By Copper Dome Strategies

Friday, Jan. 24, 2020

IN THIS EDITION: The Senate continued debate on the education reform bill, and the House of Representatives spent most of its time in subcommittee meetings. Gov. Henry McMaster delivered his annual State of the State address Wednesday evening to a joint session.

STATE OF THE STATE

Gov. Henry McMaster delivered his annual State of the State address to a Joint Session of the General Assembly on Wednesday evening. He noted the state is “roaring into the ‘20s with a vibrant economy and a growing population. In the last three years alone, we have announced nearly $10 billion in new capital investment and almost 35,000 jobs.” The thriving economy, low unemployment and rising wages have resulted in $1.8 billion in additional general fund revenue.

McMaster’s priorities include cutting taxes, education funding that includes teacher pay raises, an expansion of full-day 4-year-old kindergarten for low-income children, and public safety.

Highlighting his recommendations from his recently released executive budget, Gov. McMaster is again calling for a $3,000 teacher pay raise increase that would place South Carolina in the 25th percentile nationally for educator’s salaries, up from 41st, according to the governor’s office.

With the increase in state revenue, McMaster is asking lawmakers to send more money back to South Carolinians in the form of tax cuts, starting with $160 million to reduce personal income tax brackets by 1% over the next five years. He is also proposing sending $250 million of the new revenue back to the taxpayers via a one-time rebate averaging $200 per taxpayer.

In his speech, he noted our state has roughly 70,000 unfilled jobs, many of which only require an associate degree or credential certificate available through the state’s 16 technical colleges. He is proposing $50 million to provide a state match for collaborations between technical colleges, school districts and businesses for Career and Technology Centers in rural areas. The proposal seeks to replicate a regional center for workforce education and training for high school students and adults in Lake City. He is also calling for an additional $164 million for need-based scholarships and grants to open the door of opportunity for those students who can’t currently afford college.

McMaster also called on lawmakers to pass the education reform bill and the fetal heartbeat abortion ban bill and to increase transparency in state spending.

In the Democratic response, House Minority Leader Todd Rutherford (D-Columbia) laid the state’s problems on Republicans who he said have run the state for the past 20 years. He questioned the governor’s tax proposal and said any surplus should be put into an underfunded government to meet the state’s critical needs. Rutherford also called for legalizing and regulating gambling, expanding Medicaid and expanding broadband coverage in rural areas.

BUSINESS LICENSE TAX REFORM

The House LCI Business License Fees Ad Hoc Subcommittee met Wednesday to hear testimony on H.4431 (Reps. Jordan, Fry, Rose, Atkinson and others) the “South Carolina Business License Tax Reform Act.”

Proponents of the legislation, including the State Chamber of Commerce and the Federation of Independent Businesses, say our current system is complex, costly and lacks transparency. Currently in South Carolina, 231 municipalities and nine counties have 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.

The bill would make it so that businesses are taxed by the city based on income instead of gross revenue and would potentially allow business owners to owe fewer tax dollars while creating a more standardized and simpler application process.

Municipalities oppose doing away with the tax and, through the Municipal Association of South Carolina (MASC), have proposed a standardized portal for licensure to ease with compliance.

Bill proponents support the portal but insist it should be managed by a state government agency authorized to collect taxes and not a nonprofit association such as the MASC using a third-party vendor. The subcommittee will continue meeting and urged interested stakeholders to work toward reaching a consensus.

BUDGET

House Ways and Means budget subcommittees continued meetings to hear state agency budget requests. The Department of Juvenile Justice appeared before the Law Enforcement and Criminal Justice Subcommittee on Wednesday. Director Freddie Pugh noted the agency is requesting additional funding for increased salaries and $1.1 million for a program increase for the Marine and Wilderness Programs. The Department of Commerce appeared before the Economic Development and Natural Resources Subcommittee. Commerce Secretary Bobby Hitt told the subcommittee their request includes $4 million for Locate SC program funding that will allow the state to be proactive in preparing sites into suitable inventory for potential prospects. They are also requesting $360,000 to assist with planning for the 2021 PGA Championship, which will be contested on The Ocean Course at Kiawah Island Golf Resort.

With the state’s economy seeing record-level unemployment combined with rising wages and new residents, economists tasked with setting the revenue estimate for the FY 20-21 state budget have added $815 million to the $9 billion state general fund. Additionally, they are projecting a budget surplus of over $1 billion.

The governor’s executive budget can be found here.

Individual state agency budget requests can be found here.

