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In This Section

• June 2009
• May 2009
• April 2009
• March 2009
• February 2009
• January 2009

Friday Reports — March 2009

Issue 11-09 — March 27, 2009
Issue 10-09 — March 20, 2009
Issue 9-09 — March 13, 2009
Issue 8-09 — March 6, 2009


Issue 11-09 — March 27, 2009

Suspension of the Local Government Fund Formula — H. 3581

We received word that personal visits with all members of the Senate in Columbia are critical on Tuesday, March 31, and Wednesday, April 1. It appears that H. 3581 may be taken up late next week or the following week. We have asked each county to send a small delegation to visit with each of the senators either Tuesday or Wednesday of next week to get a firm commitment to oppose H. 3581.

H. 3581 suspends the Local Government Fund (LGF) statutory provision, which allowed the LGF to be cut $50 million in the House version of the budget. If H. 3581 can be stopped in the Senate, then the LGF must be funded at the statutory formula rate. If the Senate passes H. 3581, the amount of the LGF cut could grow at any time; and it will be much easier to suspend the formula in future years. This is a real concern given the status of the stimulus money, please see the discussion below.

The points you need to be making with the senators include:

• The LGF will drop significantly in next year's budget, because the statutory formula will reflect the drop in the state general fund occurring this year. The LGF rises and falls with the amount of the general fund the year following the state fiscal year;
• Show the senators the amount of cut the county receives as a result of the House budget. A copy of the House cut distribution is attached.
• Explain the impact of the House LGF cut in terms of the total property tax millage increase necessary to offset the cut and in terms of what impact solely using budget cuts would be. A spreadsheet showing the distribution of the cut and millage increase necessary to offset the cut is attached. Not all counties have the option to completely offset the cut through the millage rate, because the rate caps have no exception for the LGF cut;
• Explain the impact of the House LGF cut in terms of basic service reductions to citizens. Only you can tell the senators what the potential service impacts would be in your county after the county budget is impacted by the LGF cut. Many areas of spending are subject to minimum funding levels in state statute and budget provisos and cannot be cut;
• There is no reduction in the obligations the state places upon counties to fund state agencies—including DHEC; DSS; DHHS; indigent defense; circuit and magistrate courts support; the Department of Probation, Pardon and Parole; etc. Some state agencies have asked for increases in local funding;
• Counties will have to pay increases in ordinary expenses such as State Health Insurance premiums, inmate medical costs, workers' compensation premiums, etc.; and
• Let senators know how your reserve funds are obligated (tied to outstanding bonds or to avoid tax anticipation notes, etc.) and how little of that reserve is really available to use. Remind them that using reserve funds to pay for recurring expenses led to the reduction of the state’s bond rating; and the same is expected, if the county were to use reserve funds to fill a revenue gap. 

Budget Work Continues in the Senate

H. 3272 was given a favorable report by the House Ways and Means Committee on Thursday. The Committee adopted amendments to clearly state no refunds of property taxes paid will be due because of the change in H. 3272, and the valuation changes will apply beginning with property tax year 2009. The fiscal impact in a typical year is still $52 million.

In a nutshell, H. 3272 gives purchasers of existing property—residential or commercial—a grandfathered tax valuation at the previous owner’s capped value. New construction would continue to go on the tax rolls at full fair market value.

The major effects of H. 3272 are:

• ATI will create a permanent inequity. Anyone not receiving the benefit of the 15 percent cap would pay taxes based upon 100 percent of the value of their property, while anyone with fast appreciating property would pay taxes based on an ever decreasing percentage of the fair market value of their property.

• New construction of homes and commercial property investment would be discouraged. Anyone planning to move would be discouraged from building a new home, because it would be taxed on 100 percent of the value of the home, while an existing home would carry forward the capped value of the previous owner. You could purchase a larger existing home that was older and pay part of the difference with tax savings. The discouraging effect on new investment is even greater for income producing properties. Who would build a new million dollar apartment complex or shopping center which goes on the books at full fair market value, when you could do renovation to an existing structure and get the carry forward capped value of the previous owner? They would be in direct competition with other properties with a much lower tax valuation.

• The first year revenue loss is $52 million. Counties, cities and school districts, which rely on property tax revenue for operations, would lose $52 million the first year following adoption of H. 3272 for the sole reason of not recognizing the fair market value of property which transferred to a new owner. That revenue loss would have to be made up through higher millage rates or service cuts. Assuming that property sales rates remained constant, the revenue loss would grow by $52 million each year after adoption.
• Programming expenses. The subcommittee acknowledged the cost to reprogram assessors' computers, but has no estimate of the total cost.

S. 435 is a similar ATI bill, but would but would give a 15 percent increase in value of a property transferred instead of doing away with ATI altogether. The BEA fiscal impact estimate is $44 million in a typical year. S. 435 is in a Senate Finance subcommittee composed of Sens. Alexander, Elliott, Verdin and Setzler. They took testimony but carried S. 435 over until another meeting.

Ask your House member to object to H. 3272 when it reaches the floor. H. 3272 could be debated as early as next week. It would be good to talk with local developers and home builders to explain the consequences of this bill.

