View from the Dome – March 8, 2019
By Copper Dome Strategies, LLC

The Senate Finance Sales and Income Tax Subcommittee approved the annual tax conformity legislation. The South Carolina House Tax Policy Review Committee voted to adopt a plan to lower the state’s income tax to 4.5% over a five-year period.

The House passed comprehensive education reform after a lengthy debate Wednesday. The National Commander of the American Legion addressed a Joint Session of the General Assembly. Gov. Henry McMaster is re-opening a state of South Carolina Washington, D.C., office to help state agencies with their federal counterparts.

TAX CONFORMITY

The Senate Finance Sales and Income Tax Subcommittee approved H.3985 (Reps. Lucas, G. M. Smith and Stavrinakis), the annual tax conformity legislation on Tuesday. The bill updates the reference to the Internal Revenue Code (IRS) to state income tax laws and provides that if the IRS Code sections adopted by the state are extended, then these sections are also extended for South Carolina income tax purposes.

The bill now goes to the full Senate Finance Committee for consideration.

TAX REFORM

The South Carolina House Tax Policy Review Committee voted to adopt a plan to lower the state’s income tax from 7% to 4.5% over a five-year period.

The plan would be funded by state growth and includes a trigger mechanism in the event of decreasing tax revenues to the state.

Personal exemptions would be lowered from $4,150 to $2,370. The plan retains a few exemptions and would allow for bonus depreciation to be deducted by individual taxpayers but not by South Carolina corporate taxpayers.

Once this plan is drafted into bill form and introduced in the House, it will be assigned to the Ways and Means Committee, where the Tax Subcommittee will use it as a working template.

This 14-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. Committee Chairman Tommy Pope (R-York) had told the committee his goal was to find consensus among the members to send a working template to the House Ways and Means Tax Subcommittee for continued debate.

The SC House Tax Policy Review Committee’s meeting agenda and video archives dating to August 2016 can be found at https://www.scstatehouse.gov/CommitteeInfo/HouseTaxPolicyReviewCommittee/SCHouseTaxPolicyReviewCommittee.php.

BUDGET

Floor debate in the House of Representatives will begin on Monday on the Ways and Means Committee passed version of the FY 2019-20 state budget H.4000. Pursuant to the House rules, the budget has been printed and placed on House members’ desks for review for one week.

Senate Finance budget subcommittees continued meetings to hear state agency budget requests. SC First Steps, the SC Public Charter School District and the State Board for Technical and Comprehensive Education presented their request to the subcommittee. System President Dr. Tim Hardee told the subcommittee the request includes $22.5 million in recurring base funding, $12 million for high demand jobs skills training equipment and $51.1 million for Lottery Tuition Assistance. The state’s 16 technical colleges are seeking $272 million for one-time capital projects. The state’s General Fund revenue will include nearly $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 $479 million in one-time revenue. To view the budget briefing outlining highlights presented to House members, go here.

Budget spreadsheets from each subcommittee can be found here.

House Ways and Means Committee Budget Provisos can be found here.

The governor’s Executive Budget can be found here.

Individual state agency budget requests can be found here.

EDUCATION REFORM

On Wednesday, after more than six hours of debate, the full House of Representatives passed H.3759 (Lucas, Allison, Felder, Pope, Simrill, Rutherford and others) known as “The South Carolina Career Opportunity and Access for All Act” by a vote of 113-4. The bill seeks to tackle the fundamental changes needed to modernize our education system with a primary focus on students and teachers. The bill’s highlights include:

  • A 9% pay increase for first-year teachers while providing an across-the-board 9% pay raise for all teachers over the next two years
  • Requiring school districts with fewer than 1,000 students to consolidate with neighboring districts to share resources and save money
  • Overhauls the Education and Economic Development Act (EEDA) of 2005
  • Dissolving school districts that have four consecutive years of failing scores
  • Eliminating three end-of-year standardized tests in elementary schools
  • Establishes within the Governor’s Office the Zero to Twenty Committee to monitor the state education and workforce pipeline to continually determine the education and training levels required by the State’s employers and identify and recommend improvements regarding efficiency and cooperation of agencies and programs throughout the age zero to 20 education and workforce pipeline

The bill received third reading on Thursday and goes to the Senate for consideration.

