View from the Dome

June 22, 2017

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The 122nd General Assembly adjourned on Tuesday, June 6 after returning to Columbia to adopt a Conference Report on the state budget. Having traditionally adjourned the first Thursday in June, legislation was passed last year shortening the legislative session. They adjourned Sine Die on May 11 but additional time was needed for budget conferees to work through the differing versions. While it is possible they may return one final time to address the governor's budget vetoes, it appears more likely they will wait until January and deal with them at that time. Here is a look back at this past legislative session.

TAX

The following bill became law:

S.250 (Senate Finance Committee) the annual Internal Revenue Code tax conformity legislation. The act extends for South Carolina income tax purposes in the same manner they are extended for federal income tax purposes.

TAX STUDY COMMITTEE

Last year, Speaker of the House Jay Lucas formed a fourteen member ad hoc committee responsible for reviewing South Carolina's current tax code and submitting suggestions for reform to the Speaker. Due to the debate this past session on the highway infrastructure funding plan, the committee postponed its work. Committee Chairman Tommy Pope (R-York) told the committee last month they will resume work at the end of the summer and meet throughout the fall in an effort to find ways to make our tax code lower, fairer and flatter. All options remain on the table, including removal of some $3 billion in sales tax exemptions. Information from the committee can be found here.

BUDGET

After adoption of the Conference Report on the FY 2017-18 state budget (H. 3720) and the Capital Reserve Fund (H. 3721) earlier this month, the bills were sent to Governor Henry McMaster. Much of the new revenue was earmarked to address the mounting deficit in the state retirement system, provide matching funds for FEMA assistance from damages from Hurricane Matthew, and statutory obligations for the Medicaid program and base student cost allocations in K-12. On the higher education front, the committee agreed to provide an increase to the base funding for South Carolina's 33 public colleges and universities, including the state's 16 technical colleges. The committee also agreed to adopt a House proviso that would remove some responsibility from the Commission on Higher Education (CHE) from what many colleges complained was redundant oversight for capital improvement projects. After July 1, the colleges' plans will be submitted through the Department of Administration directly to the Joint Bond Review Committee, made up of state legislators, and the State Fiscal Accountability Authority, a five-member board including two legislators, the governor, state treasurer and state comptroller general. The CHE proviso provided for some drama during the Senate debate as senators requested to vote on the proviso separately before adopting the Conference Report. The Senate then voted 23-19 to remove the proviso from the budget, with the majority arguing CHE oversight was critical to containing skyrocketing tuition. Later in the afternoon, after it became clear that by removing the proviso the budget conferees would have to renegotiate the state budget, the Senate reconsidered the vote and reinserted the proviso.

The $7.9 billion general fund budget did not include a pay increase for state employees, but did fully fund the increase in their healthcare costs. The total state budget, including the $7.9 general fund revenue, other funds (fines, fees, etc.) and federal funds, now totals nearly $27 billion.

The governor vetoed 41 specific line items totaling $56 million. Most noteworthy in his vetoes was $20 million in lottery proceeds earmarked for the purchase of new school busses. In his veto message, McMaster said lottery proceeds should be used solely for the purpose they were intended, to provide scholarships to qualifying students. The governor also vetoed the proviso that would remove some responsibility from the Commission on Higher Education (CHE) from what some colleges complained was redundant oversight for capital improvement projects. McMaster said in his veto message that CHE must be allowed to exercise its oversight authority.

Other vetoed items included $25 million out of the budget that he said went to "unidentifiable pork" programs and $8 million to provide contraceptives for dependents of state employees covered by the state health plan. The governor also vetoed a proviso that transferred $6.6 million from the State Conservation Bank back into the General Fund.

A Joint Resolution S. 692 (Senator Leatherman), adopted in May allows the General Assembly to continue past the mandatory May 11 Sine Die deadline if necessary. That resolution would allow them to return one final time this year in order to address the governor's vetoes. If they do not return this year, the General Assembly will address the vetoes in January.

To view the governor's Veto Message click here.

All budget documents can be found here.

Individual state agency budget requests can be found here.

GENERAL BUSINESS

The following bill became law:

S. 279 (Senator Alexander), the Appraisal Management Company Regulation Act.

HEALTHCARE

The following bills became law:

H. 3438 (Reps. Henderson, G.M. Smith, Sandifer and Hiott) dealing with interchangeable biological products. The bill updates the Pharmacy Practice Act and requires pharmacists to notify the prescriber in the event of an interchangeable biological product substitution.