 Finance and Revenue Items

Land Use and Nuisance Items

• Care of Livestock and Poultry – S. 453. This bill is designed to protect confined feeding operations from local regulation relating to the handling and care of the animals. S. 453 was amended to protect local zoning and preserve county regulation concerning new slaughter houses and pig facilities and is pending third reading on the Senate calendar.
• Landfill Moratorium – S. 324. This bill is pending second reading on the contested Senate calendar. The proposed committee amendments exempt C&D landfills, pending permits for operating facilities and vertical expansions. The moratorium—lasting until new DHEC regulations are instituted or until January, 2011—will only affect a proposed facility in Marlboro County and a possible facility in Cherokee County.
• Regulation of Forestry Activities – H. 3651. This bill seeks to limit the authority of a county or municipality to adopt or enforce any ordinance, rule or regulation that regulates forest land or forestry activities under a forest management plan.
• Regulation of Forestry Activities – S. 494. This companion bill to H. 3651 will be before a subcommittee of the Senate Fish, Game and Forestry Committee next Wednesday. The legislation seeks to restrict local regulation of forest lands and forestry activities and, as we understand the bill, would require local governments to issue building permits in certain instances. This is part of a national wave of state initiatives. We need some input on this measure. Please review it and make suggestions. We will try to meet with the author next week.

SCAC Lobby Days Schedule

This week's Lobby Day falls at a critical time, given the proposed LGF cut and consideration of the ATI elimination bill, H. 3272. Our focus will be on these issues. Regardless of the schedule, you are encouraged and welcome to come this week. Please mark your calendar, and plan to come to Columbia on the following Tuesday for the designated Lobby Day. Each Lobby Day will begin at 10 a.m. in the SCAC office with a briefing on the specific meetings scheduled at the State House and the issues that you might make the most impact upon. We will then adjourn at 11 a.m. to visit the General Assembly. It is also a good idea to schedule lunch with one or more of your delegation members. 

   March 31 – Clarendon, Colleton, Darlington, Edgefield, Marion

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

The Friday Report is usually available on the web by 3 p.m. on Friday. The Friday Report can also be sent to you directly via e-mail. We also use this e-mail list for Legislative Alerts. If you stop getting the e-mail version of the Friday Report, call us. We may have an old e-mail address that is no longer valid.

  
Newly-Introduced Legislation

Note: If you would like copies of any of the bills or if you would like to offer comments to the SCAC staff, please call us toll-free at 1-800-922-6081, fax to 1 (803) 252-0379 or send e-mail. You can view or download bills by clicking on the bill number.

House Bills 

H. 3718 – Prohibits the resale of fresh or frozen meat and meat products sold to and returned by a consumer.

H. 3720 – Provides for notice in a foreclosure action involving multiple units in a single horizontal regime by publication that consolidates the notices into a single notice that identifies each apartment included in the foreclosure action.

H. 3722 – Provides for the determination of the treatment of gains and losses apportioned to this state by the Internal Revenue Code standards.

H. 3724 – Amends the Education Finance Act of 1977, so as to revise the manner in which weightings used to provide for relative cost differences between students are determined.

H. 3730 – Authorizes the use of all funds received under the 2009 Recovery Act for the Clean Water State Revolving Fund and Drinking Water State Revolving Fund.

H. 3734 – Allows assistant solicitors employed before July 1, 2010 the option of participating in the South Carolina Police Officers Retirement System, while making mandatory participation in that system for assistant solicitors employed after June 30, 2010.

H. 3735 – Enacts the “Ann S. Purdue Independent Autopsy Fairness Act of 2009.”

H. 3746 – Prohibits a person who voted in a primary election from signing a petition for a candidate to run for an office to be filled in the general election following that primary.

H. 3747 – Authorizes a county, by ordinance, to postpone for one additional year a countywide property tax equalization and reassessment program.

H. 3748 – Provides that the value of owner-occupied property must be included in the calculation of the index of taxpaying ability, until a permanent change in the method of its calculation is enacted.

H. 3758 – Authorizes emergency medical services personnel to participate in the South Carolina Police Officers Retirement System.

H. 3761 – Authorizes the use of forfeited drug proceeds for law enforcement training and education.

H. 3768 – Revises the exemptions of certain construction contracts from local option sales tax for county operations under which tangible personal property is to be delivered after the imposition date of the tax.

H. 3769 – Creates seismic and wind maps for the state.

H. 3771 – Requires all political subdivisions of the state to provide all services, publications, printed, audio and video materials, and tests in an English-only format—unless otherwise required by federal law.

H. 3772 – Provides for the continuation of essential services to a special purpose district following annexation by a municipality.

H. 3774 – Provides that a municipality may not require annexation as a condition precedent to providing utility services.

H. 3777 – Enacts the Emergency Local Economic Development Act.

H. 3779 – Clarifies when an attorney may be appointed to represent a Guardian Ad Litem in a child abuse and neglect case.

H. 3781 – Authorizes assessments to be levied against parcels of property.

H. 3783 – Amends the law pertaining to the hiring preference given to discharged veterans in public employment by deleting the provision that gives a hiring preference only when practical.

H. 3784 – Exempts a county and its employees from liability for injury or damage caused to a person who participates in a recreational activity on county property.

H. 3787 – Amends the Venture Capital Investment Act of South Carolina.

H. 3794 – Expands the prohibited activities in a wildlife management area.

H. 3797 – Provides a procedure for a special purpose district that provides recreational services to dissolve and turn its assets and liabilities over to a county.

H. 3798 – Requires the deposit of a cash percentage, instead of a bail bond, for a person charged and arrested.

H. 3801 – Requires local county DSS to conduct a study of the number of homeless persons in the county in comparison with the number of shelters in the county to determine the feasibility of using tent-like temporary shelters.

H. 3803 – Amends the provisions of the law regarding formal proceedings in probate court.

Senate Bills

S. 598 – Eliminates the point of sale valuation of real property and returns to the former valuation system where real property is appraised by the assessor and periodically adjusted in countywide reappraisals.

S. 599 – Allows a totally and permanently disabled firefighter to receive the property tax exemption on passenger vehicles.

