By Copper Dome Strategies

Friday, Jan. 10, 2020

In this edition: The second session of the 123rd General Assembly will convene Tuesday, Jan. 14. As this is the second year of our two-year legislative session, all bills introduced and moving from last year retain their place on the calendar and in committee.

With recent legislation passed to shorten the legislative session, Sine Die adjournment is scheduled for May 14.

South Carolina’s growing economy will once again provide considerable additional General Fund revenue and a projected surplus of over $1 billion. The potential sale of state-owned utility Santee Cooper will again be front and center for debate. Lowering the state’s income tax, public school funding and reform, and expansion of full-day, 4-year-old kindergarten are also atop the agenda.

Don’t forget that 2020 is an election year. All 124 House members and 46 senators will be on the ballot in November.

STATE OF THE STATE

Gov. Henry McMaster will deliver his annual State of the State address to a Joint Session of the General Assembly on Wednesday, Jan. 22, outlining his priorities for the 2020 legislative session.

TAX

Legislation to conform South Carolina’s tax code to the federal IRS code will once again be required due to recent changes by Congress. Also on the tax front, legislation was filed in the House last year that would lower the state’s income tax in a phased-in approach. Another bill would eliminate most sales tax exemptions and reduce the state’s sales tax.

LEGISLATION OF INTEREST STILL PENDING:

H.4532 (Reps. Pope, Clemmons, Daning, Taylor and others), is similar to a plan first proposed by the TRAC Commission a decade ago to basically eliminate all sales tax exemptions and begin taxing electricity, food and medicine at 25% of the gross proceeds of sales, which would roughly equate to a sales tax rate of 1.25%. The plan would lower the current state sales tax from 6% to 3%.

H.4334 (Reps. Pope, Clemmons, Stringer, Daning and others) enacts the “South Carolina Income Tax Act for Individuals, Trusts and Estates” that would lower the state’s income tax rate from 7% to 4.5% funded by state growth and includes a trigger mechanism in the event of decreasing tax revenues to the state.

H.4431 (Reps. Jordan, Fry, Rose, Atkinson, Daning and Forrest) enacts business license tax reform.

PREFILED LEGISLATION OF INTEREST: HOUSE

H.4657 (Rep. Pendarvis) Enacts the “South Carolina Opportunity Zone Enhancement Act of 2020” providing tax credits for investing in new projects in an opportunity zone. Referred to Committee on Ways and Means.

H.4670 (Rep. Pendarvis) Relating to liability coverage for professionals regulated by a board or commission. Referred to Committee on Labor, Commerce and Industry.

H.4675 (Reps. Dillard and Herbkersman) Relating to property tax exemptions on low-income housing. Referred to Committee on Ways and Means.

H.4693 (Rep. Moore) Tax credits to manufacturers for hiring an unemployed individual receiving unemployment compensation. Referred to Committee on Ways and Means.

BUDGET

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. Combined with federal funds and fines and fees, the total state budget is expected to exceed $30 billion.

Gov. McMaster and House leadership pledged in December to use $211 million of the new recurring revenue to fund a $3,000 per year raise for all 52,000 of South Carolina’s school teachers. The proposed pay hike will raise the new beginning salary for teachers to $38,000, up from $35,000 in 2019 and $32,000 in 2018. It also would put the state’s average teacher salary $2,456 above the average of the southeastern states and bring the state’s average teacher salary into the top 25 in the nation. Last year, the state was ranked 41st in teacher pay among all states.

The governor also announced he will seek $53 million to broaden access to full-day, 4-year-old kindergarten and has strong support in the legislature to do so. Gov. McMaster and other legislative leaders are also proposing to send some of the new revenue back to the taxpayers by reducing the state’s income tax brackets. State agencies and colleges will seek to get a large portion of the surplus for one-time capital projects and maintenance and repair needs.

House Speaker Jay Lucas (R-Darlington) has said he would like for about $300 million-$400 million of the surplus to be relegated to the state’s reserve fund. Currently, the state has about $614 million in its largest reserve account. Lucas wants to get that account to $1 billion as a safety net for any future economic downturn.

