Fire Sprinkler Property Tax Credits — S. 860

Although S. 860 was sent back to a Senate LCI subcommittee for more work, the subcommittee meeting was cancelled. Currently, the subcommittee amendment deletes the state income tax credit incentive to install sprinklers in commercial or residential structures and creates a property tax credit incentive. The property tax credit allowed would be 80 percent of the cost of the sprinkler system with no cap on the amount which could be spent on the sprinkler system. The credit would be applied against the owner’s property tax liability owed to the entity providing fire service to the structure. The credit claimed in any one year could be up to 50 percent of the tax amount billed.

The fiscal impact to local governments is unknown, although clearly both open-ended and substantial. The smaller the budget, the larger the impact. The impact would not be known until after any sprinkler systems were installed—possibly after the budget is adopted—and would grow as more sprinkler systems are installed. Indications were that the subcommittee intended to continue to rest the fiscal responsibility of this bill upon local governments. This is a classic unfunded state mandate, which will be paid for by local property taxpayers. If the state decides to provide a tax subsidy for sprinkler installation, the state should provide a state tax credit instead of a local property tax credit.

Because the subcommittee did not meet, you will need to bring concerns about the fiscal impact upon local services directly to the attention of LCI Committee members. A Committee roster is attached.

 2.

Millage Rate Limitation County Population Figures Released

The Board of Economic Advisors (BEA) has slightly revised the millage rate cap figures released last week, and the revisions are attached. Section 6-1-320 limits the increase in the county millage rate to the average increase in the Consumer Price Index (CPI) plus the increase in population for the county. SCAC has additional information, including school district millage rate limitations, on the Home Page.

 3.

Realtor Business Licenses — H. 4554

This bill was reported favorably to the House LCI Committee. It restricts business licenses on realtors to the broker in charge and confines the amount taxed to income gained within the boundaries of the local jurisdiction. Under the Home Rule Act, county business license taxes can only be collected for businesses in the unincorporated area and must afford a credit for gross revenues on which business license taxes have been paid in other jurisdictions. SCAC discovered a loophole that could allow businesses in newly-incorporated areas to avoid any taxation. Members of the LCI committee and committee staff are working with SCAC to fix this problem.

 4.

Innocence Project Evidence Retention — S. 429

The Senate Judiciary Committee considered this bill to create a procedure for inmates to apply for DNA testing to provide proof of wrongful conviction. S. 429 requires the custodian of evidence (clerk of court, sheriff, solicitor) to preserve physical evidence until one year after a convicted person is executed or released from incarceration. Currently, evidence in criminal cases other than capital cases may be destroyed if unclaimed 18 months after sentencing. The committee carried the bill over one week to allow interested parties to work on several issues prior to the next committee meeting.

SCAC is working on a proposal with the Senate Judiciary Committee staff and other agencies that would require evidence in homicides and sexual crimes to be held: for the term of incarceration for guilty verdict cases; for the lesser of seven years or the term of incarceration for sentences after guilty or nolo contendere pleas; and until execution in capital cases. The custodian of the evidence could petition the court to dispose of evidence other than on that schedule. Obviously, storage of retained evidence is a major concern in S. 429. S. 429 will be before the Senate Judiciary Committee next Tuesday.

 5.

Senate Finance to Take Up Budget on Monday

Senate Finance budget subcommittees completed their work on the budget, and the Senate Finance Committee will begin work on Monday. The subcommittees have been focused on the difficult fiscal outlook this year, and very few new provisos have appeared. There has been no Senate discussion of state employee raises yet. The House-passed bill contained a 1 percent employee raise. The subcommittees have adopted the following provisos which passed the House:

1. New $5 Traffic Ticket Surcharge - Proviso 90.11. This proviso adds a $5 surcharge on all misdemeanor traffic tickets and non-moving violations. The revenue from the surcharge is for the Criminal Justice Academy. This proviso would mean that all magistrate court traffic tickets will have a 107.5 percent assessment, a $25 surcharge for law enforcement funding, and a $5 surcharge for the academy. A $50 ticket would become $133.75 after surcharges and assessments are added.
    