S. 604 – Amends the law pertaining to the hiring preference given to discharged veterans in public employment by deleting the provision that gives a hiring preference only when practical.

S. 615 – Provides that a surviving spouse of a recipient of the property tax exemption by reason of certain ambulatory difficulties is not entitled to that exemption upon the recipient’s death.

S. 616 – Allows assistant solicitors employed before July 1, 2010 the option of participating in the South Carolina Police Officers Retirement System, while making mandatory participation in that system for assistant solicitors employed after June 30, 2010.

S. 617 – Expands the prohibited activities in a wildlife management area.

S. 618 – Creates seismic and wind maps for the state.

S. 621 – Requires a person entitled to participate in the state health and dental insurance plan as a member of county council—or as a spouse of a covered employee or retiree—to elect to participate under one form of coverage, but not both.

S. 623 – Approves regulations for SLED for the statewide criminal gang database.

Issue 10-09 — March 20, 2009

The House was on furlough this week, and the Senate met in full session only on Tuesday, although there were numerous Senate committee and subcommittee meetings.

Suspension of the Local Government Fund Formula — H. 3581

The press conference on Tuesday was well attended, and several senators spoke in favor of preserving the Local Government Fund (LGF). The speakers at the press conference included Sens. McGill, Land, Knotts, Rose, Anderson, Hutto, Campbell and Reese. Several more senators attended the press conference but did not speak. Thanks to all the county officials who made contacts with the senators or came to Columbia! The Big Picture on SCETV will set up a show on the House-passed budget with several interviews with county officials held after the press conference. The Big Picture airs Saturday at 7:30 p.m. and Sunday at 1 p.m.

It will take continued contacts with the senators in person, by telephone and in writing to continue to remind them how important the LGF is to local services and tax rates. Also take time to speak with local editorial boards, write op-ed pieces and speak to community groups about the county budget and the services which are impacted by the funding of the LGF.

The Senate Finance Committee did not take up H. 3581 this week. Any decision to try to move H. 3581 will be made informally, before any meeting is scheduled on H. 3581. That is why continued informal contacts from county officials back home are so critical. Only you can put LGF funding into the context of the effect on local services. A roster of the Senate Finance Committee is attached for your convenience.

H. 3581 suspends the Local Government Fund (LGF) statutory provision which allowed the LGF to be cut $50 million in the House version of the budget. If H. 3581 can be stopped in the Senate, then the LGF must be funded at the statutory formula rate. If the Senate passes H. 3581, the amount of the LGF cut could grow at any time and it will be much easier to suspend the formula in future years.

The points you need to be making with the senators include:

• The LGF will drop significantly in next year's budget, because the statutory formula will reflect the drop in the state general fund occurring this year;
• Show the senators the amount of cut the county receives as a result of the House budget;
• Explain the impact of the House LGF cut in terms of the total property tax millage increase necessary to offset the cut and in terms of what impact solely using budget cuts would be. A spreadsheet showing the distribution of the cut and millage increase necessary to offset the cut is attached. Not all counties have the option to completely offset the cut through the millage rate, because the rate caps have no exception for the LGF cut;
• Explain the impact of the House LGF cut in terms of basic service reductions to citizens. Only you can tell the senators what the potential service impacts would be in your county after the county budget is impacted by the LGF cut. Many areas of spending are subject to minimum funding levels in state statute and budget provisos and cannot be cut;
• There is no reduction in the obligations the state places upon counties to fund state agencies—including DHEC, DSS, DHHS, indigent defense, circuit and magistrate courts support, etc. Some state agencies have asked for increases in local funding;
• Counties will have to pay increases in ordinary expenses such as State Health Insurance premiums, inmate medical costs, workers' compensation premiums, etc.; and
• Let senators know how your reserve funds are obligated (tied to outstanding bonds or to avoid tax anticipation notes, etc.) and how little of that reserve is really available to use. Remind them that using reserve funds to pay for recurring expenses led to the reduction of the state’s bond rating; and the same is expected, if the county were to use reserve funds to fill a revenue gap. 

Serious Budget Begins in Earnest in the Senate

The Budget and Control Board instituted an across-the-board 2 percent cut for FY 2008-09. The FY 2008-09 LGF was not cut, because it was already cut to the extent allowed by the statute.

The Senate Finance Committee has a House-passed budget which is $84 million out of balance as a result of the BEA revenue projection decrease. Senate budget subcommittees will continue working next week. The full Finance Committee spent Monday afternoon getting a detailed briefing on the federal stimulus bill and how that money may or may not be used in the state budget, and Tuesday working through budget-related legislation.

Assessable Transfers of Interest (ATI)/Point of Sale —H. 3272 and S. 435

The House Ways and Means Committee will consider H. 3272 on Thursday, March 26, immediely upon adjournment of the House probably shortly after 11 a.m. This gives you one more chance to meet with your representative to explain the impact of eliminating accessable transfers of interest (ATI). A roster of the House Ways and Means Committee is attached.

H. 3272 would eliminate the recognition of valuation increases due to an ATI—except for those attributable to new construction or improvements to existing structures. A simple example under the current law is a home with a capped tax valuation of $100,000 is sold for $200,000. The sale of the home is an ATI, and the purchaser’s new tax valuation would then become $200,000. Under the law proposed in H. 3272, the capped value of $100,000 would carry forward after the sale, and an ATI would only recognize a drop in the value of the property. At the next reassessment, the value of the house under H. 3272 would go to $115,000.

The BEA issued a revised statement of revenue loss for the rewritten H. 3272—it is now $52 million in the first year. In the second year, assuming all things constant, the revenue loss would be $104 million, $156 million in the third year, and so on.

