The South Carolina Association of CPAs was one of the multiple entities that presented testimony about tax Conformity bill H. 5162 to the Income Tax Subcommittee of the House Ways and Means Committee on Tuesday. All the testimony favored conforming as soon as possible.

Subcommittee Chairman Brian White (R-Anderson) said he supported the necessity of conforming but noted the bill would probably need amendments to offset an estimated $200 million revenue increase caused by the federal laws. Those amendments will likely be politically charged as any changes will create winners and losers among tax filers. The subcommittee is expected to meet again before the session’s May 10 adjournment.

View from the Dome

By Copper Dome Strategies

ISSUE: APRIL 20, 2018

The level of activity and debate in both chambers dramatically increased this week with nine days left in the legislative session before adjournment on May 10. This week, the Senate approved a bill to temporarily lower utility rates for customers of SCE&G.

ANIMAL WELFARE

On Tuesday, the House voted to recommit to committee S. 6 (Senators. Bryant, Hembree, Campbell and Senn). The bill would increase penalties for offenders convicted of willfully or maliciously torturing, mutilating, injuring, disabling, poisoning or killing a dog or horse used by law enforcement. The bill would raise the maximum fine from $5,000 to $10,000 for offenders convicted and require restitution to a law enforcement agency to cover the costs of restoring or replacing the animal and complete up to 500 hours of community service for an animal-related organization or foundation. The 51-25 vote came after opponents, including Rep. Todd Rutherford (D-Columbia), questioned language in the bill that defines criminal actions against a police K-9 dog to include taunting or teasing. Rutherford argued the legislation does not adequately define those terms.

APPOINTMENT

On Tuesday, the Senate confirmed the reappointment of Mark Keel as Chief of South Carolina Law Enforcement Division (SLED). His term commenced Jan. 31, 2018, and will expire Jan. 31, 2024.

On Thursday, the Senate Medical Affairs Committee approved the governor’s nomination of Mark Elam of Mount Pleasant as the next Chairman of the South Carolina Board of Health and Environmental Control (DHEC). The appointment now goes to the full Senate for consideration.

BUDGET

On Wednesday, the House adjourned debate on the FY 2018-19 General Appropriations Act H. 4950 (Ways and Means Committee) and the Capital Reserve Fund H. 4951 (Ways and Means Committee) until next week. Their options next week would be to accept the Senate version, or most likely, amend the bill back to their original version and send it to a conference committee to work out the differences. The Capital Reserve Fund appropriations are identical to the House version and will not need to go to a conference committee.

The Senate Finance Committee version of the bill can be found here.

The governor’s Executive Budget can be found here.

Individual state agency budget requests can be found here.

CROSSOVER

Legislative rules require that in order for bills to be considered by the opposite chamber this session, all bills must receive third and final reading by Tuesday, April 10. Bills that did not meet that deadline can still be debated, but must reach a higher threshold for debate by receiving a two/thirds vote of the body. As this is the second year of a two-year legislative term, any bills that do not become law this year will have to be reintroduced and the process starts all over again next year. With the two thirds threshold, any bills that are deemed controversial or with significant opposition are effectively dead for the year.

ENERGY

The Senate this week passed Joint Resolution S. 954 (Senators Leatherman, Setzler), which would temporarily lower utility rates for customers of SCE&G. The original underlying bill prohibits the Public Service Commission (PSC) from making a decision on any SCANA-Dominion Energy merger until December. Last month, the House unanimously voted to amend the bill so that it also decreases SCE&G power bills temporarily by about 18%, the amount SCE&G is currently charging its customers for the failed V.C. Summer nuclear project. The Senate previously adopted an amendment, offered by Senator Shane Massey (R-Edgefield) that would roll back the nuclear surcharge from 18% to 5% immediately. Massey argued he wanted to eliminate the surcharge but wanted to make sure any decrease could withstand a court challenge. Prior to the debate, Dominion Energy released a statement saying that if the Senate acted, they might withdraw their merger proposal. The Joint Resolution now goes back to the House and sets up a fight between the House and Senate as the House has previously said it would not accept anything but a complete elimination of the surcharge. Gov. Henry McMaster joined the House in calling for an immediate end to the surcharge payments and has threatened to veto the proposal if it does not fully eliminate the surcharge. The PSC is scheduled to rule in December on whether or not SCE&G can continue charging customers for the failed nuclear reactor project and on the proposed merger.

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.

On Wednesday, a subcommittee of the Senate Agriculture and Natural Resources Committee approved H. 4875 (Rep. Ott). The bill enacts the “South Carolina Solar Habitat Act” which establishes voluntary best-management practices for commercial solar energy generators. The bill now goes to the full committee for consideration.