2. Mileage Reimbursement - Proviso 89.25. The standard mileage reim-bursement rate increases from 44.5 cents to 50.5 cents.
    

3. Failure to Remit Court Fine Reports - 76.14. This proviso states that if the State Treasurer receives an audit report from a county that contains a significant finding related to court fine reports to the State Treasurer's Office, the requirements of proviso 89.72 shall be followed if an amount due is specified. Proviso 89.72 is the assessment audit proviso, Proviso 72.75 last year. The requirements of 89.72 are as follows:
   
   "If the error is determined to have been made by the county or municipal treasurer's office, the State Auditor shall notify the State Office of Victim Assistance for the crime victim portion and the chief administrator of the county or municipality of the findings and, if full payment has not been made by the county or municipality within ninety [90] days of the audit notification, the State Treasurer is directed to adjust the authority's aid to subdivisions funding in an amount equal to the amount determined by the State Auditor to be the state's portion."
   
   If an amount due is not specified, new proviso 76.14 authorizes the State Treasurer to withhold 25% of all state payments to the county until the estimated deficiency has been satisfied. Additionally, the proviso states that if a county is more than 90 days delinquent in remitting monthly court fines, the State Treasurer shall withhold 25 percent of state funding for that county until all monthly reports are current. After 90 days, the funds being held by the Treasurer’s Office will be made available to the State Auditor to conduct an audit of the entity for determining an amount due, if any.

 6.

Act 388 Assessable Transfers of Interest (ATI) or
Point of Sale Revisions

There are a number of groups and individuals interested in revising the provisions in Act 388, which create a point of sale revaluation of properties that transfer ownership. Under Act 388, when an "assessable transfer of interest" (ATI) occurs, the full fair market value of the property is placed on the tax rolls and the 15 percent cap applies from that time forward, until there is another ATI. There are discussions about doing away with the revaluation of real property when it is sold. However, there is no introduced bill at this point in time, and staff has seen no written proposal.

Because this issue was not addressed by the SCAC Legislative Committee, the SCAC Board of Directors was sent a memo on the issue in February and polled as to what SCAC's position should be. As a result of that vote, the position of SCAC is no position. SCAC will report on this issue when it is introduced and debated, but will take no active role in the debate. Staff will be happy to address questions about the status of any bill when it is introduced, but will not advocate for or against the proposal.

 7.

There's a BAT in the House — H. 4887

H. 4887 is this year's big annual tax (BAT) bill. The bill is 60 pages long with 55 different sections. We anticipate that it may be heard in subcommittee as early as next week. There are several sections of the bill which were requested by SCAC. However, staff needs timely comment and input about any concerns on the remainder of H. 4887. Attached is a table of contents for the subject matter of the sections of H. 4887. Please contact the SCAC staff as soon as possible with any comments or thoughts you have on the provisions in this bill.

 8.

OPEB Constitutional Amendment — S. 463

A House Ways and Means subcommittee took up S. 463 to amend the state constitution to allow the state and its political subdivisions to invest their Other Post Employment Benefits (OPEB) funds in equity investments (stocks). An amendment was adopted by the subcommittee to allow independent local government pools, such as SCAC is currently organizing, similar investment authority. S. 463 was given a favorable report, as amended, and is on the House Ways and Means Committee agenda next Tuesday.

 9.

Retirement System Guaranteed COLA — H. 4673

A House Ways and Means subcommittee took up the Cost of Living Allowance (COLA) Task Force’s proposal addressing increases in retiree benefits to offset inflation. H. 4673 amends the Task Force’s proposal by standardizing all retirement systems—state employees, police, judicial and General Assembly retirees—with the 2 percent guaranteed COLA. State Treasurer Converse Chellis and the Retirement System explained that, except for the police officers retirement system (PORS), the proposal could be funded by adopting an 8 percent assumed return on investments (ROI) of the state’s retirement funds. A 0.5 percent increase in the employer’s contribution would be required to fund the PORS 2 percent guaranteed COLA. The COLA would guarantee a COLA up to 2 percent each year, instead of the current 1 percent guarantee, and put this guaranteed COLA in the other retirement systems.

