Issue 16-06
April 28, 2006

Rabbit season is now open! Legislative rabbits are amendments which seek to add proposals which did not make it over to the second chamber before the May 1 deadline or are stalled in the second chamber. Proposals once thought dead can then slip into legislation and become law. If you receive a Legislative Alert, a rapid response is all the more important at this time of the legislative session. This is especially true this year as all bills which do not become law will have to begin the process all over again and supporters of those measures have an intense desire to see legislation through.

 1.

Property Tax Restructuring In the Senate - S.960, S.1028, H. 4449 & S. 969
The Senate has cleared the decks to address property tax next week. There is no clear consensus at this time as to what option the Senate may adopt.

A. The Tax Swap Component - H. 4449
Several plans are vying for adoption. Those plans include:
• Complete replacement of all school operating property tax from numerous sources. Most of those proposals use reimbursements currently paid to counties for the Merchants Inventory Exemption and the Manufacturers’ Depreciation and it may include a replacement of the Local Option Sales Tax.
• Complete exemption from operating property taxes for owner occupied homes. The replacement comes primarily from an additional 2 cent sales tax although most of those proposals would either be well shy of replacing the local property tax revenue or require substantial funding from the state general fund.
• Increase the school operating tax exemption to $150,000, grant vehicle tax relief and adopt a 5% of income circuit breaker. This would be funded by a 1 cent sales tax increase.
• Authorize a local option sales tax to completely replace school operating property taxes for some or all of the classes of the property tax base.

There are substantial procedural hurdles to overcome on all of the proposals. Some require a two-thirds vote and there is a significant risk of filibuster if the school equity concerns are not addressed in whatever plan emerges as the consensus option.

Please remind your senator of the inherent difficulties in distributing revenue back to local governments other than schools which have differing service levels, numbers of services and tax base values.

B. The Millage Cap Component - S. 969
S. 969 is the constitutional amendment to create a property tax millage rate cap. It is next in priority behind H. 4449 and may be taken up as part of any final tax swap agreement in the Senate.

PLEASE ASK YOUR SENATOR TO SUPPORT A MILLAGE RATE LIMITATION OVERRIDE BY THE GOVERNING BODY. THERE ARE AMENDMENTS PENDING TO ALLOW AN OVERRIDE OF THE MILLAGE RATE LIMITATION BY A 2/3 OR 3/4 VOTE OF THE GOVERNING BODY.

S. 969 allows for an emergency override of the millage rate limitation only by a referendum held in November. There is no effective override of the millage limitation because tax bills are generally in the mail by the November referendum time and that is five months into the fiscal year. This would mean tax bills would not be mailed until nearly December if a city, school district or SPD within the county asked for a November override referendum. If the referendum were not successful, the budget would have to be amended to address the shortfall in the fifth month of the budget year. Elected county council members will not risk the ire of voters to raise rates above the caps absent a compelling need.
 

 2.

Fowl Bill or 2006 Version of the Hog bill - S. 1205

The chickens will roost in the House next week. The Senate on Thursday afternoon passed S.1205 to preempt local land use planning options as they apply to agriculture and repeals several county ordinances concerning set backs. It is a bad precedent and certainly encourages others who want to move local planning and permitting decisions to the state level. If your county is having a local ordinance repealed by state law or you just want to leave the door open to addressing residents’ concerns locally, you should talk with your House member now. If you do not, this bill will surely become law and a pattern of preemption will be set.
 

Senate Completes work on the Budget

The Senate completed their work on the budget this week. Other than determining how to spend any excess revenues which might come in over current estimates, debate on the bill was largely non-controversial. The bill will now be sent back to the House, which will likely amend the bill back to their version. The budget will then go to conference committee. Any proviso which is in both versions of the budget at this point will be in the final product.

The following is a brief summary of some of the items of interest to counties in the budget:

39.20 DJJ Detention Per Diem Costs. This increases the per diem paid by local governments for detention of juveniles from $25 to $50. This proviso is in the House version of the budget, but not in the Senate version.

59.10 Penalty Waiver. This proviso used to authorize the Comptroller General to suspend the ten percent withholding requirement imposed on aid to subdivisions monies for a county’s failure to submit required financial data in the Annual County Financial Report. It was amended to now state that upon notification by the Office of Research and Statistical Services that a county has failed to submit the required report under §6-1-50, the Comptroller General shall withhold 10% of subsequent payments of state aid. This proviso is in both the Senate and House version of the budget.

