The 2012 South Carolina legislative session is shaping up to be an interesting one, with several high-profile issues on the table and an election year for every member of the General Assembly in both the House and Senate who are up for re-election. The campaign filing deadline is March 31st, so the General Assembly will be in session when legislators officially field contenders – and that, historically, tends to color many actions taken during that time.
As in years past, priorities can certainly change with the wind at the State House, but, for now, there are several issues expected to be at the forefront of debate during the 2012 session, including:
Comprehensive tax reform, which is finally gaining some momentum.
Up for consideration are the General Assembly-established Taxation Realignment Commission’s study, a privately funded tax study sanctioned by the Palmetto Institute, and input from a statewide grassroots organization called SC ROAR, which focuses solely on the need for comprehensive tax reform. Additionally, House Speaker Bobby Harrell has created a House GOP Tax Study Committee, and Governor Haley has spoken publicly about her support for needed state tax reform.
The state retirement fund, which is in dire need of reform.
The SC Retirement System faces at least a $13 billion deficit, prompting state lawmakers to call for a massive overhaul of the system. Addressing such a significant deficit and resulting efforts to keep the fund solvent could divert funds away from other “critical need” areas.
The South Carolina Department of Transportation (SCDOT), which has recently experienced a serious cash flow problem.
Some lawmakers have suggested that this is the year in which they may need to look at how SCDOT is structured, after publicly criticizing what they consider financial mismanagement and lack of transparency at the state’s largest agency.
Government restructuring, which is a recurring theme at the State House.
Last year, the House passed four separate restructuring bills, including legislation to allow the Governor to appoint the State Superintendent of Education (H.3070); to pair the Governor and Lt. Governor on the same ticket (H.3152); and to restructure the executive branch functions of the Budget & Control Board into a newly formed Department of Administration controlled by the Governor (H.3066). We can also expect a similar restructuring debate to take place in the Senate.
With SC’s unemployment rate thus far remaining one of the highest in the nation, new bills that could help create jobs.
Last year’s contentious debate over Amazon.com incentives proved that the approval of state incentives in exchange for promised jobs is not a given in South Carolina. While some lawmakers, philosophically, believe that state incentives are not the answer for a market that should determine winners and losers, others understand that, in today’s economic development battles between states to land new companies, incentives do play a significant role in growing the state’s economy.
One piece of legislation that passed the House last year and currently awaiting consideration in the Senate is H.3779, also known is “The Bill Wylie Entrepreneurship Act.” Designed to attract private capital for promising start-ups, it is similar to tax credit incentive programs that have been implemented in 23 states, including North Carolina and Georgia. The bill would allow an angel investor to claim a non-refundable state income tax credit of 35 percent of its qualified investment in a business start-up company. This type incentive has proven to be very effective in luring private capital and, without it, South Carolina remains at a competitive disadvantage with our neighboring states.
Legislative action to address cases under recent consideration by the SC Supreme Court.
Under the Supreme Court’s Smith Land Company opinion of July 11, 2011, many citizens may now be in violation of the Pollution Control Act (PCA), allowing other citizens to sue for a perceived violation. The Supreme Court’s decision provides for a significant change in the implementation and operation of the PCA since its enactment in 1950. Court interpretation also creates regulatory uncertainty for business and industry and opens the door for additional environmental litigation. It is expected that legislation will be introduced to restore balance back to the PCA. A suit filed by South Carolina private citizen Matthew Bodman, in which he claims that the state’s 78 sales tax exemptions are unconstitutional, is being watched by a number of constituencies. The Supreme Court heard oral arguments on the case in December and is currently considering the issue. House and Senate leadership have said, publicly, that “any tax restructuring that is done in South Carolina should be performed in the halls of the General Assembly with careful consideration and input from the many affected businesses and industries in South Carolina and not pursuant to the sole input of one single resident of South Carolina.”
Additional monies from last year’s budget surplus, better-than-expected tax collections, and continued growth.
The Board of Economic Advisors (BEA) announced in November of 2011 that state lawmakers will have an additional $900+ million to spend when they return to Columbia this January for the fiscal year that begins July 2012. Gov. Haley has said extra money should be used to pay down debt, or else, returned to SC taxpayers. During an election year, it should be interesting to see how lawmakers divvy up this extra revenue.
For more information about state legislation and the upcoming 2012 session of the SC General Assembly, please feel free to contact the Upstate Chamber Coalition at mcothran@greenvillechamber.org or eedwards@greenvillechamber.org.