By Copper Dome Strategies
Friday, Feb. 14, 2020
The long-awaited recommendation on the future of state-owned utility Santee Cooper has been released. The Senate went late into the night on Tuesday debating education reform but has still not completed debate. The state’s economists have provided additional revenue for legislators to appropriate in next year’s budget.
BOARD OF ECONOMIC ADVISORS
The State Board of Economic Advisors announced Thursday that the state will end the current fiscal year with the largest surplus in state history. Due to actual revenue collections exceeding the current fiscal year’s estimate, they have adjusted the state revenue estimate by adding $25 million to the recurring base for FY20-21. The FY19-20 surplus estimate was increased by $60 million. Legislators will now have an additional $888 million in new recurring revenue for the new fiscal year beginning in July and a projected surplus of nearly $1.1 billion when the current fiscal year ends June 30.
The BEA is statutorily charged with providing the General Assembly with the official revenue estimate for lawmakers to draft the annual state budget. They are required by law to provide an updated estimate by Feb. 15 of each year.
Source: Board of Economic Advisors BEA/RWM/02/13/20
The House Ways and Means Proviso Subcommittee met to review agency proviso requests. Provisos are clauses in the state budget that direct the expenditure of funds and hold the force of law for one year. The Senate Finance Subcommittees continued hearing agency budget requests. Agencies appearing this week included the Administrative Law Court, JEDA, the Department of Probation, Pardon and Parole and the Department of Public Safety.
The full House Ways and Means Committee is expected to debate the budget beginning Feb. 17 with full House floor debate beginning the week of March 9.
With the state’s economy seeing record-level unemployment combined with rising wages and new residents, the state’s General Fund budget now tops $10 billion with a budget surplus projected of over $1 billion.
The governor’s executive budget can be found here.
Individual state agency budget requests can be found here.
BUSINESS LICENSE TAX REFORM
The House Labor Commerce and Industry Business License Fees Ad Hoc Subcommittee met unanimously gave approval to H.4431 (Reps. Jordan, Fry, Rose, Atkinson and others), the “South Carolina Business License Tax Reform Act” on Thursday.
The business community has long argued our current system is complex, costly and lacks transparency. South Carolina has 231 municipalities and nine counties that collect a business license tax, creating confusion and adding costs to small businesses trying to comply. While most states assess flat license fees, South Carolina business tax laws allow cities to assess the tax based on a business’s gross receipts instead of net income. Filing in multiple jurisdictions has also created problems.
After five years of discussions, stakeholders finalized a compromise agreement that was adopted Thursday. Businesses will still pay based on gross receipts, but businesses operating in multiple jurisdictions will pay the tax based on the gross income within that jurisdiction, but the tax must be reduced by the amount of the gross income tax in other counties or municipalities. Each taxing jurisdiction must accept a standard business license application as established by the state Revenue and Fiscal Affairs Office (RFA).
The South Carolina Municipal Association (SCMA) will transfer the business license portal it has developed to the state RFA, who will oversee the standardized portal through a contract with the vendor. Businesses will renew their license annually by May 1 through the portal based on the gross income for the calendar year. Businesses not wanting to utilize the portal may still file in person, by telephone or by mail.
Private third-party entities are prohibited from assessing or collecting taxes. The bill also provides a mechanism for appeals, and the taxpayer may request a hearing before the Administrative Law court. The bill will now go to the full House Labor Commerce and Industry Committee for consideration.
The long-awaited recommendation regarding the future of state-owned utility Santee Cooper was released Monday and is now front and center before the General Assembly. Lawmakers have been debating whether to sell Santee Cooper since 2017, when the utility and its partner, SCE&G, announced it was pulling the plug on a $9 billion plan to build two nuclear reactors at the V.C. Summer nuclear plant in Fairfield County.
Since shortly after the announcement, Gov. Henry McMaster and legislative leaders began pushing for the sale of Santee Cooper. Last year, legislators agreed on a plan H.4287 Act 95, which required the Department of Administration to hire experts to seek and evaluate not only bids from qualified offerors to purchase Santee Cooper, but also to seek offers for potential management contracts of the state-owned utility as well as a reform plan from Santee Cooper itself regarding its future. With the recommendation now released, the House Ways and Means Committee and the Senate Finance Committee have 30 days to recommend a path forward of what to do with the utility. After the DOA report was released, Gov. McMaster stated that he believes the state must act quickly to sell Santee Cooper.