H. 3817 (Reps. Bedingfield, Fry, Henderson, Huggins, and others) allows pharmacies and other entities to register as a collector to receive controlled substances as part of substance take-back events and mail-back programs.

H. 3864 (Reps. Bernstein, Collins and Erickson) revises the age, weight and position of a child who must be secured by a child passenger restraint system.

H. 3824 (Reps. Henderson, Bedingfield, Fry and others) which requires health care practitioners to review a patient's controlled substance prescription history before prescribing a Schedule II controlled substance and establishes a penalty for failure to do so.

H.3132 (Rep. G. M. Smith) relating to licensing requirements for hospice providers.

S. 179 (Senators Hutto and Hembree) provides limited immunity from prosecution for certain drug and alcohol offenses by a person who seeks medical assistance for another person who is experiencing a drug or alcohol related overdose.

HIGHER EDUCATION

Although the House Ways and Means Committee unanimously passed H. 3722 (Ways and Means Committee), the bond bill for higher education maintenance and renovations, support for the bill waned in the final weeks of the legislative session. The state has not approved a borrowing plan for its colleges and state agencies since 2001. The bill remains on the House contested calendar.

The following bills became law:

H.3220 (Allison and others) reestablishes the SC Education and Economic Development Coordinating Council, and provides for its membership, duties and functions. The council, disbanded in 2012 due to budget restraints, will advise the Department of Education and the Department Commerce on career pathways and workforce development.

S. 480 (Senators Hutto and M. B. Matthews) abolishes the Denmark Technical College Area Commission upon the signature of the governor and makes the State Board for Technical and Comprehensive Education the governing body for DTC. The bill was amended to reinstate a new Commission on November 1, 2018. The bill also requires the State Board to commission a study of the most effective and efficient delivery of technical college opportunities in Allendale, Bamberg and Barnwell counties and report its findings and recommendations not later than February 1, 2018. Enrollment at the two-year college has dropped from 1,800 to 600 students and the college will reach a deficit of nearly $2 million by the end of the fiscal year.

H.3034(Rep. Daning) change the in-state tuition eligibility requirements for veterans and related persons receiving educational assistance.

S.462 (Sen. Hembree) relating to uniform high school diplomas and personalized pathways for students.

S. 411 (Senator Sheheen) increases the total number of commission members for the Central Carolina Technical College Commission and requires that three members must be from Kershaw County.

HIGHWAY INFRASTRUCTURE

After more than two years of debate, legislators finally agreed on a compromise plan on H. 3516, the highway infrastructure funding bill. Senate conferees were Senators Paul Campbell, Vincent Sheheen and Ross Turner. House conferees were Representatives Gary Simrill, Brian White and Todd Rutherford. Senators adopted the Conference Report by a vote of 32-12. The House of Representatives adopted the report by a vote of 99-20. Governor Henry McMaster followed up on his promise and vetoed the bill, however both bodies overrode the governor's veto and the plan is now law. The compromise plan includes:

  • Effective July 1, 2017, the gas tax will be raised 2 cents per year for 6 years resulting in a 12 cent increase in the tax by year 6 to a rate of 28.75 cents per gallon;
  • Increases the motor vehicle registration fee by $16 every other year;
  • Increases the motor vehicle sales tax cap by $200 to $500;
  • Enacts a $60 fee every other year on hybrid vehicles and a $120 fee every other year on electric vehicles;
  • Enacts a $250 fee for registering a vehicle in South Carolina that is registered in another state;
  • Creates a temporary state income tax credit/rebate for South Carolina residents for gas purchases or preventive maintenance equal to 100% of the amount paid in new gas taxes based on gallons of gas purchased in a tax year. The rebate will expire in year six.
  • Increases tuition tax credits from $350 to $1,500 for two year institutions and $850 to $1500 for four year institutions. The $1500 cap is increased each year afterwards equal to a percentage increase in the Higher Education Price Index;
  • Creates an earned income tax credit (EITC) starting in 2018 equal to 125% of the federal EITC;
  • Creates a two wage earner tax credit; and
  • Decreases the industrial property tax rate from 10.5% to 9.0% through a six year phase in of the reduction.

The bill also includes reform of the SCDOT Commission by allowing the governor to remove SCDOT commissioners and by adding an additional member appointed by the governor. Once fully implemented, the plan will raise an additional $630 million annually for the SCDOT and will include $186 million in tax relief.

JUDICIAL / LEGAL

The following bills became law:

H.3879 (Davis, Yow and others) increases the allowed maximum amount of covered burial expenses in workers' compensation cases to $12,000.

