By C. Grant Jackson

When state legislators return Jan. 9 to start year two of the 2023/2024 session of the S.C. General Assembly, business leader are hopeful, but not necessarily optimistic, that several issues important to the business community will be successfully addressed.

But while the business community would like to see movement on issues such as workforce development, the reality of the second year of a two-year legislative session that includes both presidential primaries during the first two months of the session and when all 170 state legislators are up for re-election means a difficult path forward.

The Democratic presidential primary will be held Feb. 3, followed by the Republican primary on Feb. 24, which will include former S.C. governor Nikki Hailey on the ballot. Then legislators who are seeking re-election will be filing their candidacy in the second half of March.

“I think the air will be sucked out of the room in South Carolina for the first month of session,” said Carl Blackstone, president and CEO of the Columbia Chamber of Commerce. The dynamics will be different in 2024 and that makes it harder to try to get anything done, Blackstone said. “It’s more of a blocking and tackling year than it is a proactive year.” 

Those sentiments were echoed by state Rep. Micah Caskey, a Lexington County Republican, and Rep. J. Todd Rutherford, a Richland County Democrat and House Minority Leader. The two spoke to a Columbia Chamber legislative breakfast briefing Dec. 13. 

 “I don’t know much that is actually going to pass,” Rutherford said because of the impact of the primaries and the coming election. 

Caskey noted that the weeks leading up to filing for the election “are not particularly brave moments in the legislative world because people don’t want to take votes on issues that might push somebody who is contemplating challenging them over the fence.”

And because 2024 is the second year of a two-year session, anything that doesn’t pass will die at the end of the session.

While 2024 may not be as much about the session as it is about the election, Bob Morgan, president and CEO of the S.C. Chamber of Commerce, hopes that the General Assembly will move forward on some issues that are important to South Carolina business like workforce development and tort reform. 

“We are fortunate to have a strong pro-business majority in both the House and the Senate, folks who are there for the right reasons, who want to do the right things, who are capable and willing to reach across the aisle. We're not Washington, D.C., with the dysfunction that we see there,” Morgan said.

The S.C. Chamber of Commerce and the state’s Metro Chamber Coalition, which includes the Charleston Metro Chamber, Greenville Chamber, Myrtle Beach Area Chamber of Commerce, Columbia Chamber and the Charlotte Regional Business Alliance have all developed legislative agendas that include those and other issues of concern to the state’s business community.

The 2024 S.C. Chamber of Commerce Competitiveness Agenda includes:

• Establishing a Flourishing and Resilient Talent Pipeline
• Bringing Fairness to an Unfair Tort System
• Ensuring Continued Economic Growth and Prosperity
• Modernizing Our Tax Code
• Letting Business Do Business. 

Workforce issues were clearly top of mind for business leaders participating in the state chamber’s annual Grassroots Tour, conducted each fall. This year the chamber made 26 stops and heard from 41 local chambers, with 897 individuals responding to the camber’s poll on issues affecting business.

“As we have seen in the last three years, workforce, workforce, workforce is the No. 1  challenge,” Morgan said. “The fact that we have a low unemployment rate now, which is  2.9 percent.  We have over 70,000 jobs going unfilled. But, we have more companies moving in than ever before,” points to business’ need for more workers, Morgan said. 

Asked if their businesses were struggling to hire and retain qualified workers, 69 percent of the respondents to the Grassroots Tour survey said yes. Forty two percent said a lack of workers was their biggest challenge, with 36 percent saying workers’ wages and benefit is the biggest drag on their earnings potential. 

Forty two percent also selected increasing wage and benefits as the top solution to getting people back to work coming out of the pandemic.

But while workforce remains the No. 1 issue for business, Morgan said, it was not the runaway issue it has been in previous years. Thirty one percent chose Inflation and increased costs as their biggest challenge. 

“And I don't know that there's a lot the legislature can do in the upcoming legislative session about that, but clearly the cost of goods for both consumers and businesses have gone up significantly. And folks are feeling that,” Morgan said. 

But workforce is an issue that lawmakers can do something about. “South Carolina suffers from a labor force participation rate that is significantly lower than most other states in the country,” that at 57 percent that is the third lowest in the country, Morgan said. 

What are the barriers keeping people from either entering the workforce for the first time or reentering for those who might have dropped out, many of whom left during the pandemic?

A lack of quality, affordable childcare comes up repeatedly. “One of the things that we learned about this through the Grassroots Tour is that it's the cost for many. The cost is prohibitive,”and because that lack of childcare is keeping workers on the sidelines, childcare increasingly is an issue with businesses, Morgan said. 

South Carolina does have an existing Child Care Tax Credit for companies who set up or operate childcare facilities, but Morgan notes that fewer than 20 companies take advantage of it. 

Both the state chamber and Columbia Chamber of Commerce have made modernizing that credit one of their legislative priorities to increase greater access and provide more affordable care. 

And The Metro Chamber Coalition has made one of its priorities to “Seek solutions to expand accessibility and affordability of childcare to ensure working parents can  fully participate in the workforce.”

The General Assembly is taking steps to address that issue. A six-member Special Joint Committee to Study Childcare was appointed in September and held its first meeting in November. The panel is charged with “finding solutions that will improve workforce participation so that our statewide economy can continue to grow and thrive.” 

In addition to affordability, availability is also a concern because of a lack of childcare workers. “We heard down in Hilton Head that there's a facility that has space for a hundred additional children, but they can't hire the workers,” Morgan said. 

Sen. Katrina Shealy, R-Lexington, a member of the study committee, pre-filed legislation aimed at increasing the pool of qualified childcare workers by reducing some of the educational and training requirements. 