S. 1101 (Senators Young, Hutto and Massey) was signed into law by Governor McMaster this past Tuesday. The law extends the sunset provision to November 30, 2020 on exemptions for private, for-profit pipeline companies.

HEALTHCARE

On Tuesday, by a vote of 41-0, the Senate amended and gave third and final reading to H. 4116 (Reps. Ridgeway, Douglas, Spires, G. M. Smith, and others). The bill prohibits hospitals and insurance companies from enjoining physicians to secure a maintenance of certification as a condition for licensure or admitting privileges at a hospital in this state. The bill was amended by the Senate to include Federally Qualified Health Centers. The bill, as amended, now goes back to the House of Representatives for concurrence.

Also on Tuesday, a subcommittee of the Senate Medical Affairs Committee approved a number of bills. On Thursday, the full committee approved the same bills. Many of the bills approved deal with the ongoing opioid crisis and were recommended by the House Opioid Study Committee. They include:

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.

H. 4117 (Reps. Henderson, Bedingfield and Fry) would add an exception to the confidentiality of data in the prescription monitoring program for drug courts.

H. 4600 (Reps. Huggins, Bedingfield, and others) would authorize certain community organizations to distribute opioid antidotes to a person at risk of experiencing an opioid-related overdose or to a caregiver of such a person.

H. 4486 (Reps. Henderson and Elliott) would authorize the state of SC to join an EMS interstate compact.

H. 4487 (Reps. Henderson, Hewitt and Robinson-Simpson) provides for a process for the Department of Health and Environmental Control (DHEC) to schedule certain substances on an emergency basis.

The committee also approved H. 4935 (Reps. Felder, Douglas, Ridgeway and Bryant) a Joint Resolution that creates the “South Carolina Palliative Care and Quality of Life Study Committee.” It requires the study committee to consult with and advise the Division on Aging on matters related to the establishment, maintenance, operation, and outcomes evaluation of palliative care initiatives in this State, including needed state policies or responses and ways to provide clear and coordinated services to support and enhance the delivery of palliative care. Also approved was H. 4529 (Rep. G. M. Smith) that would allow certain nursing licensees to perform delegated medical acts by means of telemedicine. All these bills now go to the full Senate for consideration.

On Thursday, the House Medical, Military, Public and Municipal Affairs Committee favorably passed H.3521 (McCoy, Bedingfield, Herbkersman, and others) that enacts the “South Carolina Compassionate Care Act.” The bill would allow seriously ill patients to have access to a regulated medical marijuana system, as they do in 29 other states and the District of Columbia. However, bill proponents and opponents understood the bill does not have a chance of passage this year and both sides will continue to work on the bill. Two committee members placed a Minority Report on the bill, formalizing their opposition to the bill.

TAX

On Tuesday, the Income Tax Subcommittee of the House Ways and Means Committee heard testimony on H. 5162 (Rep. White) relating to tax conformity. Now that President Trump has signed into law the first major revamp of our federal tax code since the Reagan Administration, our state’s legislature must now decide whether or not to conform with the multitude of changes.

In previous years, South Carolina has generally conformed to the federal tax code changes but does have the ability to decouple from provisions if necessary. This year will prove to be a major challenge as the new federal tax laws will dramatically impact the state general fund budget. Failure to conform will present a multitude of problems for tax filers and state agencies. All of the testimony heard on Tuesday, including from the South Carolina CPA’s, favored conforming as soon as possible. Subcommittee Chairman Brian White (R-Anderson) said he understood and supported the necessity of conforming but noted the bill would probably need amendments to offset the estimated $200 million revenue increase caused by the federal laws. Those amendments will likely be politically charged as any changes will create winners and losers among tax filers. The subcommittee is expected to meet again soon.

INTRODUCTIONS OF INTEREST

HOUSE

H. 5252 Rep. Bowers: Enacts the “Palmetto Power Promise Act” relating to the sale of the South Carolina Public Service Authority (Santee Cooper) by giving priority consideration to electric cooperatives. Referred to Committee on Labor, Commerce and Industry.

H. 5253 Rep. Bowers: Enacts the “Small Town Competitive Power Act” to allow municipalities with less than five thousand residents to terminate an exclusive power agreement and seek an agreement with another retail electric provider. Referred to Committee on Labor, Commerce and Industry.

H. 5254 Rep. Bowers: Enacts “The Palmetto Recreation Act” to increase and enhance the recreational areas owned by Santee Cooper. Referred to Committee on Labor, Commerce and Industry.

H. 5255 Rep. Bowers: Requires a valuation of real property by the Department of Parks, Recreation and Tourism before the approval of the sale of real property larger than an acre owned by a governmental body. Referred to Committee on Judiciary.

NEXT WEEK

Nine legislative days remain in the current session.