ENERGY/SANTEE COOPER

The Senate gave third and final reading approval on Thursday to 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. The bill now goes to the House for consideration. Additionally, the House Labor, Commerce and Industry Committee approved H.4827 (Reps. Lucas, Sandifer, Forrester and Mack), the companion to the Senate bill. That bill now goes to the full House for consideration.

HEALTHCARE

By a vote of 110-0, the House gave second reading to H.4404 (Reps. Stringer, Herbkersman, W. Newton, Yow, Huggins and others) that enacts the “Veterans Nursing Degree Opportunity Act.” The bill is intended to provide a gateway for military veterans to transition from military life to a professional career in nursing by authorizing the development and implementation of Veteran Associate of Science in Nursing degree (VASN) programs and Veteran Bachelor of Science in Nursing degree (VBSN) programs. The bill received third and final reading in the House on Wednesday and now goes to the Senate for consideration.

AUTOMOTIVE

A Senate Transportation Subcommittee gave favorable approval to S.723 (Senators Young, Davis, Sabb and Rankin) the “South Carolina Hands Free Act.” The bill prohibits driving while holding an electronic device in your hand and creates penalties. The bill now goes to the full Transportation Committee.

ALCOHOL

By a vote of 3-2, a Senate Judiciary Subcommittee gave favorable approval, as amended, to S.290 (Senators Talley, Climer, Turner, Campbell and others) relating to drive-through, curb service or delivery of alcoholic beverages. The bill was amended to require the retailer to provide training and receive electronic verification of the purchaser’s proof of age. The bill now goes to the full Judiciary Committee for consideration.

EDUCATION REFORM

The Senate continued debate on S.419 (Sens. Hembree, Malloy, Turner, Setzler, Sheheen and Alexander) known as “The South Carolina Career Opportunity and Access for All Act.” The bill remains in masthead status on the Senate calendar and debate will continue next week. 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.

CHARTER SCHOOLS

The House Education Committee received a report with mark-ups from the ad-hoc Charter School Committee. The committee was created by the House Education Committee to make recommendations for potential changes to our current charter school laws. Education Committee Chairwoman Rita Allison (R-Lyman) thanked the ad hoc committee for its work and asked the committee members to study the report and consider potential changes to state law.

HIGHER EDUCATION

By a vote of 109-0, the House approved H.4076 (Reps. Tallon, Hixon, Johnson and others). The bill requires an agency of government or an institution of higher learning with a governing board or commission to provide new members of the board with a written document outlining their duties and powers, which must be signed within ninety days after taking office. The bill received third and final reading on Wednesday and now goes to the Senate for consideration.

A Senate Education Subcommittee favorably approved S.954 (Senators Scott and Setzler), which repeals the sunset provision relating to the disposal of surplus property of the Midlands Technical College Enterprise Campus Act. The bill now goes to the full Senate Education Committee.

INTRODUCTIONS OF INTEREST

SENATE

S.1034 (Senators Grooms, Campbell, Loftis and Climer) Reduces income tax brackets by 1% over a five-year period. Referred to the Committee on Finance.

S.1030 (Senator Hembree) Recognizes the week of Jan. 26 through Feb. 1, 2020, as “National School Choice Week.” The Senate Resolution was introduced and referred to the Committee on Education.

S.1032 (Senator Davis) Renders a deed restriction, covenant or homeowners association document that prohibits the installation of a solar energy system void. Referred to the Committee on Judiciary.

S.1038 (Senator Fanning) Relating to average pupil-teacher classroom ratios. Referred to the Committee on Education.

S.1042 (Senator Hembree) Relating to ill-treatment of animals by removing the exemption for the training of hunting dogs. Referred to the Committee on Agriculture and Natural Resources.

HOUSE

H.4973 (Reps. Bamberg and Rutherford) Enacts the “Fair Pay to Play Act” relating to compensation for student-athletes at institutions of higher learning. Referred to Committee on Education and Public Works.

H.4974 (Reps. Lucas, Simrill, Rutherford, Pope, McCoy, G. M. Smith and Bannister) Increases the number of at-large judges in all Circuit and Family Court judicial circuits. Referred to Committee on Judiciary.

H.4993 (Rep. Bamberg) Authorizes and regulates “Local Government-Owned Broadband Internet Access Service.” Referred to Committee on Labor, Commerce and Industry.

H.4998 (Rep. White) Abolish the Education Oversight Committee and the Commission on Higher Education and devolve their duties to the Commission for Comprehensive Education. Referred to Committee on Ways and Means.

UP NEXT

The Senate Family & Veterans’ Services Committee will hold a Confirmation Hearing next on Wednesday morning for the governor’s appointment of Rep. Bobby J. Cox to become Secretary of Veterans Affairs.

REARVIEWS 2020

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