While no refund would be required, H. 3272 would be retroactive and properties which had been taxed on full fair market value would drop to the capped value at the time of their transfer. This would have two effects: 1) The tax base would be reduced by the value of any property which had a value previously increased because of an ATI. Charleston County estimates that the retroactive value reduction would drop real property tax revenue (even after adding the value of new construction) by 1/2 percent below what real property taxes generated last year. 2) The bonded debt limit would be reduced, retroactively.

The major effects of H. 3272 are:

• ATI will create a permanent inequity. Anyone not receiving the benefit of the 15 percent cap would pay taxes based upon 100 percent of the value of their property, while anyone with fast appreciating property would pay taxes based on an ever decreasing percentage of the fair market value of their property.
• The first year revenue loss is $52 million. Counties, cities and school districts, which rely on property tax revenue for operations, would lose $52 million the first year following adoption of H. 3272 for the sole reason of not recognizing the fair market value of property which transferred to a new owner. That revenue loss would have to be made up through higher millage rates or service cuts. Assuming that property sales rates remained constant, that revenue loss would grow by $52 million each year after adoption of H. 3272.
• The value of one mill of property tax imposed countywide would drop in the year after adoption. As a result of H. 3272, the valuation of any property which had been the subject of an ATI in the previous years would change from fair market value to the capped value of the previous owner. In other words, the value of one mill might have been $100,000 in 2008 and would drop in 2009. This drop in the value of the mill would also have to be offset by higher millage rates or cuts in services.
• Programming expenses. The subcommittee acknowledged the cost to reprogram assessors' computers, but has no estimate of the total cost. Several assessors have said they doubt the values of properties which were increased because of ATI in the past can be pulled out of the databases in time for preparation of real property tax notices this fall. These have to be corrected by hand in most cases, because no differentiation was made to indicate when an ATI was triggered by new construction or a transfer.

S. 435 is a similar ATI bill, but would give a 15 percent increase in value of a property transferred instead of doing away with ATI altogether. There is no final revenue loss projection by the BEA yet, but indications are that it would be $10-35 million in the first year, doubling in the second year and tripling in the third year, etc. S. 435 is in Senate Finance Committee. Senators have been adding their names as sponsors each week, and there are now 15 sponsors.

Please contact members of the House Ways and Means Committee. Also, make municipalities and school districts in your county aware of the consequences of H. 3272 and contact the members of the House Ways and Means Committee.

Milla Rate Cap County Population Figures Released

The Board of Economic Advisors (BEA) has released county population change figures. The BEA has agreed that the attached sheet is how they intend to interpret and round the data.

The millage rate cap in §6-1-320 is the percentage change in the Consumer Price Index (CPI) plus the percentage change in the county population, with a negative change in population being deemed zero. The CPI for this year is 3.8 percent, and you would add the percentage population change. The millage rate cap is calculated for each county on the attachment. This millage rate cap applies only to county operational millage and does not apply to bonded indebtedness.

Finance and Revenue Items

SCAC Lobby Days Schedule

This week's Lobby Day falls at a critical time, given the proposed LGF cut and consideration of the ATI elimination bill, H. 3272. Our focus will be on these issues. Regardless of the schedule, you are encouraged and welcome to come this week. Please mark your calendar, and plan to come to Columbia on the following Tuesday for the designated Lobby Day. Each Lobby Day will begin at 10 a.m. in the SCAC office with a briefing on the specific meetings scheduled at the State House and the issues that you might make the most impact upon. We will then adjourn at 11 a.m. to visit the General Assembly. It is also a good idea to schedule lunch with one or more of your delegation members. 

   March 24 – Aiken, Barnwell, Berkeley, Pickens, Richland, Saluda
   March 31 – Clarendon, Colleton, Darlington, Edgefield, Marion

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

The Friday Report is usually available on the web by 3 p.m. on Friday. The Friday Report can also be sent to you directly via e-mail. We also use this e-mail list for Legislative Alerts. If you stop getting the e-mail version of the Friday Report, call us. We may have an old e-mail address that is no longer valid.

  
Newly-Introduced Legislation

Note: If you would like copies of any of the bills or if you would like to offer comments to the SCAC staff, please call us toll-free at 1-800-922-6081, fax to 1 (803) 252-0379 or send e-mail. You can view or download bills by clicking on the bill number.

Senate Bills

S. 590 – Prevents a person who voted in a primary election from signing a petition for a candidate to run for an office to be filled at the general election following that primary.

S. 591 – Allows service of process by persons other than constables in claim and delivery actions.

Issue 9-09 — March 13, 2009

The House left for the week when they finished the budget on Wednesday and is on furlough the week of March 16. The Senate will meet in full session on Tuesday only with subcommittee and committee meetings the rest of the week.

Suspension of the Local Government Fund Formula — H. 3581

H. 3581 suspends the Local Government Fund (LGF) statutory provision, which allowed the LGF to be cut by $50 million in the House version of the budget. If H. 3581 can be stopped in the Senate, the LGF must be funded at the statutory formula rate. If the Senate passes H. 3581, the amount of the LGF cut could grow at any time; and it will be much easier to suspend the formula in future years.

The Senate Finance Committee will have to make a decision—either formally or informally—on H. 3581, prior to taking up the budget; and the Finance Committee is scheduled to meet Tuesday, March 17, at 3 p.m. Although the agenda for this meeting has not been posted, it looks like this meeting may be critical in the process. Staying after the press conference (see info below) for this committee meeting would be an excellent idea, as well.