60.12 Withheld Accommodations Tax Revenues. This proviso states that before noncompliant expenditures and penalties are withheld from a local government’s state accommodations tax distribution the Tourism Expenditure Review Committee must certify to the State Treasurer’s Office that the time period for an appeal has expired or that the action of the committee has been decided upon by the Administrative Law Judge. The proviso then requires the proportional reallocation of the withheld funds to all other jurisdictions. This new proviso is in both budget versions.

62.2 Election Managers and Clerks Per Diem. This proviso increases the per diem paid to managers and clerks of state and county elections from $50 to $60, and is in both versions of the budget.

63.32 State Employee Pay Increase. Grants state employees a 3% pay increase. The increase is the same in both budgets.

69B.1 Veterans Affairs. This proviso directs the monies now being provided to the County Veteran Affairs Office by a direct allocation from the “Veterans Affairs-Aid to Counties” line of the budget. The proviso reinserts previous language that was inadvertently left out of the budget last year when the line was removed from the Governor’s Office. This proviso is in both versions of the budget.

72.26 Travel - Subsistence Expenses and Mileage. This proviso was amended to allow reimbursement for lodging expenses for state employees up to the maximum lodging rates established by the US General Services Administration. It increases state employee mileage reimbursement from 34.5 cents to 44.5 cents. This new proviso is in both versions.

72.80 Assessment Audits. The proviso, a continued proviso from last year, allows the state auditor to audit court assessment, fine and surcharge revenues. If a jurisdiction is found to have remitted an improper amount of fines and assessments to the state and the State Auditor finds that the county treasurer is at fault, then the county’s Aid to Subdivisions money will be withheld in the amount of the shortfall. If a clerk of court or magistrate is found to be at fault, then the clerk or magistrate has 90 days to remit the portion owed, but there is no aid to subdivisions withholding provision. The proviso gives the State Treasurer and Court Administration $10,000 for the training of court officials in the handling of the assessment, fine, and surcharge revenue. The Senate amended this proviso to reflect that the audits are to be done based upon a random selection process.

72.81 Reimbursement for Hiring Correctional Officers. This proviso states that the provisions of §23-6-405, which require the reimbursement for mandatory training of a government employee hired by another governmental entity within two years, also apply to correctional officers and juvenile correctional officers. This proviso is in both budget versions.

73.2 $25 Surcharge for Law Enforcement. This proviso, placed in the budget in 2003, adds a $25 surcharge on all fines in general sessions, magistrates or municipal courts. The revenue is to be distributed to numerous state agencies. The Senate amended this proviso to state that the surcharge does not apply to parking violations imposed by state law or local ordinance.

FOI ACT BILLS - H. 4833, H. 4834, H. 4835 & H. 4836

There were several attempts to recall these FOI Act bills from committee to the floor this week. H. 4834, to limit copy costs to the prevailing commercial rate, was the only one to make it to the floor for consideration but H. 4834 failed to get a reading this week. Kinko’s may offer self serve copies at a loss and make up that loss with other services such as binding, color copies, colored paper, stationary, etc. Many public documents are originals or have to be replaced into filing systems correctly to allow them to be found when needed the next time and cannot be self serve. Proponents claim the only thing H. 4834 requires is that the copy charge be the same as commercial copies and any personnel time could be charged separately. H. 4834 will be considered by the House next week.

Newly-Introduced Legislation

H. 5057 - Enacts the Illegal Aliens and Public Employment Act requiring public employers to register and participate in the federal work authorization program.

SENATE BILLS

S. 1375 - Exempts certain buildings from having to be designed by an architect.

S. 1376 - Provides that it is the intent of the General Assembly for DHEC to be solely responsible for a complete and integrated regulatory plan for agricultural facilities and operations.

RATIFICATION OF ACTS

The following bills have been passed by both chambers and are now before the Governor for his signature or veto.

(R.270), H. 3721 - Requires the Election Commission to review the withdrawal of a candidate for a multi-county election or an election for a member of the General Assembly.