There was agreement by the members to support the bill. The bill was carried over until Tuesday morning for members to review an amendment unrelated to the State Retirement System or PORS. The bill will probably be on the agenda of the House Ways and Means Committee on Tuesday afternoon.

Other Items of Interest

1. Probate Court Jurisdiction - S. 1068. A Senate Judiciary subcommittee gave a favorable report to S. 1068. After the subcommittee amendment, the bill increases probate court jurisdiction for minor settlements from $25,000 to $50,000; increases the amount of annual distributions to a minor not requiring court approval from $10,000 to $25,000; and retains the direct appeal to the Court of Appeals. The rationale for the minor distribution increase was inflation since the adoption of the statute, which has not been adjusted in over 20 years.
    

2. Combined Registration and Election Boards - S. 1106. The Senate gave second reading to S. 1106 without amendment. This bill is an effort to combine county registration and election boards in a constitutionally sound manner. The bill codifies the numerous local acts which have been used to combine these boards without making substantive changes to existing struc-ture in each county.
    

3. Personal Property in Probate - S. 16. This bill to clarify ownership of personal property in an estate with a surviving spouse was carried over by a Senate Judiciary subcommittee.
    

4. Landfill Regulations - Both of these regulations are in the possession of DHEC, which stops the running of the time period after which they become approved. R. 1114 (Super Reg) was returned to DHEC to amend the notice requirements. York County had a concern that a county was not involved early enough in the permitting process. This is being addressed. The demon-stration of need (DON) regulation has not been reported back to the legis-lature. SCAC has been working with DHEC to ensure that the counties have the opportunity to interpret their land use regulations and ordinances in per-mitting consistency determinations. This will not only give the counties input in the location, but will also involve counties at the front end of the appli-cation process. An applicant has to demonstrate that the project is consistent with local ordinances and local solid waste plans at the time of the application.
    

5. Adult Businesses - H. 3679. A House Judiciary subcommittee gave this bill a favorable report. The bill would require adult businesses to close between 12 a.m. and 6 a.m. The bill provides for criminal penalties. SCAC is concerned that H. 3679 may preempt existing ordinances which are more stringent.
    

6. Electronic Recording Act - H. 3451. This bill provides for the electronic recording of land title documents in the RODs’ offices. H. 3451 has been taken off of the Senate Judiciary Committee agenda for this week, and probably next week, in order to allow Senate bills to get through the Senate prior to the May 1 procedural deadline for bills to cross to the other chamber.
    

7. SPD Dissolution - H. 4578. This amendment to the S.C. Constitution permits local legislation to abolish special purpose districts (SPDs). The House adjourned debate on the bill this week, and it is pending third reading on the contested calendar. Because debate has been requested on this bill, there may be an attempt to amend it on the House floor. Please contact your house member, and ask that H. 4578 remain unamended.
    

8. Municipal Annexation - H. 3642. The House Judiciary Committee ad-journed debate on this bill—due largely to the fact that while there are continuing discussions among the parties, no common ground has been reached. SCAC will not support any liberalization of annexation, unless it incorporates the elements of our legislative agenda.
    

9. Smoking Ban - S. 103. This bill would prohibit smoking in public places, except in certain prescribed areas. A House Judiciary subcommittee amend-ed the bill by removing the local government preemption language. S. 103 was recommitted to subcommittee to await a decision from the Supreme Court on the two cases currently before them.
    

10. State Spending Caps - S. 718 and S. 1220. This is the constitutional amendment to cap state spending and the statutory implementing language. The Senate Judiciary Committee included no provisions addressing local governments and adopted a mechanism to smooth state revenue spikes to avoid large swings in state revenue available for appropriation. Both bills were given a favorable report by the Senate Judiciary Committee and have now been sent to the Senate Finance Committee for further review.
     