H.3215 (E. Smith) which creates the offense of impersonating a lawyer.

H.3441 (Gagnon) which authorizes electronic payment of workers' compensation claims.

STATE RETIREMENT SYSTEM

In April, Governor Henry McMaster signed into law H. 3726 (Reps. Herbkersman, Cobb-Hunter, Anthony, Whitmire, Stringer and others), which reforms the state retirement system. The new law is the result of a special joint committee that met throughout last summer and fall to address a $20 billion plus deficit in the retirement investment funds for South Carolina's public employees. The plan is designed to help pay down the retirement system's unfunded obligations, which occurred because its assets have earned less than expected and was charged exorbitantly high fees for investment management. The new law includes:

  • raising the employee contribution rate from 8.66% to 9%;
  • capping the employee contribution rate at 9%;
  • raising the employer contribution rate from the current 11.56% to 13.56%, effective July 1, and increasing it annually until it reaches 18.56%;
  • shortening the debt's financing from a 30-year schedule to 20 years; and
  • reducing the expected rate of return for the fund's performance.

Funding of up to $150 million in next year's state budget will absorb half of the increases to public entities. In signing the bill into law, Governor McMaster noted this was "the first step of many which are needed" to secure the future fiscal health and sustainability of the pension systems. He said the new law does not address the single most important measure which would ensure the long term financial stability and viability of the State's retirement systems: a date certain transition from the State's defined benefit pension plans to a defined contribution retirement plan for new state employees. The governor's signing statement can be found here.

LEGISLATION OF INTEREST STILL PENDING

ANIMAL WELFARE

S. 3 (Senators Rankin and Hembree), known as the Cost of Animal Care Act, Seeks to recoup the cost incurred by someone who is awarded custody of an animal due to the arrest of the animal's owner for animal cruelty charges. The bill passed the Senate and is now in the House Judiciary Committee.

H. 3619 (Rep. Atwater) prohibits the tattooing and piercing of companion animals except for medical benefit, and then only by a licensed veterinarian or someone under the supervision of a veterinarian. The bill passed the House of Representatives and is now in the Senate Committee on Agriculture and Natural Resources.

S. 6 (Senator Bryant) increases the fines for injuring or killing a police dog or horse as well as require full restitution. The bill passed the Senate and is in the House Judiciary Committee.

CHILDCARE

Companion bills were introduced in the Senate and the House of Representatives relating to child care facilities. S. 569 (Senator Shealy) and H. 4044 (Reps. G. M. Smith, Erickson, White, Anthony and others) create oversight of businesses operating any school, vacation or school holiday camp, as well as after school programs operating four hours or less. Currently such programs are able to operate without state oversight.

H. 3591 (Reps. Govan, J. E. Smith, Allison, Erickson, G. R. Smith and Felder) relating to benchmarks and objectives required as part of the First Steps to School Readiness comprehensive long-range initiative. The bill would also make the Office of First Steps to School Readiness permanent. The bill passed the House of Representatives and is in the Senate Education Committee.

GENERAL BUSINESS

H.3650 (Reps. Sandifer, Simrill and others) enacts the South Carolina Business License Tax Standardization Act. The bill was adopted by the full House Labor, Commerce and Industry Committee and initially reported out to the full House. The bill, which has been a priority in the business community for a number of years, would dramatically change the process of business licensing by providing greater ease of use, fairness and accessibility. After much controversy on this approach, the bill was recommitted to the House Labor, Commerce and Industry Committee for further study.

H. 3651 (Reps. Sandifer and Finlay) would prohibit the Municipal Association of South Carolina or any other non-governmental entity from collecting a business license tax levied on the sale of telecommunication services by a municipality. While the bill was reported out of the full committee, it was later recommitted to the House Labor, Commerce and Industry Committee for further study.

HEALTHCARE

H.3133 (Rep. M. Smith) a bill related to the regulation and oversight of birth centers.

H.3772 (Rep. Clary) related to the scope of practice of advance practice registered nurses.

H.3845 (Rep. Hill) a bill related to the regulation and oversight of birth centers.

H. 3885 (Reps. Bannister, Bedingfield, G. R. Smith, Loftis and Hamilton) is an expansion of the Lewis Blackman Hospital Patients Safety Act, adding to the definitions of "health care practitioner" and "health care facility," and requiring health care practitioners to wear identification badges displaying certain information. The bill passed the House of Representatives and the Senate Medical Affairs Committee and is on the Senate calendar.

