Legislative Update: Sales Tax Overhaul is Out; State Income Tax Reform is on the Move; Conformity Options Sought; View From the Dome
The House of Representatives Tax Policy Review Committee is putting to rest (for now) its recent proposal to reduce the statewide sales tax rate from 6% but which would require adding a 3% tax on professional services. While it stands a chance to be reintroduced next year, it will not be a factor for the rest of this legislative session – and SCACPA considers that an exciting success.
The committee did vote to draft legislation that could lead to collapsing SC’s various brackets of income tax rates into a flat income tax rate of 4.85%, and that is expected to lead to a bill next week. Further, this could be tied together with Conformity action for a “Reformity” package, but it is more likely that the Income Tax Brackets Reduction Bill will be a standalone item.
We are looking for the Senate to become re-engaged with Conformity actions this coming week. SCACPA has sent letters to legislators this past week urging that simple, workable solutions can be put in place, and we have reached out to SCACPA members to urge their representatives to take action. But a bill needs to find its leadership as quickly as possible.
View from the Dome
ISSUE: March 2, 2018
The House of Representatives spent time working through numerous bills on their calendar this past week. The Senate finished their debate on the "poultry bill," which regulates the permitting of poultry farms, sending the bill to the House who concurred with their amendments. That bill will soon be on its way to the governor. Both bodies met Wednesday in a Joint Session for the annual State of the Judiciary Address.
The House Ways and Means Committee adopted their version of the FY 2018-19 state appropriations act last week. Floor debate by the full House is expected to begin on March 12.
The committee budget spreadsheets and amendments can be found here.
The Senate Finance subcommittees are continuing their agency budget hearings. On Tuesday, the State Ethics Commission appeared before the Constitutional Subcommittee. Executive Director Meghan Walker is requesting additional state funding to hire more investigators. Recent changes to state law have increased their responsibilities, particularly in addressing complaints against members of the General Assembly.
The governor's Executive Budget can be found here.
Individual state agency budget requests can be found here.
The House Utility Oversight Committee has written Westinghouse, the lead contractor of the failed V.C. Summer Nuclear Station expansion, demanding they appear before the committee on March 21to answer questions about the project. The committee is also requesting numerous documents and files related to the project. The bankruptcy of Westinghouse last year was a major factor in the shuttering of the project by SCANA and Santee Cooper. Westinghouse has not commented publicly on the project since construction was stopped.
On Tuesday, the House Judiciary Committee approved S. 954 (Senators Leatherman, Setzler) which prohibits the Public Service Commission (PSC) from making a decision on any SCANA-Dominion Energy merger until December. The committee voted 24-0 to amend the bill so that it also decreases SCE&G power bills by about 18 percent, the amount SCE&G is currently charging its customers for the failed VC Summer nuclear project. The Joint Resolution now goes to the full House for consideration.
Fallout from the decision to cease all construction on two new nuclear reactors being built at the V.C. Summer Nuclear Generating Station in Jenkinsville by SCANA and state-owned utility Santee Cooper remain one of the most costly, complex and politically explosive issues to hit our state in decades.
The House gave favorable approval to two bills dealing with the state's opioid crisis. H. 3819 (Reps. Bedingfield, Fry, Henderson and others) establishes requirements for prescribing opioid analgesics to minors. H. 3820 (Reps. Fry, Bedingfield, and others) requires instruction in prescription opioid abuse prevention in public high schools. Both bills have been sent to the Senate for consideration.
On Wednesday, a subcommittee of the House Medical, Military and Municipal Affairs Committee approved H. 3826 (Reps. Huggins, Bedingfield, Fry, and others). The bill requires the Department of Health and Environmental Control (DHEC) to develop a counterfeit-resistant prescription blank which must be used by practitioners for prescribing controlled substances. The bill now goes to the full committee for consideration.
On Thursday, the Senate Medical Affairs Committee unanimously approved S. 345 (Senator Davis) with a strike and insert amendment. The bill as amended was a compromise agreement between the staff and various representatives of the physician and nursing communities that would expand, under certain circumstances, the role of Advanced Practice Registered Nurses (APRN). Under the compromise, the bill would allow APRN's and physicians to enter into practice agreements which would allow prescribing of schedule II drugs in hospice and palliative care settings. It would also allow for prescribing of non-controlled drugs while working at clinics for indigent patients. The bill removes the 45 mile radius requirement for APRNs under current law. The agreements must contain mechanisms that allow physicians to continue to ensure quality of care and patient safety. All members reserved their rights with the bill moving forward, as do both major stakeholder groups. The bill now goes to the full Senate for consideration where Senator Davis - the primary sponsor - agreed to place his name on the bill to hold it for at least a week as others have an opportunity to review and for stakeholder groups to give final approval.
On Tuesday, the House Education Committee unanimously approved H.4931 (Reps. Elliott, Alexander, Simrill and many others) that would authorize an applied baccalaureate in manufacturing if approved first by the State Board for Technical and Comprehensive Education and the Commission on Higher Education. The bill now goes to the full House for consideration.