A Senate Education Subcommittee met on Wednesday on the companion bill, S.419, which was introduced by Senate Education Committee Chairman Greg Hembree (R-Horry). The subcommittee discussed an amendment, to be voted on at the next meeting, that would eliminate the Zero to Twenty Committee and the “Student Bill of Rights” currently in the bill and proposed changes to the Read to Succeed Program. The subcommittee plans to hold four meetings across the state to seek input from interested parties and would like to move the bill to the full Senate Education Committee by the end of March. They have scheduled a meeting on March 18 in Gaffney and another on March 21 in Georgetown. A summary of the companion bills can be found here.

HIGHER EDUCATION

The House Education and Public Works Committee favorably approved H.3936 (Reps. Davis and Daning) relating to the Palmetto Fellows Scholarship. The bill would allow the scholarship to be extended to students attending a technical college or other two-year institution and may continue to use the scholarship to attend an eligible four-year institution. The bill now goes to the full House for consideration.

ENERGY

The newly formed Senate Select Committee on Santee Cooper met on Wednesday and heard an overview on the Public Service Authority Evaluation and Recommendation Committee. The Public Service Authority Evaluation and Recommendation Committee, also known as the Santee Cooper Study Committee, has been meeting since last summer. While this new Senate committee was created to review the work of the Santee Cooper Study Committee, members said the purpose is not to supplant or replace the joint committee or to slow down or speed up a sale of Santee Cooper, but rather to work to educate other senators about options that may be available to the General Assembly. Those options could be to sell all or parts of Santee Cooper, enter into a management agreement or allow Santee Cooper to restructure. The committee plans to hear from Santee Cooper at their meeting next week.

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.

WASHINGTON OFFICE

Gov. Henry McMaster has announced he is re-opening a state of South Carolina Washington, D.C., office. McMaster has hired Florence native Jordan Marsh as director of federal relations. Marsh will work out of an office at the National Governor’s Association and will help state agencies with their federal counterparts. He is a graduate of the University of South Carolina and has worked for the South Carolina Republican Party and the S.C. Alliance to Fix Our Roads.

HEALTHCARE

The House Medical, Military, Public and Municipal Affairs Committee favorably approved as amended H.3821 (Rep. Clary), which enacts the “Advanced Practice Registered Nurse (APRN) Act.” The bill expands the role of APRN’s relating to death certificates by allowing them to authorize crematories, sign death certificates, certify the manner of death and execute do not resuscitate orders among other things. The bill now goes to the full House for consideration.

INTRODUCTIONS OF INTEREST

HOUSE

H.4000 (Ways and Means Committee) Appropriations for Fiscal Year beginning July1, 2019 (state budget) Without Reference.

H.4001 (Ways and Means Committee) Appropriate monies from the Capital Reserve Fund. Without Reference.

H.4206 (Reps. Toole, Calhoon and Spires) Allows the Public Service Commision to authorize the issuance of bonds to offset costs incurred due to a state of emergency declared by the governor or abandonment of an authorized project. Referred to Committee on Labor, Commerce and Industry.

SENATE

S.595 (Senator Shealy) Relating to background checks for employment at a childcare facility. Referred to the Committee on Family and Veterans’ Services.

S.620 (Senator Bennett) Requires electrical utilities to submit an integrated resource plan. Referred to the Committee on Judiciary.

S.627 (Senator Campbell) Relating to property tax exemptions for institutions of higher learning. Read the first time and referred to the Committee on Finance.

UP NEXT

The House of Representatives will begin full floor debate on H.4000 the FY 2019-20 state budget beginning Monday.