More S.C. companies are offering child care benefits to attract workers, and much of that is already subsidized through tax credits. 

Arthrex, a global manufacturer of orthopedic devices and implants, will have an onsite daycare center when it opens a new plant in Pendleton in the fall of 2024. Volvo Cars in October, 2023, began offering hourly employees a stipend for childcare that is similar to the state’s little used childcare credit. 

And Scout Motors will have a childcare facility built on land provided by Richland County, which also included, as part of its incentive package, tax credits to reimburse Scout for money it gives employees for childcare.

The problem with the state childcare credit, “is it’s a difficult  and cumbersome process,” Blackstone said. The process needs to be streamlined and made more user friendly before the state looks are other incentives, he said.

Seventy percent of the respondents to the state chamber’s Grassroots survey said they “would be interested in a reimbursement from the state if they provided employees with credit for childcare.”

Blackstone said he also thinks “we're going have to get companies to basically create co-ops to work with four or five companies to build their own facility, whether or not they build their own or they take spots at a daycare facility. I think it's just going to have to be something creative, where companies that are in the same business park can have a facility close by.” 

Joint and Several Liability

One critical business issue that remains unresolved from the 2023 session is tort reform. The issue revolves around how much responsibility a business has when it is sued for damages. 

South Carolina’s current system of “modified joint and several liability“ prevents juries from considering all parties responsible for damages in a lawsuit. That has led to a system that targets the deepest pockets for 100 percent of the damages, regardless of the percentage of fault.

Ninety two percent of those responding to the state chamber’s Grassroots Survey said, “businesses should only be responsible for their share of fault in civil lawsuits.”

The state’s civil justice system is severely out of balance with businesses disproportionately impacted by the state’s lawsuit-friendly climate, according to the state chamber. 

“It’s a simple question of fairness,” Morgan said. “Why should any person or company ever be held responsible for more than their percentage of fault? And that's one to watch particularly early in the session,” he said.

The South Carolina Justice Act, which currently languishes in a Senate Judiciary subcommittee, would amend current law “establish a modified joint and several liability” system that does not hold parties responsible for the entirety of damages when they are less than 50 percent at fault. 

The current tort system needs change in part because of its huge impact on small businesses, especially in driving up insurance rates, business leaders say. 

That impact has been felt especially by establishments that serve alcohol. 

In 2017, lawmakers passed a requirement that businesses serving liquor after 5 p.m. carry a minimum of $1 million in liability insurance. That not only led to higher insurance costs for those business, but also insurance carriers began leaving the state after several insurers lost big settlements in personal injury cases. 

As a result of the state’s unfair tort system, “I think 21 carriers have left the state over the last few years, just because the rates are so high,” Blackstone said.

The Metro Chamber Coalition has made “reinstitute joint and several protections for businesses to reasonably reflect fault in tort actions and improve the state’s insurance coverage climate,” one of its legislative priorities for 2024.

The group SC Venue Crisis, formed to lobby for legislative change in this area, has planned an SC Tort Reform Rally on the steps of the Statehouse Jan. 9, the opening day of the session, to seek changes in the state’s “unbalanced liability laws, forcing insurance prices to rise and crushing small business.“

State Sen. Luke Rankin, R-Myrtle Beach, has prefiled legislation to create a subcommittee to “study and review” the rapidly rising insurance rates and suggest possible solutions.

Tort reform and addressing joint and several liability is certainly “the issue with the most drama surrounding it going into the session,” Morgan said. 

Resolving the issue is going to take “a compromise between the business community and the trial lawyers” Blackstone said. “And compromise is not a great word in the election year.”

The Greenville Chamber issued a statement Jan. 8 saying the cost of liquor liability “is putting tremendous pressure on the Upstate’s important tourism and hospitality sector. The skyrocketing costs of insurance – on top of the significant inflationary pressures already hurting small businesses – will have far-reaching effects on hundreds of small businesses if it is not corrected quickly.”

It added: “Every small business in South Carolina is one lawsuit away from going out of business because we have a system where a business might be 1 percent at fault but could he held 100 percent financially liable.”

Energy & AI

Two other issues that are likely to generate a lot of conversation, Morgan said, are energy needs and artificial intelligence. But it is too early to tell if either of those conversations will generate any legislation, he said.

The energy question revolves around “this notion that South Carolina is on the verge of exceeding its demand,” Morgan said, because of the state’s “unprecedented levels of capital investment, job creation and growth.”

Both the Columbia Chamber and the Metro Chamber Coalition, along with the state Chamber, have listed among their legislative priorities support for “legislation that ensures the state has adequate energy generation and infrastructure to meet the demand for current and future developments.” 

“With the growth we’re seeing in South Carolia, we definitely need to think of new generation in the years to come,” Columbia’s Blackstone said. “if we want to see a continuation of growth in advanced manufacturing, all these companies require some sort of energy. It takes a lot of electricity or natural gas to build an electric car.”

As for issues surrounding Artificial Intelligence or AI, Morgan noted that House Speaker Murrell Smith has formed a new committee, chaired by Rep. Jeff Bradley, R-Beaufort, to “study Artificial Intelligence (AI), cybercrime and cybersecurity in South Carolina.” 

In the announcement Smith noted that, “While this new technology is being integrated into almost every facet of everyday life, policy development has not kept pace with technological development.” 

This will be the first state standing legislative committee in the nation on AI, Morgan said, and will study AI’s impact from a public policy perspective.

“Whether that turns into legislation in 2024 or not is too soon to tell,”  Morgan said, but at least the conversation will have begun.