On Tuesday, the Senate gave final approval to S. 937 (Senators Hutto and M. B. Matthews) relating to the devolution of powers of the Denmark Technical College Commission. The bill extends the authority of the State Board for Technical and Comprehensive Education from November 1, 2018 to January 1, 2019. The bill now goes to the House for consideration.
On Wednesday, Supreme Court Chief Justice Donald Beatty addressed a Joint Session of the General Assembly for the annual State of the Judiciary Address. As he did in his budget hearings, Beatty once again advocated for salary increases for justices and judges. Judicial pay has not substantially increased since 1995 as periodic cost-of-living increases have largely been swallowed by higher costs for insurance and retirement benefits, amounting to a net salary increase of 0.12 percent over 23 years, Beatty said. He said higher pay will attract more experienced lawyers to the bench noting many young, inexperienced judges are getting elected.
Overall, South Carolina judges take home about $20,000 less than what Southeastern judges generally make, Beatty said. He reminded legislators they pledged to address the problem more than a decade ago.
Beatty also commented on the dire conditions of the information technology infrastructure. The case management system is at the end of its life cycle and much of their technology equipment is 15 years old and in desperate need of replacement. He has requested funding in three phases for a complete overhaul of the case management system.
Beatty also spoke of the problems with case backlogs and of the success of the e-filing system and the need to build upon successes for additional improvements in the judicial system.
You can read his entire speech here.
The House of Representatives Tax Policy Review Committee met yesterday and voted to move forward with the introduction of legislation aimed at reforming our state's income tax code. This fourteen member ad hoc committee was created in 2016 by Speaker of the House Jay Lucas and is responsible for reviewing South Carolina's current tax code and submitting suggestions for reform to the Speaker. The committee's goal is to find ways to make our tax code lower, fairer and flatter. Committee Chairman Speaker Pro Tem Tommy Pope (R-Rock Hill) told the committee that after conversations with House leadership, they were recommending moving forward with an income tax plan, but not with a sales tax reform proposal at this time.
The committee voted to draft legislation that would eliminate all income tax rates for one single flat income tax rate of 4.85%. The new rate would include standard deductions and tax the federal adjusted income rate in a simplified manner. The chairman told the committee that this bill might be used to address our state's current issue with conforming to the recent tax changes made at the federal level. Failure to conform to the recent federal changes may result in significant tax increases for individuals and businesses. Once introduced, the bill would be referred to the House Ways and Means Committee for consideration.
The committee voted to place on hold the recommendation to remove all sales tax exemptions currently in place for all goods and services and then reduce the statewide sales tax rate from 6% to 3%. Chairman Pope told the committee that their hard work was not in vain as this proposal, along with potentially others on property tax, might be pre-filed as legislation next year. With only ten weeks left in the current legislative session, and with too many other pressing issues before the General Assembly, only the income tax proposal will be introduced this year.
Click here to view the tax proposals.
INTRODUCTIONS OF INTEREST
H. 5017 Reps. Felder, Elliott, G. R. Smith and Allison: Establishes an "Advisory Council on Pediatric Acute-Onset Neuropsychiatric Syndrome and Pediatric Autoimmune Neuropsychiatric Disorder Associated with Streptococcal Infections (PANDAS)". Referred to Committee on Medical, Military, Public and Municipal Affairs.
H. 5039 Rep. Putnam: Repeals the three-year sunset provision of the "Tucker Hipps Transparency Act" requiring public institutions of higher learning to maintain reports of actual findings of certain misconduct by fraternity and sorority organizations, among other things. Referred to Committee on Education and Public Works.
H. 5041 Reps. Robinson-Simpson, Elliott, Trantham, and others: Intentional misrepresentation of a service animal is a misdemeanor. Referred to Committee on Judiciary.
H. 5043 Reps. Cogswell, Elliott, Caskey, and others: Joint Resolution calling for a state constitutional convention. Referred to Committee on Judiciary.
H. 5045 Reps. Sandifer, White and Forrester: Relating to distributed energy and net metering.
Referred to Committee on Labor, Commerce and Industry.
H. 5055 Reps. W. Newton, Clemmons, Norrell, and others: Relating to the derivation clause requirement on a deed or mortgage. Referred to Committee on Judiciary.
S. 1063 Senators Campbell and Grooms: Relating to permit requirements for licensed podiatrists seeking to engage in ankle surgery procedures. Referred to the Committee on Medical Affairs.
S. 1066 Senators Alexander, Sheheen, Goldfinch, and others: Relating to assault on a health care professional. Referred to the Committee on Judiciary.
S. 1069 Senators Timmons, Rice, Fanning, and others: Joint Resolution calling for a state constitutional convention. Referred to the Committee on Judiciary.
S. 1072 Senator Turner: Authorizes an applied baccalaureate in manufacturing degree. Referred to the Committee on Education.
COMING UP NEXT WEEK
The House Oversight Committee will meet next Thursday at 1:00 pm to take public input on the Commission on Indigent Defense; the Commission on Prosecution Coordination; and the SCETV Commission.