(R.273), H. 4421 - Provides that permits for the temporary sale of alcoholic beverages for off-premises consumption issued pursuant to a referendum may continue to be reissued without the requirement of a further referendum.

(R.275), H. 4624 - Permits DMV to issue up to 400 manufacturer license plates to a motor vehicle manufacturer.

(R.277), S. 800 - Increases the fine for violating the child restraint laws from $25 to $150.

(R.280), S. 1200 - Provides the annual fee for automobile manufacturer standard license plates is $761, twenty of which is credited to the state general fund and the balance to local governments.

(R.286), H. 3591 - Methamphetamine bill requiring a log be kept by retailers who sell over the counter medications which contain the ingredients for meth.

(R.287), H. 3735 - Requires the court to mail a copy of a judgment against a vehicle owner for failure to pay a toll and requires DMV to suspend a vehicle’s registration until the judgment is satisfied.

(R.288), H. 4314 - Provides that the first Friday in May is declared to be Vietnam Veterans Survivors and Remembrance Day.

House Ways & Means Committee Passes Numerous Bills on to the House Floor 

The Ways and Means Committee reported out a number of bills noted below. Many of the bills have a substantial impact on county operations and collectively have a significant fiscal impact.

A. Motorcycles Assessment Ratio Decrease - H. 4307. This bill mandates that motorcycles, trucks with an empty weight of 9000 lbs, and trucks with a gross weight limit of 11,000 lbs are all considered motor vehicles for the purposes of the assessment ratio drop from 10.5% to 6%. The fiscal impact of the legislation is $6,102,000. This is primarily due to the inclusion of trucks in the bill.

B. Nonprofit Housing Corporation Tax Exemption - H. 3718. The bill originally deleted the property tax exemption for non-profit low income housing corporations. The legislation was amended to allow non-profits to continue to have the exemption, but to disallow the exemption for “for-profit” corporations owned by the non-profit.

C. Recognition of Federal Tax Credits for Low Income Housing - H. 4737. H. 4737 would disallow an assessor recognizing the federal tax credits given to developers of low income housing when using an income based approach valuation. The bill does nothing for low income residents and instead bestows a property tax break on developers. The bill is most likely detrimental to low income residents, because those residents will likely have to pay higher vehicle taxes when millage is increased to provide this tax break. The legislation has a fiscal impact of $2.8 million. This impact will be felt in certain counties which have a greater concentration of low income housing utilizing the federal tax credits where the proceeds of the sale of income tax credits is counted as income from the property.

D. Property Leased to Similar Property Tax Exempt Entities - H. 4426. This bill provides that if an entity which is exempt from property tax as a nonprofit corporation funded by federal or state loans or is exempt from property tax as a religious, eleemosynary, educational or literacy organization leases property owned by it to similarly property tax exempt entities, the leased portion of the property is exempt from property tax. This bill has a fiscal impact of $150,000.

E. Volunteer Strategic Assistance and Fire Equipment Act - H. 4366. This legislation requires the General Assembly to appropriate funds annually for grants that must be awarded to certain volunteer and combination fire departments for the purpose of protecting local communities and regional response areas from incidents of fire, hazardous materials, terrorism, and to provide for the safety of volunteer firefighters. The House appropriated $3 million for this legislation in their version of the budget. One amendment requires a fire department to be at least 85% volunteer to be eligible for grants from this fund.

F. Responsibilities of Comptroller General moved to the Department of Revenue - H. 4504. This bill transfers many of the former statutory responsibilities of the Comptroller General to DOR.

G. Use of Accommodations Tax Money - H. 4691. This bill was amended to provide that in counties which collect less than $900,000 in state accommodations tax annually, up to 20% of the revenue in the preceding year of the local accommodations tax and 20 % of the local hospitality tax may be used for the operation and maintenance of tourist related items.

H. SC Economic Development Incentive Act - H. 4874. In addition to creating new tax credits for certain manufacturers and allowing banks to qualify for the job tax credit and the corporate headquarters tax credit, this bill lowers the minimum investment requirement for the fee in lieu of tax agreement from $5 million to $2.5 million. The bill lowers the minimum initial investment requirement for the super fee in lieu (4% assessment ratio) to $150 million dollars. The amount of new full time jobs required for the super fee in lieu is dropped from 200 to 125.