The points you need to be making with the senators include:

• The LGF will drop significantly in next year’s budget per the statutory formula, reflecting the drop in the state general fund occurring this year;
• Show the senators the amount of cut the county receives as a result of the House budget;
• Explain the impact of the House LGF cut in terms of the total property tax millage increase necessary to offset the cut and in terms of what impact solely using budget cuts would be. A spreadsheet showing the distribution of the cut and millage increase necessary to offset the cut is attached. Not all counties have the option to completely offset the cut through the millage rate, because the rate caps have no exception for the LGF cut;
• Explain the impact of the House LGF cut in terms of basic service reductions to citizens. Only you can tell the senators what the potential service impacts would be in your county after the county budget is impacted by the LGF cut. Many areas of spending are subject to minimum funding levels in state statute and budget provisos and cannot be cut;
• There is no reduction in the obligations the state places upon counties to fund state agencies—including DHEC, DSS, DHHS, indigent defense, circuit and magistrate courts support, etc. Some state agencies have asked for increases in local funding;
• Counties will have to pay increases in ordinary expenses such as State Health Insurance premiums, workers' compensation premiums, etc.; and

• Let the senators know how your reserve funds are obligated (tied to outstanding bonds or to avoid tax anticipation notes, etc.) and how little of that reserve is really available to use. Remind them that using reserve funds to pay for recurring expenses led to the reduction of the state’s bond rating; and the same is expected, if the county were to use reserve funds to fill a revenue gap.

Personal contacts with the senators are best, and Tuesday at the Senate door would be a great time to reemphasize contacts made at home. It is also important to be at the press conference and talk with the local editorial boards. Council resolutions explaining the impact of the House LGF cut and asking the Senate to defeat H. 3581 would be helpful as well. Let the SCAC staff know what feedback you get from the specific request to vote against H. 3581.

House Finishes Budget — LGF Cut $50 million

The House sent a budget to the Senate with a $50 million reduction in the LGF this week. Although this represents an improvement over the Ways and Means proposed $122 million cut, it still fails to meet the statutory requirements and exhibits the House’s failure to understand the importance of this funding. This reduction will still mean a reduction in important public services that counties provide and—more than likely—property tax increases in the midst of an economic recession. With the suspension of the LGF formula, the $50 million LGF cut could grow at any time.

Wednesday, after the House gave third reading to the budget, the Bureau of Economic Advisors (BEA) reduced the revenue projection the budget is based on by $64 million.

Although the LGF formula was suspended, there were some successes in the House floor action on the budget; other changes which need to be noted are covered below:

• Auditors' and Treasurers' Salaries. The Ways and Means Committee adopted a budget which reflected a $200,000 reduction in County Auditors' and Treasurers' salaries. The last proviso adopted in the House restored the state salary for Auditors and Treasurers to last year’s appropriated levels. This was achieved with help from many sources. The House also adopted a Ways and Means proviso (Proviso 85.1) to protect these salaries from mid-year cuts.
• Flexibility Provisos. Provisos offered by Reps. Tim Scott and Tom Young, intended to give counties more flexibility within their own budgets, were adopted by the House. The House also adopted a proviso offered by Rep. Miller which "frontloads" LGF quarterly payments, so that any reductions will be taken out of the last three quarterly payments. However, amendments offered by Reps. Doug Jennings and Jimmy Bales—which would have suspended the unfunded mandates requiring counties to provide office space and utilities to certain state agencies—were tabled. A more detailed explanation of the House-adopted flexibility provisos will be sent to county budget personnel later.
• Proviso 37.5 (DNR: Proportionate Funding). The House amended this proviso—which used to direct that a proportionate share of funds, at $15,000 per district, be allocated to each of the State’s 46 Soil and Water Conservation Districts for general assistance to the district’s programs. Ways and Means deleted the specific amount of $15,000 per district and increased the minimum funding required from the counties within a district from $300 to $1,000 in order for the district to receive this money. The House amendment restored the $300 local match.

• Proviso 80C.___ (County Council Member Insurance). The House adopted this proviso, which states that a person who is eligible to participate in the state health and dental insurance plans as a council member of a participating county—and who is also eligible to participate as the spouse of a covered employee or retiree—may choose to participate in the insurance plans as either an employee or a spouse, but not both.

• Proviso 89.72 (Assessment Audits). This proviso authorizes the State Office of Victim Assistance (SOVA) to perform programmatic reviews for any entity which receives victim assistance money—primarily fine assessments. In Ways and Means, the proviso required a withholding of Aid to Subdivisions money as a penalty. The proviso was substantially amended on the House floor. One of the changes deleted all references to withholding of Aid to Subdivisions money.

• Proviso 89.111 (TERI Program Closure). The House adopted this proviso, which prohibits any new applications to enter the TERI program as of July 1, 2009. There is no mention of the similar program for law enforcement (LERI).

• Proviso 89.__ (Stimulus Oversight). This proviso requires the State Treasurer to be responsible for collecting information associated with funds received by state agencies, school districts, and local government from the American Recovery and Reinvestment Act of 2009 (the federal "Stimulus bill"). Information collected shall include, but not be limited to, state agency or local government entity, program designation, purpose for which the funds were received and expended, and the amount of funds received.

• Proviso 89.__ (Fire Trucks Allowed to use "Offroad Diesel"). The House adopted this proviso, which states that fire service vehicles operated by political subdivisions of this state are exempt from the user fee on diesel fuel. "Offroad diesel" may be purchased to operate these vehicles.

