Henry McMaster issued an executive order Wednesday ending a requirement for state agencies to spend part of their annual budget through minority-owned businesses.

The order directs state agencies to no longer spend, procure or award contracts to minority-owned businesses based on “unconstitutional and discriminatory race-based quotas” or requirements already established by state law.

The full executive order can be found below.

Under current state law, the South Carolina Department of Transportation is required to use 5% of its budget to award some highway and infrastructure funds to minority businesses. All other state agencies are required to spend 10% of their annual budget through various minority-owned companies.

State data shows last fiscal year, about $27 million went toward businesses in compliance with these requirements.

But nearly half of the agencies required to submit annual plans showing they are following the law did not submit them.

According to that data, the South Carolina Department of Transportation spent just under $7 million in Fiscal Year 2024-2025 in compliance with the law.

Transportation Secretary Justin Powell said, to his knowledge, the agency does not have any current contracts subject to that mandate.

“That specific provision was generally not used by the department and was very limited to how we do it, but we’re going to comply immediately with the governor’s order,” Powell told reporters Wednesday.

SC Small Business Contracting and Certification Annual Report by marley.bassett

McMaster said that the new order would ensure that the state complies with the U.S. Constitution.

“We are in a position — it was called to our attention — that we had to do something,” McMaster told reporters Wednesday, shortly after issuing the order.

McMaster also noted that this order helps the state comply with a recent U.S. Supreme Court ruling and an executive order issued by President Donald Trump.

In Students for Fair Admissions, Inc. v. President & Fellows of Harvard College, the Supreme Court ruled that any race-based programs “must comply with strict scrutiny, they may never use race as a stereotype of negative, and – at some point – they must end.”

Trump, meanwhile, issued an executive order earlier this year prohibiting the use of race-based quotas and set-asides.

“If we didn’t comply with the constitution, as viewed by the Trump administration, as viewed by me and the lawyers here, if we didn’t abide, then our people would be losing federal money,” McMaster said.

The executive order drew the ire of Democratic lawmakers Wednesday.

House Minority Leader Todd Rutherford, D – Richland, said he does not believe federal funding would have really been at risk.

Rutherford argued the existing requirements were benefiting a strong state economy.

“We need to understand that a rising tide lifts all boats. We do that because we take care of the least of thee, we take care of those that participated in the building of this state, not just enjoying its wealth without giving back to those that actually had to build it,” Rutherford said.

McMaster’s order does not repeal the pair of laws, as the governor does not have that authority. But McMaster’s office said the governor “extensively” consulted with legislative leadership before issuing the order.

In a press release issued Wednesday by the governor’s office, Speaker of the House Murrell Smith, R – Sumter, and Senate President Thomas Alexander, R – Oconee, said they will file bills to permanently repeal these statutes from state code.

The General Assembly can take that legislation up when it return to session at the State House next month.

Notably, McMaster’s executive order only applies to future contracts. State agencies are not allowed to break any current agreements with minority-owned businesses as part of their required quotas.

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