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January 6, 2017

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The 122nd General Assembly will convene on Tuesday, January 10. Having traditionally adjourned the first Thursday in June, legislation was passed last year shortening the legislative session. Sine Die adjournment is now scheduled for May 11, assuming the House sends the Senate a state budget in a timely matter. Republicans in the General Assembly are now more than a simple majority. They occupy nearly two-thirds of the seats in the legislature: 80 of the 124 seats in the House and 28 of 46 seats in the Senate are held by Republicans. As legislators return to Columbia, we will once again see many of the same issues dominating the discussion. Although work has been done in recent years to provide more funding for highway infrastructure, there still is no stable, long-term funding source, and that will be once again be a top priority. Reforming our state's retirement system, public school funding and the state budget are also at the top of the agenda.


While writing a state budget and meeting the needs of all state agencies are always a challenge, this year presents more obstacles than usual. Legislators will have far less in recurring and one-time revenue than years past, with $446 million in new and one-time funds - about a third of what they had last year. That total includes $139 million in one-time funds added to the $7.6 billion general fund budget. Legislators have warned state agencies that the new revenue has already been earmarked and receiving additional funding will be a challenge. Additionally, Governor Nikki Haley is requesting $64 million for flood relief, with $30.4 million earmarked for damaged state roads and $33.5 million for public building damages, debris removal and emergency procedures related to the storms. Flood relief for our state's farmers will also be part of the budget discussion.

Infrastructure funding is sure to play a role in the budget negotiations as well. Beginning in 2013, for the first time ever, the General Assembly earmarked state general fund revenue to help address our state's major highway infrastructure needs. Since then, legislators have cobbled together additional general fund revenue and, while they may do the same again this year, pressure is mounting to find a permanent, long-term funding plan. One roadblock to a potential tax increase was the threat of veto by Governor Haley. With Haley now poised to leave for a position in President-elect Donald Trump's administration, a gas tax plan may be back on the table. Governor Haley is expected to release her Executive Budget next week, which outlines her funding priority recommendations to the General Assembly for the next fiscal year.

Individual state agency budget requests can be found here.

The latest economic outlook from the Department of Commerce for the State can be found here.


President-elect Donald Trump has nominated current South Carolina Governor Nikki Haley to become his Ambassador to the United Nations. Haley has accepted the nomination and will remain governor until she is confirmed by the United States Senate. While it is unclear when her confirmation hearing will begin, it will almost certainly be during the current South Carolina legislative session. Should she be confirmed by the U.S. Senate, she will resign immediately and current Lieutenant Governor Henry McMaster will fulfill the remaining two years of her term.


Like every other state in the nation, South Carolina continues to face a critical funding challenge to upgrade roads and bridges, and to enhance existing roads to better meet demands. Our state's 16 cent per gallon gas tax, the primary source of funding for infrastructure repairs and improvements, has not been increased since 1987 and has never been adjusted for inflation. Many in the General Assembly have long opposed raising taxes of any kind, and Governor Nikki Haley has promised a veto of any tax increase. Since 2013, the General Assembly earmarks state general fund revenue to help address our state's major highway infrastructure needs. Previously, only state and federal fuel tax revenue was used for highway infrastructure. Legislators also have cobbled together additional general fund revenue, which includes a $200 million allocation to borrow $2.2 billion in bonds. Those funds will be used to complete projects over the next 10 years. We anticipate discussions will center around finding a stable, long-term plan for funding our infrastructure needs again this year.


Several Judicial seats will be filled early this year. Among them are a Supreme Court seat and a Court of Appeals seat. Three state judges have been screened out as qualified candidates by the Judicial Merit Selection Commission for a vacancy on the five-member S.C. Supreme Court that will open up in January upon the retirement of Chief Justice Costa Pleicones. The candidates are: Judge Diane Goodstein of Summerville, Judge George "Buck" James Jr. of Sumter and Judge Keith Kelly of Moore. In the judicial race for the open Court of Appeals Seat, the JMSC nominated the following: Judge Alison Lee of Columbia, Judge Garrison "Gary" Hill of Greenville and Blake Hewitt of Conway. A Joint Resolution has been filed to set the judicial elections for noon on February 1.


One major issue that has risen to the top of the priority list is to find a solution to the ever-growing unfunded liability of our state's retirement system. The amount is approaching $17 billion and is unsustainable to meet the future needs of retirees. A legislative panel charged with finding ways for the pension system to meet its obligations has been meeting in the off-session. Officials with the state Public Employee Benefit Authority, which runs the state's retirement system, laid out several scenarios last year to help pay down the retirement system's unfunded obligations. The scenarios include requiring state employees to pay as much as 12 percent of their salaries annually into the retirement system. Those workers now pay close to 9 percent of their salaries, considerably higher than the national average after the latest increase last July took effect. Advocates for state employees have said they already pay too much, leaving the state at a competitive disadvantage when it comes to hiring talented workers. Many, including Governor Nikki Haley, have long argued that finding a fix to the massive problem will not be easy on the state or the retirees depending on the plan.


Representative Gary Simrill (R-Rock Hill) will be the new House Majority Leader, replacing Bruce Bannister (R-Greenville). All other House and Senate leadership positions remain the same as last year. Micah Caskey (R-Lexington) was elected to lead the House of Representatives Freshman Caucus.


Following the loss of four long-serving Senate members in primaries last June, the current chamber will feature 21 members who have joined the Senate since 2012. That is nearly half of the 46-member body. On the House side, there will be 18 new members joining the body. Members of the House and Senate can be found here.


In an effort to keep bills with widespread support from being too easily blocked on the Senate calendar, the Senate made several rule changes during the organizational session last month. The new changes include: eliminating "minority reports" - a mechanism that senators use to block bills even though they have won approval in committee; making high-priority proposals, so-called "special order" bills, debated earlier in the legislative day; and making it easier to end filibusters, where senators opposed to a proposal take the podium and try to talk to death bills.

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