View from the Dome: House Bill Advances to Eliminate Military Retirement Income from State Income Taxes

View from the Dome: House Bill Advances to Eliminate Military Retirement Income from State Income Taxes

View from the Dome – Jan. 25, 2019

By Copper Dome Strategies, LLC

Week three of the session saw numerous subcommittee and committee meetings in the House and Senate. Gov. Henry McMaster delivered his annual State of the State Address on Wednesday evening. Major education reform legislation was introduced in both chambers on Thursday.

TAX

The SC House Tax Policy Review Committee is a 14-member ad hoc committee 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 heard a presentation from Dr. Rebecca Gunnlaugsson from the Palmetto Promise Institute. The presentation was an updated version of one she gave to the committee in 2017. She told the committee that comprehensive tax reform must be an evolution and said it must also consider spending in addition to collections. She further advised to include trigger mechanisms in any proposal to offset a downturn in the economy. Her Jan. 24 presentation can be found here.

The committee is currently focused on income tax and will use its February meetings to hear additional presentations, including from the SC Chamber of Commerce. Any recommendations drafted as legislation would go to the Ways and Means Tax Subcommittee chaired by Rep. Alan Clemmons (R-Myrtle Beach), who has been added as a member of this committee.

On Thursday, the House Ways and Means Sales & Use and Income Tax Legislative Subcommittee unanimously approved H.3135 (G.M. Smith, Erickson, Yow and Funderburk), the Workforce Enhancement and Military Recognition Act of 2019. Championed by Gov. McMaster, the bill would exempt military retirement income from state income taxes. Proponents of the bill argue it will attract more military retirees to the state and help fill the gap of skilled workers. The bill now goes to the full House Ways and Means Committee.

BUDGET

Both House and Senate budget subcommittees met to hear state agency budget requests. On Wednesday, the Judicial Department and the Department of Revenue testified before the Senate Finance Committee Criminal Justice Subcommittee. The Judicial Department’s request includes $9.2 million for judicial salary increases and $13 million for the Case Management System Modernization project. They are also seeking funding for the digital courtroom recorder project and additional court reporters.

The Department of Revenue is not seeking any new additional state funds.

Also on Wednesday, the Department of Health and Human Services appeared before the House Ways and Means Healthcare subcommittee. Their request includes $64 million for maintenance of effort, $7.4 million for the Medicaid Management Information Systems and $6.7 million for provider reimbursement rate and benefit remediation.

The state’s General Fund revenue will include over $1 billion in new revenue from two years of a budget surplus. Budget writers will have an additional $498 million in new recurring revenue and $549 million in one-time revenue.

The governor’s Executive Budget can be found here.

Individual state agency budget requests can be found here.

EDUCATION REFORM

On Thursday, House Speaker Jay Lucas (R-Hartsville) introduced legislation H.3759 that he called a transformative change in South Carolina’s education system. The comprehensive plan known as “The South Carolina Career Opportunity and Access for All Act” seeks to tackle the fundamental changes needed to modernize our education system with a primary focus on students and teachers.

According to Speaker Lucas, “the bill lays out the blueprint to update the outdated student funding formula created over 40 years ago; will increase base teacher pay; will get more money and resources into the classroom; will free teachers to teach instead of giving unnecessary tests; will hold chronically failing school districts accountable by providing alternative management solutions; will focus on the overall education and workforce pipeline, and get our students ready for a future in higher education, the technical college system or the workplace.”

A companion bill was introduced in the Senate by Senate Education Committee Chairman Greg Hembree (R-Horry). Gov. McMaster strongly supports the legislation. The bill is expected to receive its first hearing next week in a House Education subcommittee.

STATE OF THE STATE

Gov. McMaster delivered his annual State of the State address to a Joint Session of the General Assembly. Outlining his legislative priorities, McMaster implored the General Assembly to “be bold” and focused on improving education, workforce development and tax relief.

McMaster’s speech followed up on his spending recommendations to the General Assembly outlined in his Executive Budget. He proposes additional investments in K-12 education and called for a 5% teacher pay increase that will bring average teacher salaries above the projected southeastern average salary for 2020. He also called for additional school resource officers and mental health counselors.