11. Removal of Roads from the State System - S. 981. A Senate Transportation subcommittee has recommended an amendment which would require county approval before a road could be removed or placed in the county road system. The bill now goes to the Senate Transportation Committee.
     

12. Tethering Dogs - S. 833. This legislation would prohibit the tethering or otherwise restraint of dogs. The bill was further amended to allow local government to enact more stringent ordinances; however, local ordinances can only impose a civil punishment. S. 833 applies to all animals except poultry, animal husbandry practices, pet shops, exhibitions and shows. The bill has passed the Senate and is now in the House.
     

13. Disabled Veteran Motorcycles - H. 3592. This bill amends 12-37-220(B)(3), which currently allows a disabled veteran to exempt two automobiles from property tax, to also allow an exemption for a motorcycle. A House Ways and Means subcommittee reported the bill out favorably.
     

14. Highway Funding and the HEF - H. 4665. This legislation puts the money not expended after all school districts have been reimbursed from the Homestead Exemption Fund into the Non-Federal Aid Highway Account and a reserve account. Under current law, the money would be used to provide a property tax credit against county taxes. A House Ways and Means subcommittee adjourned debate on the bill.
     

15. Appeals of Property Tax Assessment to County Council - H. 3079. This legislation would allow a taxpayer to appeal to county council the removal of the agricultural use classification. Currently, appeals go to the board of assessment appeals. The bill required the payment of attorney’s fees, if the taxpayer prevails. A House Ways and Means subcommittee continued this legislation.
     

16. Boat Situs - H. 4685. This bill states that a boat not used in interstate commerce is subject to taxation in this state, if it is present in the state for a total of 180 days. Current time requirements are 60 consecutive days or 90 non-consecutive days in a year to become subject to S.C. property tax. A House Ways and Means subcommittee reported this bill out favorably this week. This issue is also addressed in H. 4887 (BAT bill).
     

17. Mini-bottle Hold Harmless - S. 951. This bill holds harmless state agencies and local entities which received mini-bottle tax revenues for alcohol education, prevention and other purposes. A House Ways and Means subcommittee reported the bill out favorably.
     

18. School Sales Tax - H. 4883. This legislation would allow a local option sales tax to be imposed for educational capital improvements. The tax may be imposed in the county upon the adoption of a resolution by the school district and a favorable referendum result. The tax may only be imposed by a school district whose boundaries are the same as the county. The revenues may be shared with higher education for capital improvements on campuses. A House Ways and Means subcommittee reported the bill out favorably.
     

19. Closed Plant Personal Property - S. 1171. As amended, S. 1171 allows manufacturing machinery in a closed plant to be property tax exempt. A manufacturer that is not under a fee agreement would return personal property as non-taxable, if the property is in a plant which is closed for one fiscal year and the personal property has not been used in operations for one fiscal year. The personal property becomes taxable at the earlier of its operation in a manufacturing process or four years. This bill was reported out of Senate Finance Committee and is pending third reading in the Senate.
     

20. Jobs Tax Credit - S. 1217. This legislation revises the Jobs Tax Credit. The current five levels of Jobs Tax Credit are combined into three. Because S. 1217 has no fiscal impact, it is apparent that there is some change in the amounts of credit. A Senate Finance subcommittee reported the bill out favorably.
     

21. Residential Improvement Districts (RIDs) - H. 4745. This bill is based upon the county improvement districts in Chapter 35 of Title 4, which allows assessments to finance public infrastructure and improvements. A House Ways and Means subcommittee made numerous technical amendments and gave H. 4745 a favorable report. It will be on the House Ways and Means Committee agenda Tuesday.
     

22. Affordable Housing TIFs - H. 4706. This bill allows publicly- and privately-owned affordable housing to be the focus of a Tax Increment Financing District (TIF). H. 4706 was given a favorable report and will be on the House Ways and Means Committee agenda next Tuesday.