Gov. McMaster is expected to release his Executive Budget next week, which outlines his recommendations to the General Assembly for his funding priorities.

Once posted, the Executive Budget can be found here.

Individual state agency budget requests can be found here.

EDUCATION REFORM

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) in early March. However, after hearing complaints from teachers and others about the legislation, the Senate did not pass their version S.419 (Sens. Hembree, Malloy, Turner, Setzler, Sheheen and Alexander) known as “The South Carolina Career Opportunity and Access for All Act.” Instead, Senate Education Committee Chairman Greg Hembree (R-Horry) wanted to bring more stakeholders to the table and held numerous subcommittee and committee meetings throughout the summer and fall. After numerous changes to the bill, the full Senate Education Committee passed it out of the Education Committee in December and the bill is on the Senate calendar for debate by the full body.

ENERGY/SANTEE COOPER

The fallout from the V.C. Summer nuclear debacle continues to be a major issue at the State House. With ratepayers being forced to pay billions of dollars for the project that has been abandoned, the debate to sell the state-owned utility Santee Cooper will likely dominate the discussions in both chambers early in the session.

Last year, legislators agreed on a plan H.4287 (Reps. Lucas, G. M. Smith, Simrill, Rutherford and others) that required the Department of Administration to hire experts to seek and evaluate not only bids from qualified offerers to purchase Santee Cooper but 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. The evaluation portion of the process is coming to a close and the Department is to make their recommendations to the General Assembly by Jan. 15 or ask for an extension not to exceed 60 days. Legislative hearings will then be held by the House Ways and Means Committee and the Senate Finance Committee, who will in turn make recommendations to their respective bodies for further consideration.

Legislators will have three options: sell Santee Cooper to a for-profit utility; allow another utility or firm to take over and manage Santee Cooper; or allow Santee Cooper to reform itself.

HEALTHCARE

The Senate worked over the summer and fall on a bill that would ban an abortion once a fetal heartbeat is detected. H.3020 (Reps. McCravy, Bennett, Burns, Chumley, B.Cox and others) passed the House last year and advanced to the Senate floor. Senate Democrats have promised a potential session-killing filibuster if it comes up for debate. Should the Senate agree to take up the bill on the floor, expect a protracted debate.

LEGISLATION OF INTEREST STILL PENDING

HEALTHCARE

S.366 (Sens. Davis, Hutto, McLeod and Kimpson) known as the “Compassionate Care Act,” the bill deals with medical marijuana. The state’s top two law enforcement officials, Attorney General Alan Wilson and SLED Chief Mark Keels, are in opposition to the proposed legislation, along with the South Carolina Sheriff’s Association. The South Carolina Medical Association opposes sections of the bill that force physicians to be the access point for marijuana in South Carolina. They call 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. Gov. McMaster has indicated he will follow law enforcement’s lead on the bill, suggesting a veto should legislation reach his desk.

H.3823 (Reps. Mace, G.M. Smith, Taylor, G.R. Smith and others) would eliminate the Certificate of Need (CON) requirements relating to the licensure of health care facilities. The committee took no action on the bill but heard testimony both for and against the bill. Subcommittee Chairman and bill co-sponsor Murrell Smith (R-Sumter) said he is disturbed that five years have passed since the House last passed legislation eliminating CON only to see the bill stall in the Senate. He believes the current system is broken and said the votes are in the House to totally repeal CON but urged those opposed to present their plan to modernize as soon as possible.

S.16 (Sen. Rankin) increases the amount of a prescription that may be refilled from a 10-day to a 14-day supply. The bill would allow for exemptions for drugs like insulin that are pre-packaged for a 30-day supply. The bill has passed both bodies and is now in conference committee to resolve the differences in the two versions.

HIGHER EDUCATION

S.298 (Sens. Sheeheen, Peeler and others), the “Higher Education Opportunity Act of 2019,” is an attempt to reign in rising tuition costs while increasing funding for the state’s 33 public colleges and universities. The bill remains in the Senate Education Committee.

