By Copper Dome Strategies, LLC
The House Ways and Means Committee completed their work on next year’s state budget. The Senate spent considerable time on the floor debating the “poultry bill,” which regulates the permitting of poultry farms.

APPOINTMENTS

Governor Henry McMaster on Wednesday announced his nominees to serve in the 2nd and 4th Congressional District seats on the South Carolina Department of Transportation Commission. Woodrow “Woody” Willard, Jr., of Spartanburg was first appointed to the 4th district seat in January of 2014. The governor’s nominee for the 2nd Congressional District seat, John H. Burriss, is a long-time member of the South Carolina business community and a resident of Lexington County. The governor’s nominations will now be sent to the Senate for confirmation by the legislative delegations within the respective Congressional Districts.

ANIMAL WELFARE

On Wednesday, the House debated 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 also 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 bill was moved to the contested calendar for extended debate after concerns were raised.

BUDGET

The House Ways and Means Committee adopted their version of the FY 2018-19 state appropriations act this past week. The $8.2 billion general fund budget does not include a pay raise for state employees, but does give teachers a 2% pay raise. The committee also agreed to a 7% pay raise for attorneys and law clerks at the Judicial Department but did not fund raises for justices or judges. Most of the new recurring funding was earmarked for healthcare with $26 million going to fund increases to the Medicaid program. The committee agreed to place tobacco settlement funds, and cigarette tax funds, into a restricted reserve account to fund future Medicaid increases. The committee also included $56.4 million to offset increases to the state health plan. State employees will see a modest increase in their plan. The budget includes:

Technical Colleges:

No recurring base funding;
Increase Lottery Tuition Assistance to $51 million;
$11 million for workforce scholarship grants;
$9.85 million for equipment;
$9.4 million ReadySC.

Healthcare:

$4.3 million for opioid response in Medicaid;
$3 million for the Department of Alcohol and Other Drug Abuse Services for Opioid response;
$1.5 million in recurring funding added to the Telehealth program.

Technology:

$7.7 million to DHHS for the Medicaid Management Information System (MMIS);
$7 million to the Judicial Department for Phase I of the Case Management System;
$3 million to the Department of Administration for the IT shared services program.
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. Yesterday the State Board for Technical and Comprehensive Education presented their budget request to the Senate Finance Higher Education Subcommittee. System President Dr. Tim Hardee told the subcommittee funding for our technical college system is vital as our state is facing staggering workforce demand. The demand for highly skilled workers, an aging workforce and economic development growth require a strong commitment to ensure our state’s continued competitiveness. The system budget request includes: $25.7 million in recurring base funding; $9.85 million for STEM related equipment; $400 million for capital projects; $51 million for Lottery Tuition Assistance and $9.3 million for readySC projects. The system is also requesting additional funding for workforce grants for short-term, high demand job skills training.
The governor’s Executive Budget can be found here.
Individual state agency budget requests can be found here.

ENERGY

On Tuesday, the Senate gave 3rd and final reading to 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 bill was sent to the House and referred to the Judiciary Committee. On Thursday the House Judiciary Constitutional Laws Subcommittee approved the measure. It now goes to the full House Judiciary Committee 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.

HIGHER EDUCATION

On Wednesday, the House passed H. 4078 (Rep. Huggins) by a vote of 107-2. The bill enacts the “Military Priority Registration Act” and provides for priority course enrollment for military-related students. The bill was amended to include technical colleges and only those discharged honorably. The bill received third reading yesterday and now goes to the Senate for consideration.
On Tuesday, the Higher Education Subcommittee of the House Education Committee approved H.4931 (Reps. Elliott, Alexander and Simrill) 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 Education Committee and is expected to be debated next week.
The subcommittee also debated H.4440 (Reps. G.R. Smith, Magnuson, Lucas and others) that enacts the “Forming Open and Robust University Minds (FORUM) Act” which protects expressions on campus. Representatives from Clemson University raised concerns about unintentional consequences of enacting the legislation. As a result, the committee adjourned debate on the bill.
On Tuesday, the Senate approved S. 937 (Senators Hutto and M. B. Matthews) relating to the devolution of powers of the Denmark Technical College Commission by a vote of 41-0. The bill changes the date from November 1, 2018 to January 1, 2019. The bill is awaiting 3rd and final reading in the Senate.

TAX POLICY

The House of Representatives Tax Policy Review Committee met yesterday and adopted in principal two bills that they hope will be formally adopted next week. 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. Speaker Lucas was present at the meeting and thanked the committee for their hard work noting our state’s tax code needs a “reset”. He and Committee Chairman Speaker Pro Tem Tommy Pope (R-Rock Hill) agree this effort will not be an easy task but felt it necessary to move our state forward and remain competitive and inviting.
The first bill deals with the state’s income tax. The committee is recommending 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.
On sales tax, the proposed plan would broaden the base by removing all of the sales tax exemptions currently in place for goods and services, and then reduce the statewide sales tax rate from 6% to 3%. The proposal does tax services at 3% which of course are not currently taxed in South Carolina. The committee is aware that eliminating exemptions and taxing services will be a hard sell to many and understands this may be a multi-year effort. Since this is the second year of the two year legislative session, it will be difficult for such a comprehensive plan to pass both bodies and be signed into law. Once introduced, the bills will be sent to the House Ways and Means Committee for consideration.
Click here to view the tax proposals.

INTRODUCTIONS OF INTEREST

HOUSE

H. 4958 Reps. Ridgeway, Henderson and Spires: Allows pharmacists to dispense a varying quantity of maintenance medication. Referred to Committee on Medical, Military, Public and Municipal Affairs.
H. 4962 Reps. Sandifer and Spires: Relating to retaliatory taxes by other states against insurance companies chartered in South Carolina. Referred to Committee on Labor, Commerce and Industry.
H. 4967 Rep. Atwater: Relating to energy standards and net metering requirements. Referred to Committee on Labor, Commerce and Industry.
H. 4972 Reps. Lowe, Ballentine, Burns, Clemmons, and others: Enacts the “School Protection Officer Act” allowing K-12 and public colleges and universities to designate employees as school protection officers and to provide training at the Criminal Justice Academy. Referred to Committee on Education and Public Works.
H. 5000 Reps. Lucas, Herbkersman and Bradley: Creates an optional shared-risk defined benefit retirement plan. Referred to Committee on Ways and Means.
H. 5001 Rep. Clary: Enacts the “Clean Energy Access Act” and requires electrical utilities to provide access to renewable energy programs. Referred to Committee on Labor, Commerce and Industry.

SENATE

S. 1026 Senators Timmons, Martin and Corbin: Relating to the duties of the Greenville Health Systems Board of Trustees. Read the first time and ordered placed on the Local and Uncontested Calendar.
S. 1046 Senators M. B. Matthews, McElveen, and others: Prescriptions for Schedule II controlled substances must not exceed a seven day supply. Referred to the Committee on Medical Affairs.

COMING UP NEXT WEEK

The House Tax Policy Review Committee will meet next Thursday upon adjournment of the House.

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