Assessable Transfers of Interest (ATI)/Point of Sale — H. 3272 and S. 435

The House Ways and Means Committee is expected to take up H. 3272 the week of March 23. Now is the time to meet with your representative to explain the impact of eliminating assessable transfers of interest (ATI). H. 3272 was substantially rewritten in subcommittee with no testimony taken. The bottom line of the new amendment is to eliminate the effect of an ATI, except for new construction or additions to an existing structure. The revenue loss from this change is expected to be $44 million or more statewide in the first year. In the second year, assuming all things constant, the revenue loss would be $88 million, $132 million in the third year, etc.

While no refund would be required, H. 3272 would be retroactive. Properties which had been taxed on the full fair market value would drop to the capped value at the time of their transfer. This would have two effects: 1) the tax base would be reduced by the value of any property which had a value previously increased because of an ATI; and 2) the bonded debt limit would be reduced, retroactively.

Under current law, when a property receiving the benefit of the 15 percent valuation cap is sold, the value for property tax purposes is changed to the full fair market value. For example: a home valued at $100,000 for tax purposes under the 15 percent cap sells for $200,000. The value for property tax purposes then becomes $200,000.

Under H. 3272, the house in the example would still be valued at $100,000 for tax purposes until the next reassessment, when the value would then become $115,000. The new owner would never pay taxes on the full fair market value of the house.

The result of H. 3272 is that anyone purchasing a property would carry forward the capped value of the previous owner and never have been taxed on what they actually paid for their property. Anyone not receiving the benefit of the 15 percent cap would pay taxes based upon 100 percent of the value of their property—while anyone with fast appreciating property would pay taxes based on an ever decreasing percentage of the fair market value of their property.

S. 435 is a similar ATI bill, but would give a 15 percent increase in value of a property transferred instead of eliminating ATI altogether. There is no final revenue loss projection by the BEA yet, but indications are that it would be $10-35 million in the first year, doubling in the second year and tripling in the third year.... S. 435 is in Senate Finance Committee. Senators have been adding their names as sponsors each week, and there are now 15 sponsors.

Please make the municipalities and school districts in your county aware of the consequences of H. 3272, and contact members of the House Ways and Means Committee.

Other Items of Interest to County Officials

Seamless Capital Projects Renewal – S. 360. This bill would change the termination date of the capital projects sales tax from seven years or collecting the specified amount to 2, 4, 6 or 8 years in duration—depending upon the referendum question. S. 360 was given a favorable report by Senate Finance Committee. It is pending second reading on the Senate calendar.

90-Day Rental Legal Residence – S. 193. The Senate Finance Committee gave a favorable report to S. 193. There was quite a bit of discussion, and retroactivity of the bill was deleted by amendment. S. 193 allows a homeowner to rent their home for 90 days without losing their 4 percent legal residence assessment ratio. S. 193 is on the contested Senate calendar pending second reading.

Accommodations and Hospitality Tax – S. 332. This bill would allow counties collecting less than $900,000 in state accommodations tax revenue to spend up to 50 percent of the revenue from local accommodations and hospitality taxes on the operation of tourist facilities, instead of the current 20 percent. S. 332 received a favorable report from Senate Finance Committee and is pending second reading on the Senate calendar.

Accommodations and Hospitality Tax Bonds – S. 304. The Senate Finance Committee gave a favorable report to S. 304, which would put specific language in the code to allow the pledge of local accommodations and hospitality tax revenue for bonds. This is a more economical way to use the funds for construction borrowing to build tourist facilities.

School Impact Fees – S. 240. This bill would include school facilities in the definition of public facilities that may be built using the existing impact fee statute. The bill was tabled in Senate Finance Committee this week with only one vote against the motion.

Care of Livestock and Poultry – S. 453. This bill is designed to protect confined feeding operations from local regulation relating to the handling and care of the animals. S. 453 is expected to be amended to protect local zoning and preserve county regulation concerning new slaughter houses and pig facilities. It has been sent to the Senate floor.

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

The Friday Report is usually available on the web by 3 p.m. on Friday. The Friday Report can also be sent to you directly via e-mail. We also use this e-mail list for Legislative Alerts. If you stop getting the e-mail version of the Friday Report, call us. We may have an old e-mail address that is no longer valid.

 
Newly-Introduced Legislation

Note: If you would like copies of any of the bills or if you would like to offer comments to the SCAC staff, please call us toll-free at 1-800-922-6081, fax to 1 (803) 252-0379 or send e-mail. You can view or download bills by clicking on the bill number.

House Bills

H. 3706 – Authorizes the use of a debit card for personal expenses of more than $25 drawn from a campaign account, as long as it is reported.

H. 3709 – Authorizes a county by ordinance to use up to one-half of their revenues from a hospitality tax for county transportation needs.

H. 3710 – Revises the composition of the Emergency Medical Services Advisory Council.

H. 3711 – Allows a person who is eligible to participate in the state health and dental insurance plans as a county council member of a participating county—and who is eligible to receive coverage as the spouse of a covered employee or retiree—to participate as an employee or spouse, but not both.

S. 560 – Amends the constitution to allow raffles to be conducted by charitable or nonprofit organizations.

S. 561 – Amends the constitution to require the General Assembly to provide for the maintenance and support of a system of free public schools.

S. 562 – Authorizes a vehicle signaled by a law enforcement officer to stop to proceed to a reasonably close and safe location before stopping.

S. 564 – Provides that a person convicted of a felony offense or an offense involving moral turpitude may not serve as a probate judge.

S. 565 – Provides that in addition to existing incineration fees, a facility that incinerates hazardous waste and is classified as a large quantity generator shall pay an additional fee of $100 for a ton disposed by incineration.

S. 571 – Requires that a probate court must make a finding of good cause, before a case may be removed from probate court to circuit court.