H.3757 (Reps. Lucas and Collins) establishes the Workforce and Education Data Oversight Committee (WEDOC) and specifies the responsibilities and objectives of the committee. The WEDOC is to support the mission of the Coordinating Council for Workforce Development and includes the Executive Director of the State Board for Technical and Comprehensive Education and the president of a technical college appointed by the Chairman of the State Board for Technical and Comprehensive Education. The bill passed the House in May and is now in the Senate Labor, Commerce and Industry Committee.

H.3936 (Reps. Davis and Daning) would include eligibility for the Palmetto Fellows Scholarships for students attending technical colleges and two-year institutions of higher learning. The bill passed the House in April and is now before the Senate Education Committee.

H.3576 (Reps. White, Cobb-Hunter and Garvin) establishes the SC Workforce Industry Needs Scholarship (SCWINS) for students who are attending a two-year public technical college, majoring in a critical workforce area program, as defined and recommended by the State Board for Technical and Comprehensive Education and ratified by the South Carolina Coordinating Council for Workforce Development, and who are receiving a Lottery Tuition Assistance Program Scholarship (LTAP) for the current school year. The critical areas included advanced manufacturing, healthcare, information technology and transportation logistics and distribution. The bill was amended to include provisions for need-based students as well. The bill passed the House in January and is now before the Senate Education Committee. However, a proviso was included in the FY 2019-20 state budget relating to the program.

S.33 (Sens. 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 more work before advancing.

JUDICIAL/LEGAL

S.7 (Sens. Malloy, Climer, Goldfinch, Talley, Harpootlian, Kimpson and Allen) related to caps within the Tort Claims Act has passed the Senate and was referred to the House Ways and Means Committee. The bill proposes to raise the caps on the recovery limits. As amended, it would raise the cap on a single person from $300,000 to $500,000 and for an occurrence from $600,000 to $1,000,000. The bill as passed by the Senate also adds new language related to an offer of judgment and the calculation of interest. S.386 (Senators Malloy, Climer, Goldfinch, Talley, Sabb and Harpootlian) was a related bill with additional reform measures that was recommitted to the Senate Judiciary Committee.

PREFILED LEGISLATION OF INTEREST: HOUSE

H.4668 (Rep. King) Prohibits higher education institutions from charging application fees for in-state residents. Referred to Committee on Education and Public Works.

H.4713 (Rep. Gilliard) Requires health care facilities to conduct an annual risk assessment to identify potential threats and provide appropriate security. Referred to Committee on Medical, Military, Public and Municipal Affairs.

H.4719 (Rep. Rutherford) Relating to juvenile justice reform and diversion programs. Referred to Committee on Judiciary.

H.4720 (Rep. Pope) Enacts the “Solemn Covenant of the States to Award Cash Prizes for Curing Diseases Act.” Referred to Committee on Judiciary.

H.4729 (Rep. Rutherford) Constitutional amendment to allow the General Assembly to restrict the sale of alcoholic beverages that are deemed unreasonably hazardous to persons under age 21. Referred to Committee on Judiciary.

H.4730 (Reps. G. M. Smith, Bradley, Erickson, Herbkersman, Huggins and W. Newton) Enacts the “Utility Facility Citing and Environmental Protection Act.” Referred to Committee on Labor, Commerce and Industry.

H.4738 (Rep. King) Makes it unlawful for a third party to accept a fee for payment on utility bills. Referred to Committee on Labor, Commerce and Industry.

H.4755 (Reps. Lucas and Allison) Relating to admission requirements of technical colleges. Referred to Committee on Education and Public Works.

H.4757 (Reps. Allison and Lucas) Relating to LIFE scholarships and additional stipends. Referred to Committee on Education and Public Works.

H.4775 (Rep. G. R. Smith) Enacts the “Forming Open and Robust Minds (FORUM) Act of 2020” relating to free speech on campuses. Referred to Committee on Judiciary.

H.4776 (Reps. Tallon, Allison and Hyde) Increases restrictions on former members of the Public Service Commission from one to three years. Referred to Committee on Labor, Commerce and Industry.