McMaster also threw his support behind wholesale education reforms being proposed by House Speaker Jay Lucas (R-Hartsville) and Senate Education Chairman Senator Greg Hembree (R-Horry) that would eliminate burdensome testing, consolidate school districts, replace non-productive school boards and rein in the practice of social promotions. In higher education, McMaster is proposing that in exchange for freezing in-state tuition and fees, an institution will receive a 6% increase to their annual base budget, representing their pro-rata share of a $36 million-dollar appropriation.

He is also proposing an additional $63 million dollars to enhance our workforce partnerships, training, grants and scholarships to help students attend our state’s technical colleges.

Noting that South Carolina has the highest marginal income tax rates in the Southeast, McMaster renewed his push for an across-the-board state income tax cut. He also called for eliminating income taxes for all retired veterans, first responders, law officers, firefighters and peace officers and recommends returning $200 million of this year’s budget surplus back to the taxpayers who paid it.

Read the governor’s address here.

HIGHER EDUCATION

The Senate Education Committee approved S.228 (Gambrell), which creates the Tri-County Technical College Enterprise Campus Authority. That bill now goes to the full Senate for consideration. The committee recommitted to the subcommittee S.33 (Grooms and Campsen) that enacts the Campus Free Expression Act. The bill aims to prevent any four-year, two-year or technical college from blocking student-invited speakers from visiting campus and allow for penalties for those who interfere with freedom of speech. The bill also seeks to ensure speakers of all political leanings can speak on campuses without being deterred by administrative issues such as high security costs. The committee agreed the legislation needs work before advancing.

JUDICIAL/LEGAL

The Senate Judiciary Committee approved S.7 (Malloy, Climer, Goldfinch, Talley and Harpootlian) dealing with the Tort Claims Act limits. The bill increases the limits from a loss to one person arising from a single occurrence to $1 million and increases the total limits from a loss arising from a single occurrence to $2 million. The bill also requires the limits be adjusted annually in accordance with the Consumer Price Index. The bill now goes to the full Senate for consideration.

HEALTHCARE

Last week brought a news conference for those who support legalizing medical marijuana in South Carolina. This week, opponents of the legislation took to the podium at a Wednesday news conference. The state’s top two law enforcement officials, Attorney General Alan Wilson and SLED Chief Mark Keels, spoke in opposition of proposed legislation S.366 (Senator Davis). They were joined by representatives of the South Carolina Medical Association and the South Carolina Sheriff’s Association. Keel said the law enforcement community firmly opposes the bill, noting that legalizing marijuana in any form could create a “black market” for resale and potential abuse. The South Carolina Medical Association also opposes sections of the new bill that force physicians to be the access point for marijuana in South Carolina. They are calling for lowering marijuana from a Schedule I to a Schedule II drug so that more comprehensive research can be conducted. This issue has been discussed in previous legislative sessions and will surely generate considerable debate again this year. Gov. McMaster has indicated he will follow law enforcement’s lead on the bill, suggesting a veto should legislation reach his desk.

On Thursday, the Senate gave second reading approval to S.16 (Senator Rankin) that increases the amount of a prescription that may be refilled from a 10-day to a 30-day supply when authorization from the prescriber is not obtainable. The bill was amended by the full committee to change it to a 14-day supply. The bill was further amended on the floor to allow for exemptions for drugs like insulin that are pre-packaged for a 30-day supply. The bill should receive third and final approval next week.

ANIMAL WELFARE

The Senate Agriculture and Natural Resources Committee approved S.105 (Campbell and Sheheen). This is the animal welfare bill that passed the senate last year and was reintroduced this year. The legislation was developed from recommendations of the Animal Welfare Task Force. The bill now goes to the full Senate for consideration.

INTRODUCTIONS OF INTEREST

HOUSE

H.3685 (Rep. R. Williams) Income tax credits for school to work programs. Referred to Committee on Ways and Means.

H.3697 (Reps. Taylor, Allison, Gilliard and Simmons) Joint Resolution relating to degree requirements and the closure of Corporation of America providers. Introduced, read first time, placed on calendar without reference.

H.3701 (Reps. Rutherford and G. R. Smith) Enacts the “South Carolina Cellular Data Privacy Protection Act.” Referred to Committee on Labor, Commerce and Industry.

H.3702 (Reps. Hill, Bryant, Bailey, Cobb-Hunter, Fry and others) Relating to forfeiting ownership of an animal treated cruelly. Referred to Committee on Judiciary.