Legislators now have three options for deciding the fate of Santee Cooper:
- Sell Santee Cooper to NextEra, the largest publicly traded utility holding company
- Enter into a management contract with Dominion Energy to oversee the state-owned utility
- Allow Santee Cooper to continue on but with reform measures.
The House Ways and Means Committee and the Senate Finance Committee held a joint meeting to hear about the report from the Department of Administration on Thursday. Both committees will begin debate on the recommendations beginning next week. The report can be found here here.
The House passed H.4940 (Reps. Sandifer and Forrester) by a vote of 81-31 on Wednesday. The Joint Resolution establishes the Electricity Market Reform Measures Study Committee. The committee would study redesigning rate structures and alternative energy plans. After receiving routine third reading, the bill now goes to the Senate for consideration.
S.996 (Senators Alexander, Rankin and Hutto), which allows for the extension of the application and screening process for candidates for the Public Service Commission, was signed into law by the governor last week.
Senators began the week with the goal of passing education reform by week’s end and went late into the night on Tuesday in that effort. However, with dozens of amendments remaining to be debated, they adjourned at noon on Thursday with much more work to be done. More than two dozen amendments have been adopted to S.419 (Sens. Hembree, Malloy, Turner, Setzler, Sheheen and Alexander), known as “The South Carolina Career Opportunity and Access for All Act.”
Both Gov. McMaster and legislative leadership had said the 2019 legislative session would produce long-overdue reforms in K-12 education. The House passed its version of education reform H.3759 (Reps. Lucas, Allison, Felder, Pope, Simrill, Rutherford and others) last March. However, after hearing complaints from teachers and others about the legislation, the Senate did not pass their version last year and spent the summer and fall hearing from stakeholders and revising their bill.
On Tuesday, a Senate Judiciary Subcommittee favorably approved S.1002 (Senators Rankin, Malloy, Young and others). The bill would change the conduct of Voir Dire in the Court of Common Pleas from being conducted by the judge to being conducted by the attorneys. There is a “time limit” of “at least” 30 minutes for each party, upon motion by either party the trial judge can extend the time. The SC Association for Justice supports the bill. Subcommittee Chairman Tom Young (R-Aiken) noted he expected amendments to be offered when the bill is debated by the full Judiciary Committee when they meet next.
On Thursday, the House favorably approved H.4974 (Reps. Lucas, Simrill, Rutherford, Pope, McCoy, G. M. Smith and Bannister), relating to judges. The bill would increase the number of at-large Circuit Court judges from 16 to 17 and increase the number of at-large Family Court judges from eight to 10. The subcommittee added an amendment to the bill that would add two resident family court seats in Orangeburg and York Counties and two resident circuit court seats in Horry and Beaufort Counties. After a routine third reading next week, the bill will go to the Senate for consideration.
On Thursday, a House Judiciary subcommittee again debated H.3758 (Reps. Hiott, Allison, Anderson, Atkinson, Bales and others), relating to the Contributions among Tortfeasors Act. This is the bill that seeks to address the inequitable outcome of the South Carolina Supreme Court’s majority decisions in two well-known cases. The South Carolina Supreme Court ruled that a defendant in a civil injury damages case involving the actions of multiple parties cannot have another more responsible party or parties (but a non-defendant) joined to the case or added to a verdict form and apportioned fault by the judge or jury. The bill seeks to update the statute to correct this unfairness by changing apportionment of fault in the statute to “all parties and nonparties.”
The Coalition for Lawsuit Reform supports the legislation and previously testified. The subcommittee heard testimony on Thursday from the SC Association of Justice, which opposes the bill. The Department of Mental Health testified that they would like the bill amended in regard to the definition of a governmental entity. The subcommittee ran out of time due to the start of session and will take the bill up again at a future meeting.