'Can't Wait to Get Your Friday Report or Missed Your E-mail Version This Week?

Information has a short shelf life in the legislative arena. The sooner you receive legislative updates, the sooner you are able to contact the members of the General Assembly to thank them for doing helpful things or give them the information they need to make better decisions. The Friday Report is usually available on the website by 3 p.m. on Friday. The Friday Report can also be sent to you directly. Just fax the enclosed form, or follow the e-mail request instructions. If you stop receiving the e-mail version of the Friday Report, call us. We may have an e-mail address that is no longer valid.

Newly-Introduced Legislation

 HOUSE BILLS

H. 4868 - Allows a county, by ordinance, to postpone for a second year the implementation of county-wide appraisal and equalization programs of real property value for property tax purposes.

H. 4875 - Provides an enhanced Job Tax Credit for companies that establish or expand their headquarters in this state, expands the definition of project under fees in lieu of tax provisions to include an airplane in the county or using an airport if the county consents, and provides three methods for verifying a county’s approval for the transfer of a Fee in Lieu of Taxes agreement.

H. 4876 - Amends provisions of the state retirement system laws to comply with IRS requirements regarding employee benefits, employer contributions and other related matters pertaining to participating in the system and system procedures. It also elimin-ates the application of SC Regs. 19-900 through 19-997 to the operation of Title 9.

H. 4881 - Creates a new ranking factor for the Targeted Jobs Tax Credit, based upon property tax millage imposed in a county for school operations and debt service for schools, and provides a method for calculating this new school millage factor.

H. 4882 - Amends magistrate court rules by repealing the sections relating to the time for serving a complaint and relating to an offer of judgment.

H. 4883 - Creates the "Education Capital Improvements Sales and Use Tax Act" by allowing a 1 percent local sales and use tax to be imposed in a county for not more than 15 years, upon referendum approval, for public school capital improvements. Revenues are to be apportioned to the school districts—as well as to technical colleges, state colleges or universities located in the county—for specific capital improvements.

H. 4887 - Creates the latest version of a BAT bill that contains various tax credit and tax exemption provisions.

H. 4890 - Provides that every construction, demolition and land-clearing debris landfill permitted by DHEC after June 30, 2008 must have an operable fire hydrant within 200 feet of the entrance to the landfill.

H. 4892 - Provides an income tax incentive for home builders constructing high per-formance energy-efficient homes, and prevents local governments from prohibiting the installation of a solar energy heating or cooling system in a residential home.

H. 4898 - Provides that a person applying for a marriage license who does not have a Social Security Number or an Alien Identification Number may present other documen-tation, such as a Work Visa, as proof that the person is legally in the U.S.

SENATE BILLS

S. 1226 - Provides an enhanced Job Tax Credit for companies that establish or expand their headquarters in this state, expands the definition of project under fees in lieu of tax provisions to include an airplane in the county or using an airport if the county consents, and provides three methods for verifying a county’s approval for the transfer of a Fee in Lieu of Taxes agreement.

S. 1227 - Adds Clarendon County to the list of counties that have both a register of deeds and a clerk of court.

S. 1232 - Creates the "Education Capital Improvements Sales and Use Tax Act" by allowing a 1 percent local sales and use tax to be imposed in a county for not more than 15 years upon referendum approval for public school capital improvements. Revenues are to be apportioned to the school districts—as well as to technical colleges, state colleges or universities located in the county—for specific capital improvements.

S. 1234 - Provides an income tax incentive for home builders constructing high performance energy-efficient homes, and prevents local governments from prohibiting the installation of a solar energy heating or cooling system in a residential home.

S. 1242 - Creates the S.C. Taxation Realignment Commission to do a comprehensive study of the state’s tax system and submit a report of recommended changes to the General Assembly by Jan. 1, 2010.

S. 1243 - Provides an exemption for state-imposed sales and use tax on tangible personal property sold or leased to public schools and public school districts. The exemption does not apply to local sales and use tax administered by the Department of Revenue.