H.4800 (Reps. Collins, Bernstein and Kimmons) Joint Resolution reauthorizing the Joint Citizens and Legislative Committee on Children. Referred to Committee on Judiciary.

H.4809 (Rep. Finlay) Increases restrictions on former members of the Public Service Commission from one to four years. Referred to Committee on Labor, Commerce and Industry.

H.4813 (Rep. Elliott) Relating to bakeries using alcoholic beverages as ingredients. Referred to Committee on Judiciary.

K-12 Education

H.4671 (Rep. Rose) Enacts the “Highly Qualified Subject Educator Certification Act” relating to substantial experience to obtain a teacher certificate. Referred to Committee on Education and Public Works.

H.4753 (Reps. Lucas and Allison) Enacts the “Teacher Bill of Rights” and relating to other education requirements. Referred to Committee on Education and Public Works.

H.4754 (Reps. Lucas and Allison) Relating to school choice and the establishment of schools of innovation. Referred to Committee on Education and Public Works.

H.4759 (Reps. Lucas and Allison) Directs the State Department of Education to develop a technology plan for providing wireless internet in all public schools by Aug. 1, 2021. Referred to Committee on Education and Public Works.

H.4764 (Reps. Brawley and King) Provides public school teachers a 30-minute lunch. Referred to Committee on Education and Public Works.

H.4766 (Reps. Brawley and King) Provides that public school teachers may not be required to work more than 37.5 hours each week. Referred to Committee on Education and Public Works.

H.4769 (Rep. Gilliard) Enacts the “Advanced Manufacturing Act of 2020” for students in grades 6 through 12. Referred to Committee on Education and Public Works.

PREFILED LEGISLATION OF INTEREST: SENATE

S.865 (Senators Jackson, Hutto and Shealy) Joint Resolution reauthorizing the Joint Citizens and Legislative Committee on Children. Prefiled and referred to the Committee on Family and Veterans’ Services.

S.870 (Senators Campsen, Setzler, J. Matthews, Reese, Jackson and others) Prohibits oil and gas exploration in the Atlantic Ocean. Prefiled and referred to the Committee on Agriculture and Natural Resources.

S.891 (Senator Shealy) Relating to the transfer of beer or wine for underage person’s consumption and compliance testing. Prefiled and referred to the Committee on Judiciary.

S.900 (Senator Campbell) Relating to cruelty to animals and tethering a dog. Prefiled and referred to the Committee on Agriculture and Natural Resources.

S.903 (Senators Davis and Young) Enacts the “Magistrates Reform Act of 2020.” Prefiled and referred to the Committee on Judiciary.

S.904 (Senator Young) Prohibits public utilities from disclosing customer information to third parties. Prefiled and referred to the Committee on Judiciary.

S.907 (Senator Young) Relating to the “Natural Gas Rate Stabilization Act.” Prefiled and referred to the Committee on Judiciary.

S.908 (Senator Scott) Provides immunity from removing a minor or animal from a vehicle in a life-threatening situation. Prefiled and referred to the Committee on Judiciary.

S.911 (Senator Bennett) Relating to exemptions on coloring or dyeing animals. Prefiled and referred to the Committee on Agriculture and Natural Resources.

S.923 (Senator Climer) Requires water and sewer utilities to submit an integrated resource plan to the PSC. Prefiled and referred to the Committee on Judiciary.

S.924 (Senator Climer) Relating to water and sewer utility rates and failure to provide service. Prefiled and referred to the Committee on Judiciary.

S.925 (Senator Climer) Constitutional amendment allowing the governor to appoint judges. Prefiled and referred to the Committee on Judiciary.

S.947 (Senator Harpootlian) Increases restrictions on former members of the Public Service Commission from one to four years. Prefiled and referred to the Committee on Judiciary.

S.950 (Senator Harpootlian) Relating to regulations of bundled offerings for local exchange companies and franchise fees. Prefiled and referred to the Committee on Judiciary.

S.954 (Senator Scott) Repeals the sunset provision for the Midlands Technical College Enterprise Campus Authority. Prefiled and referred to the Committee on Finance.