H. 3487 (Reps. Ridgeway, Govan, Duckworth and others) would allow a parent or legal guardian of a patient who is a child to request and revoke a Do Not Resuscitate order for emergency services for the child. The bill passed the House of Representatives and the Senate Medical Affairs Committee and is on the Senate calendar.

H. 3926 (Rep. Spires) relating to compounding pharmacies. The bill passed the House of Representatives and is now in Senate Medical Affairs Committee.

H. 3809 (Reps. Finlay, Bernstein, Collins and others) establishes that an individual or group health insurance policy providing coverage for contraceptive drugs must provide reimbursement for a twelve-month refill at one time. The bill passed the House of Representatives and is in the Senate Committee on Banking and Insurance.

H. 3064 (Rep. Rutherford) requires the Board of Pharmacy to issue written protocol allowing pharmacists, without an order of a practitioner, to prescribe and dispense contraceptives. The bill remains on the House calendar.

S.212 (Davis, Hutto, Campbell and others), known as the South Carolina Compassionate Care Act. The bill would authorize the use and distribution of medical cannabis for individuals with certain medical conditions. The bill received a subcommittee hearing but no vote was taken.

S.345 (Davis), a bill aimed at expanding the scope of practice for Advanced Practice Registered Nurses (APRNs). After hearing a few hours of testimony from both nurses and physicians, the subcommittee carried the bill over with the intention of having another meeting in the future. The bill remains before the Senate Medical Affairs Committee.

HIGHER EDUCATION

H. 3722 (Ways and Means Committee), the bond bill for higher education maintenance and renovations, did not pass but will remain on the House contested calendar until next year.

S. 262 (Senator Setzler) would require the Commission on Higher Education (CHE) to establish guidelines concerning procedures for the adoption of all public institutions of higher education textbooks. It also requires each public institution to develop their own guidelines for adoption of textbooks, as well as provide information on best practices and establish procedures to assess the success of the established practices. The bill also defines an allowable time period for the replacement of most textbooks. The bill passed the Senate and is now in the House Education Committee.

JUDICIAL /LEGAL

S. 349 (Senators Gregory, Peeler and Campbell). The bill would modify the exemptions relating to workers' compensation to include the Longshore and Harbor Workers' Compensation Act and the Merchant Marine Act. A Senate subcommittee adjourned debate without taking action on the bill.

S. 390 (Senator Kimpson) regulates consumer litigation funding companies. The committee heard from a proponent of the bill and from a lending company who would like significant changes made to the bill to relax the regulation. The committee did not take any action and asked the interested parties to meet and try to work out their differences before the subcommittee takes it up again

S. 118 (Senators Campsen and Malloy), known as the magistrates civil jurisdiction bill. The bill would increase the jurisdiction from $7,500 to $10,000. The bill passed the Senate and is now in the House Judiciary Committee.

S. 349 (Senators Gregory, Peeler and Campbell) modifies the exemptions relating to workers' compensation to include the Longshore and Harbor Workers' Compensation Act and the Merchant Marine Act. The subcommittee adjourned debate without taking action on the bill. The bill remains in the Senate Banking and Insurance Subcommittee

H. 3565 (Reps. Fry, Crawford, Elliott, Burns, Clemmons and others) establishes an automatic stay concerning license issuances and renewals for contested case hearings under the administrative procedures act, and provides for the circumstances under which a stay may be lifted. The bill passed out of the House Judiciary Committee and remains on the House Contested Calendar.

H. 3204 (Pope) relating to the Judicial Merit Selection Commission (JMSC). The bill changes the JMSC process from nominating three qualified candidates to releasing a list of all qualified candidates to the General Assembly instead. The bill passed out of the House Judiciary Committee but was later recommitted back to the committee.

WORKFORCE DEVELOPMENT

H. 3427 (Lucas, Allison and others) enacts the "South Carolina Computer Science Education Initiative Act," which would require public high schools and public charter high schools to offer certain computer science coursework. The bill passed the House of Representatives and is now in the Senate Education Committee.

H. 3311 (Reps. White, G. R. Smith, Pitts, and others). The bill, aimed at providing a seamless transition from education to employment, provides for the development and implementation of the Pathways to First Careers program and Pathways to New Opportunities program. The bill passed the House of Representatives and is now in the Senate Education Committee.

COMING UP NEXT

Copper Dome Strategies, LLC hopes you have a safe and enjoyable summer. We will keep you apprised of any activity by the General Assembly during the interim. The 2nd year of the current legislative session will resume in January 2018.

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