H.3705 (Reps. Spires and Sandifer) Relating to the application of the South Carolina Property and Casualty Insurance Guaranty Association and related requirements for workers’ compensation. Referred to Committee on Labor, Commerce and Industry.

H.3709 (Rep. Huggins) Relating to registering a fertile pit bull dog. Referred to Committee on Agriculture, Natural Resources and Environmental Affairs.

H.3726 (Reps. Weeks, Fry, Alexander, Dillard, Erickson and others) Requires coroners and medical examiners to complete continuing education on the identification of deaths caused by opiates. Referred to Committee on Medical, Military, Public and Municipal Affairs.

H.3727 (Reps. Fry, Alexander, Dillard, Erickson, Hewitt and others) Requires Medicaid health plans to insure access to appropriate clinical services for the treatment of opioid use disorders. Referred to Committee on Medical, Military, Public and Municipal Affairs.

H.3728 (Reps. Fry, Alexander, Dillard, Erickson, Hewitt and others) Requires hospital physicians and pharmacists to submit certain information to DHEC when a person is administered an opioid antidote. Referred to Committee on Medical, Military, Public and Municipal Affairs.

H.3732 (Reps. Hewitt, Fry and West) Requires veterinarians to complete continuing education to prescribing and monitoring certain controlled substances. Referred to Committee on Agriculture, Natural Resources and Environmental Affairs.

H.3736 (Reps. Spires, Calhoon, Ballentine, Huggins, Caskey, Toole and Wooten) Property tax exemption on owner-occupied homes for persons sixty-five years of age and older. Referred to Committee on Ways and Means.

H.3748 (Reps. Loftis, Burns, Forrester and Elliott) Establishes procedures for electrical utilities for new conforming net energy metering rates. Referred to Committee on Labor, Commerce and Industry.

H.3751 (Reps. Clary, McCoy, Pope, Simrill, Caskey, W. Newton and Elliott) Relating to reforms to the Public Service Authority. Referred to Committee on Labor, Commerce and Industry.

H.3756 (Reps. Lucas and Collins) Joint Resolution directing the Department of Revenue to develop a report recommending a new funding model or models for appropriating, monitoring and reporting revenue and expenditures at the state and local school district level. Referred to Committee on Education and Public Works.

H.3757 (Reps. Lucas and Collins) Establishes the Workforce and Education Data Oversight Committee. Referred to Committee on Education and Public Works.

H.3758 (Reps. Hiott, Allison, Anderson, Atkinson, Bales and many others) Relating to the contribution among tortfeasors act. Referred to Committee on Judiciary.

H.3759 (Reps. Lucas, Allison, Felder, Pope, Simrill and many others) Enacts the “South Carolina Career Opportunity and Access for All Act” (education reform). Referred to Committee on Education and Public Works.

H.3760 (Rep. Sandifer) Merges the Patients’ Compensation Fund with the South Carolina Medical Malpractice Joint Underwriting Association and establishes surcharges. Referred to Committee on Labor, Commerce and Industry.

SENATE

S.390 (Senator Rice) Provides tax credits or rebates against various types of taxes imposed if a qualifying capital investment is made at the business location. Referred to the Committee on Finance.

S.404 (Senators Sheheen, Campbell and Campsen) Relating to the income tax credit for certain qualified rehabilitation expenses for a certified historical structure. Referred to the Committee on Finance.

S.407 (Senator Gambrell) Prohibits a person convicted of animal cruelty from adopting animals. Referred to the Committee on Agriculture and Natural Resources.

S.408 (Senators Reese and Turner) Relating to sales and gross receipts from the operation of a cable system. Referred to the Committee on Finance.

S.419 (Senators Hembree, Malloy, Turner, Setzler and Sheheen) Enacts the “South Carolina Career Opportunity and Access for All Act” (education reform). Referred to the Committee on Education.

S.424 (Senators Campbell, Talley, Scott, Reese, M. B. Matthews and Gambrell) Relating to Community Development Tax Credits. Referred to the Committee on Finance.

S.430 (Senator Cromer) Resolution recognizing the week of March 10-16, 2019 as “Medical Assistants Week”. The Senate Resolution was introduced and referred to the Committee on Medical Affairs.

UP NEXT

The House Ways and Means Committee will hold its first full committee to consider legislation on Tuesday afternoon, Jan. 29.

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