S. 572 – Enacts the “Anne S. Purdue Independent Autopsy Fairness Act of 2009.”

S. 575 – Increases the jurisdictional amount from $25,000 dollars to $100,000 for purposes of concurrent jurisdiction of the probate court and circuit court for the settlement of claims of minors or incapacitated persons.

S. 577 – A resolution that authorizes the General Assembly to accept the federal stimulus funds, if the Governor fails to certify within the required 45-day period that he will request the funds for this state.

S. 578 – A concurrent resolution to join in the Governor’s request to use a certain percentage of the stimulus funds to pay off state debt.

S. 579 – A resolution to refuse all stimulus funds designated for this state.

S. 581 – Provides that the house owned by a qualified surviving spouse, acquired prior to or subsequent to the deceased spouse’s death, is exempt from property taxes.

Issue 8-09 — March 6, 2009

This week was a rough one for local government. Two major pieces of legislation which would have very significant negative impacts on local government services moved forward in the House. Both of these bills are discussed below. Thank you to the many county officials who made visits and calls about these bills; however, now is not the time to give up on your efforts. There is still the question of how big a cut in the Local Government Fund (LGF) the House will make in the budget and whether the Senate will honor the commitment made when the LGF formula was adopted.

Suspension of the Local Government Fund Formula — H. 3581

H. 3581 was given second reading in the House with unanimous consent for third reading on Friday. H. 3581 suspends §6-27-50 for FY 2009-10. That code section requires separate legislation solely for the purpose of amending the Local Government Fund (LGF) formula, allowing the LGF to be cut in a proviso in the budget bill next week.

The House set the pattern for all votes on H. 3581 when it voted to cut off debate very early in the process, limiting debate on each amendment to three minutes. The result was 66 votes to cut off debate and 49 votes to allow debate. The roll call votes on this cloture vote and final passage of H. 3581 are attached. Please take time to thank the representatives who voted to honor the commitment made by the General Assembly when they adopted the LGF formula.

The standard response from those voting to support H. 3581 was that the LGF would have to take a cut like all state agencies.

One "flexibility" amendment by Reps. Funderburk and Vick was adopted by a voice vote. It reads, "Notwithstanding other provisions of this joint resolution, for the 2008-09 and 2009-10 fiscal years, counties of this State may transfer among appropriated state revenues as needed to ensure the delivery of services."

Now is the time to begin having conversations with your Senators about the importance of honoring the commitment made by the General Assembly when they adopted the LGF formula, if you have not already done so.

House to Take Up the Budget — LGF Funding is the Main Question

The House convenes at 10 a.m. Monday to begin work on the budget bill. There is work to be done, before the House convenes Monday.

Although the House voted to allow suspension of the LGF formula, SCAC does not support the suspension of the LGF formula. If there are not sufficient votes to preserve the LGF formula in the House, we must work to minimize any cut in LGF funding in the House version of the budget. Each member of the House needs to be contacted to encourage them to maintain the LGF formula—or at least minimize the amount of any cut in the LGF—and to encourage them to vote for a series of "flexibility" amendments to remove minimum funding levels required of the county for state agency support.

ACTION REQUEST #1:

Contact House members to ask that they support all measures to eliminate or minimize the size of any LGF cut.

Tell the House members that—while suspension of the LGF formula is not acceptable—if the votes are not there to preserve the LGF, the amount of the LGF cut should be as small as possible to preserve basic local services. The great majority of those who supported H. 3581 to suspend the LGF formula say the LGF will be cut by $50 million, instead of $122 million. There are also representatives who supported the LGF formula suspension, but said they do not support the $50 million cut being discussed now. Reports are that Speaker Bobby Harrell agreed to look for an additional $18 million to make the LGF cut $32 million. County officials need to let their House members know that they want all measures to minimize any LGF cut supported.

A spreadsheet showing the effect of various cuts in the LGF is attached. This sheet also shows these cuts in terms of the millage necessary to offset them.

ACTION REQUEST #2:

Ask House Members to support amendments to give flexibility in dealing with any LGF cut by deleting minimum funding levels of state agencies by counties.

Several amendments will be offered to delete the requirements for counties to fund state agencies at the same level as the previous year. It is not reasonable to adopt a state budget which will clearly require cuts in basic local services, while protecting a state agency supported by county taxpayers from any of those cuts. Why can’t agencies be asked to reduce expenditures, when basic local services will have to be cut to deal with the LGF funding cut?

Assessable Transfers of Interest (ATI)/Point of Sale — H. 3272

The House Ways and Means Property Tax subcommittee took up H. 3272 to eliminate assessable transfers of interest (ATI) upon the sale of property. The subcommittee reviewed an amendment to rewrite the bill and passed it without taking testimony. The bottom line of the new amendment is to eliminate the effect of an ATI except for new construction or additions to an existing structure. The fiscal impact of this change is expected to be $44 million or more in lost revenue statewide during the first year. In the second year, assuming all things constant, the revenue impact would be $88 million; in the third year, $132 million; and so on.

Under current law, when a property receiving the benefit of the 15 percent valuation cap is sold, the value for property tax purposes is changed to the full fair market value. For example: a home valued at $100,000 for tax purposes under the 15 percent cap sells for $200,000. The value for property tax purposes then becomes $200,000.

Under H. 3272, the house in the example would still be valued at $100,000 for tax purposes until the next reassessment, when the value would then become $115,000. The new owner would never pay taxes on the full fair market value of the house.

The result of H. 3272 is that anyone purchasing a property would carry forward the capped value of the previous owner and never have been taxed on what they actually paid for their property. Anyone not receiving the benefit of the 15 percent cap would pay taxes based upon 100 percent of the value of their property—while anyone with fast appreciating property would pay taxes based on an ever decreasing percentage of the fair market value of their property.