A special Senate Judiciary Subcommittee known as the Raise the Age Committee favorably approved S.1018 (Senators Malloy, Hutto, Gregory, Shealy and Talley) that enacts the “South Carolina Juvenile Justice Reform Act of 2020.” This special committee has held multiple meetings throughout last summer and fall to develop a comprehensive plan to address challenges in the juvenile justice system. The bill now goes to the full Senate Judiciary Committee for consideration.
The Senate Family & Veterans’ Services Committee favorably approved S.865 (Senators Jackson, Hutto and Shealy) that reauthorizes the Joint Citizens and Legislative Committee on Children through Dec. 31, 2030. The bill now goes to the full Senate for consideration.
House Speaker Jay Lucas (R-Hartsville) announced that the House will take two furlough weeks this session. They will furlough March 17-19, which is the week immediately after the House floor budget debate and prior to the Santee Cooper debate, and again April 14-16, which is the week after Easter and the legislative crossover deadline. The Senate has not announced plans to furlough.
- McMaster announced his choice of retired Army Maj. Gen. William F. Grimsley to lead the new S.C. Department of Veterans Affairs. Grimsley, 62, is a military officer with more than three decades of experience. A Beaufort resident, he is the son of The Citadel’s 16th president, Maj. Gen. James A. Grimsley Jr., who led the school from 1980-89. The new cabinet agency was created by law last year and is designed to advocate on behalf of veteran needs and to protect the military’s presence in South Carolina. Grimsley’s appointment now goes to the Senate for confirmation.
Grimsley has held assignments throughout the United States, Germany, Korea and Kuwait. He completed multiple combat tours in Iraq and deployments to several other nations and retired from active duty in 2013. He is a recipient of the Distinguished Service Medal, Silver Star, Bronze Star and Purple Heart.
- The Senate confirmed the appointment of Robert H. Boyles, Jr. to lead the Department of Natural Resources (DNR). He has worked for DNR for over 22 years, and he has been a member of the senior DNR leadership team for over 16 years, serving as Deputy Director for Marine Resources since 2003. He has served as Interim Director of the DNR since May. A native of Cheraw, Boyles is married and has two sons attending Clemson University.
INTRODUCTIONS OF INTEREST
H.5136 (Reps. Lucas, G. M. Smith, Simrill and others). A joint resolution to provide for the disposition of the South Carolina Public Service Authority, aka Santee Cooper, pursuant to Act 95 of 2019. Referred to the Committee on Ways and Means.
H.5150 (Rep. Simrill). Relating to the infrastructure maintenance fee against a vehicle or other item upon its first registration. Referred to the Committee on Education and Public Works.
H.5228 (Reps. Clyburn and Hosey). Enacts the “Safe Water Act.” Referred to the Committee on Labor, Commerce and Industry.
H.5232 (Reps. Wooten, Ott, Brawley and others). Provides provision to prevent utilities from recovering certain nonallowed expenses from ratepayers. Referred to the Committee on Labor, Commerce and Industry.
S.1093 (Senators Talley, Hutto, Gambrell and others). Relating to situations requiring Certificate of Need (CON). Read the first time and referred to the Committee on Medical Affairs.
S.1108 (Senator Campbell). Requires registration for fertile pit bulls. Read the first time and referred to the Committee on Agriculture and Natural Resources.
S.1109 (Senator Verdin). Relating to the custody and care of an animal after arrest and custodial costs. Read the first time and referred to the Committee on Agriculture and Natural Resources.
The House Ways and Means Committee and the Senate Finance Committee will begin hearings relating to the sale of Santee Cooper.
Look to SCACPA’s ‘The View from the Dome’ for State House Developments on Tax Issues Through SC’s 2020 Legislative Session
Jan. 10: South Carolina’s Pending Tax Bills and Your 2020 Legislative Preview
Jan. 17: Gov. McMaster’s Executive Budget Calls for Tax Cuts, Rebates for Taxpayers
Jan. 24: McMaster’s State of the State Emphasizes Tax Cuts, Rebates, Teacher Raises; Business License Tax Talks Continue
Jan. 31: House Subcommittee Hears Budget Request from SC Chief Justice to Improve Case Management System
Feb. 7: Senate Finance Committee Approves Business Personal Property Bill for DOR Filing
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