While no refund would be required, H. 3272 would be retroactive and properties which had been taxed on full fair market value would drop to the capped value at the time of their transfer. This would have two effects: 1) the tax base would be reduced by the value of any property with a value previously increased because of an ATI, and 2) the bonded debt limit would be reduced retroactively.

H. 3272 is expected to be before the House Ways and Means Committee the week of March 23. SCAC will send out a more detailed analysis of the proposal later. Please make the municipalities and school districts in your county aware of the consequences of H. 3272, and begin contacting the members of the Ways and Means Committee.

Other Items of Interest to County Officials

Jail Recodification – S. 217. The Senate Corrections Committee gave a favorable report with amendments to S.217. The bill now goes to the Senate floor. It amends chapters in Title 24 relating to local detention facilities by replacing obsolete language, updating statutes to reflect current practice and clarifying ambiguous or confusing language. This legislation is the work product of SCAC's Local Detention Committee.

Family Court Financial Privacy – S. 146. This bill provides for the sealing of family court financial declaration forms and exempts them from disclosure under the FOI Act. S. 146 was amended on the Senate floor to seal the financial declaration itself only upon order of the court, but require supporting documents such as bank records and tax returns to be sealed. S. 146 received third reading and is now in the House.

Election Dates – H. 3579. A House Judiciary subcommittee took up H. 3579 this week. This bill would restrict all elections to quarterly election dates for conducting referenda or other ballot questions. The subcommittee gave H. 3579 a favorable report.

Poll Managers – H. 3464. This bill would authorize a poll manager to work in a county other than where he/she resides as long he/she is otherwise qualified. A House Judiciary subcommittee gave H. 3464 a favorable report.

Attorney Fees – S. 186. S. 186 would limit attorney fees against the state and political subdivisions in state initiated actions to a reasonable time at a reasonable rate. The bill does allow a state or county agency to bring a claim against a party, if the agency is following a statutory or constitutional mandate that has not been invalidated by a court. In this scenario, no attorney fees would be awarded against the state or county. In response to the exorbitant award of attorney fees in the 2006 TERI case, the Senate Judiciary Committee amended S.186 to limit the circumstances under which the amount of attorney’s fees could be enhanced beyond what would normally constitute reasonable fees and gave the bill a favorable report.

SCAC Lobby Days Schedule

This week's Lobby Day falls at a critical time, given the proposed LGF cut. Our focus will be on this issue. Regardless of the schedule, you are encouraged and welcome to come this week. Please mark your calendar, and plan to come to Columbia on the following Tuesday for the designated Lobby Day. Each Lobby Day will begin at 10 a.m. in the SCAC office with a briefing on the specific meetings scheduled at the State House and the issues that you might make the most impact upon. We will then adjourn at 11 a.m. to visit the General Assembly. It is also a good idea to schedule lunch with one or more of your delegation members. 

   March 10 – Chesterfield, Dorchester, Kershaw, Lexington, Newberry
   March 24 – Aiken, Barnwell, Berkeley, Pickens, Richland, Saluda
   March 31 – Clarendon, Colleton, Darlington, Edgefield, Marion

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

The Friday Report is usually available on the web by 3 p.m. on Friday. The Friday Report can also be sent to you directly via e-mail. We also use this e-mail list for Legislative Alerts. If you stop getting the e-mail version of the Friday Report, call us. We may have an old e-mail address that is no longer valid.

 
Newly-Introduced Legislation

Note: If you would like copies of any of the bills or if you would like to offer comments to the SCAC staff, please call us toll-free at 1-800-922-6081, fax to 1 (803) 252-0379 or send e-mail. You can view or download bills by clicking on the bill number.

House Bills

H. 3560 – Provides for appropriations and revenues to meet the state budget for FY 2009-10 beginning July 1.

H. 3561 – Provides a resolution to appropriate revenues for the operation of state government for FY 2009-10 and to supplement those appropriations by the General Appropriations Act for FY 2009-10.

H. 3641 – Requires law enforcement agencies investigating criminal domestic violence to document the investigation and maintain a report.          

H. 3648 – Deletes the provision of law pertaining to foreign adoptions requiring a statement on a foreign birth certificate that the certificate is not evidence of U.S. citizenship.

H. 3651 – Limits the authority of counties to restrict or regulate certain forest activities.

H. 3653 – Postpones until Dec. 31, 2009 implementation of the provisions of Act 270 of 2008 requiring municipal court jury lists to include otherwise qualified residents of the municipality who hold a driver’s license or valid ID card.

H. 3654 – Authorizes the governing body of a county to reduce the budget of a county official that receives a salary supplement from the state without a corresponding reduction in the county’s Aid to Subdivision distribution.

H. 3659 – Redefines “assault weapon” and increases penalties under the law for assault weapon violations.

H. 3661 – Provides that a county may appoint noncompensated volunteers to issue parking tickets to vehicles and persons who violate state handicapped parking laws.

H. 3668 – Allows a county forfeited land commission to bid on property up for tax sale and to void title, if the property turns out to be contaminated.

H. 3669 – Establishes a state minimum wage, and prohibits a county from requiring a minimum wage that is lower than the state minimum wage.

H. 3670 – Requires all confessions obtained by a law enforcement agency to be video recorded.

H. 3671 – Reduces the amount of accommodations tax revenues collected in a fiscal year necessary to exempt a county from blue laws from $900,000 to $9.

H. 3672 – Establishes a rebuttable presumption that a law enforcement officer, magistrate or circuit judge charged with a crime cannot receive a fair and impartial trial in the county in which they served, and the venue must be changed to another county.