Friday Report - June 17, 2022
The General Assembly returned this week pursuant to the sine die resolution (S. 1325) to vote on bills that went to conference committees. Several conference committees reached agreements and presented their conference reports to their respective chambers for approval or rejection. Among those conference reports was the user fee bill language that was attached to a property tax exemption bill, S. 233. S. 233, along with some other bills of note, will be discussed below in this week’s Friday Report.
Revenue, Finance and Economic Development
User Fees – S. 233. Both the House and the Senate took up and adopted the conference report on S. 233 on Wednesday. With a vote count of 47-40 in the House and 24-12 in the Senate, the bill narrowly escaped defeat and has been enrolled for ratification. The passage of this important bill was due in large part to your calls, texts, and emails to your members of the General Assembly!
S. 233, as adopted, contains the language from S. 984, the user fee bill, as passed by the Senate, as well as several other property tax bills discussed below. Section 2 of the bill reinstates the Brown test to all service or user fees imposed after December 31, 1996. The Brown test states that a fee is valid if:
- the revenue generated is used to the benefit of the payers, even if the general public also benefits;
- the revenue generated is used only for the specific improvement contemplated;
- the revenue generated by the fee does not exceed the cost of the improvement; and
- the fee is uniformly imposed on all the payers.
Any county that repealed their road user fee, raised property taxes in response and subsequently reimposes their road user fee, will be required to lower property taxes by the amount previously raised. Counties must also post on the county website the amount of the fee and the amount of revenue collected annually by the fee.
Section 1 of the bill provides that a qualified surviving spouse may qualify for a property tax exemption in an instance where they do not own the house. The statute previously required that the house be transferred to the surviving spouse by the deceased spouse. This section also provides the exemption to surviving spouses of those killed in action and to any structures owned by an otherwise qualified surviving spouse even if these structures are located on heirs’ property.
Section 3 of the bill requires an adjustment in assessed value for real property and improvements which have sustained damage as a result of flooding or a hurricane, provided that the application for correction of the assessment is made prior to payment of the tax. Wind events such as hurricanes and tornadoes are also included.
Section 3 also exempts all farm buildings and agricultural structures owned by a producer in this state that are used to house livestock, poultry, crops, farm equipment, or farm supplies beginning in tax year 2022. Currently, all farm machinery and equipment, excluding motor vehicles licensed for use on the highways, are exempt.
Please thank your Representatives and Senators who voted for this important piece of legislation to help counties avoid dire economic consequences from the user fee lawsuits already filed against some counties, as well as those that may be filed in the future!
State Budget – H. 5150.
The House and Senate adopted the conference report on H. 5150, the budget bill, on Wednesday. This year’s budget increased funding to the Local Government Fund (LGF) by $12,583,080 statewide. This represents full funding to the LGF under the statutory formula. The budget also includes $12 million for the rural stabilization fund (discussed below), $2 million more than was allocated last year.
Other funding of note in the budget includes:
- $72 million to cover a 3 percent base pay increase for all state employees, including county auditors and county treasurers, an additional $45 million for a one-time $1,500 bonus;
- $37 million to cover the state’s share of the 1 percent retirement contribution increase;
- $101 million for the state’s share of the state health plan, including expanded well visits;
- $250 million to County Transportation Committees;
- $750,000 for PTSD treatment for first responders;
- $3.5 million for the Firefighter Cancer Benefit Plan;
- $3 million to fund the V-SAFE program;
- $850,000 to the Department of Labor, Licensing and Regulation for EMT training;
- $373,000 for a mental health for incarcerated individuals pilot program;
- $15 million for destination-specific tourism grants;
- $4 million in additional funds for regional tourism advertising;
- $100,000 for a statewide housing needs study;
- $10 million to the State Treasurer for a disaster trust fund;
- $20 million to the Department of Public Safety for grants to fund local law enforcement body cameras and vests;
- $1.6 million to coroners to fund the local child fatality review team program;
- $1 million to supplement the Councils of Governments (COGs);
- $617,550 to supplement the clerks of court;
- $617,550 to supplement the sheriffs; and
- $617,550 to supplement the probate judges.
Rural Stabilization Fund – Due to the recent census and the shifting of populations into the state and throughout the state, the General Assembly put $12 million into a Rural County Stabilization Fund. Under this proviso, any county that had population growth, as determined by the 2020 Census, of less than 5.35 percent since the 2010 Census shall be eligible to receive monies from the fund as follows:
- a baseline of $300,000 to each eligible county;
- an additional $100,000 to eligible counties with a population between 50,000 and 99,999; and
- an additional $200,000 to eligible counties with a population of more than 100,000.
After disbursal of funds, any monies remaining shall be distributed to each eligible county on a pro rata basis. In the event the amount of funds in the Fund is not sufficient to provide monies to counties according to the above formula, the amounts distributed to counties shall be reduced on a pro rata basis.
The following new provisos are included in the budget for FY 2022-2023:
27.1 – Aid to Counties Libraries Allotment. Raises the minimum allocated to each county on a per capita basis from $100,000 to $150,000.
42.6 – SC Housing Statewide Assessment. Directs $100,000 to be used for a comprehensive statewide housing needs assessment to include a statement by the authority on housing policies and recommendations for South Carolina and an evaluation and summary of housing conditions and trends in South Carolina broken down by geographic regions. A copy of the assessment must be provided to the Chairman of the Senate Finance Committee and the Chairman of the House Ways and Means Committee by June 30, 2023.
50.24 – Emergency Services Pilot. This proviso establishes a pilot program within the Department of Commerce named the Public/Private Partnerships – Emergency Services Fund for the purpose of funding projects that increase a local government’s emergency services capacity and capability. Every project must involve investment and participation by both private companies and local governments in order to be eligible for funding. The Department of Commerce will provide an annual update by January 15 of each year to the Chairmen of the Senate Finance Committee and Ways and Means Committee until all funds are expended. Any unexpended funds at the end of the fiscal year shall be carried forward and expended in the current fiscal year for the same purposes.
63.10 – Governor’s Law Enforcement Officer of the Year Award. This proviso establishes an advisory committee within the Department of Public Safety charged with creating an award nomination and recipient selection process for the Governor’s Law Enforcement Officer of the Year Award. The committee must annually select a state law enforcement officer of the year, a county law enforcement officer of the year, and a municipal law enforcement officer of the year. Each winner will be recognized by the Governor and will receive $10,000.
86.2 – CTC Expenditure Authority. Authorizes County Transportation Committees to expend all cash balances brought forward from the previous year. A listing of cash balances shall be provided to the Chairman of the Senate Finance Committee, the Chairman of the House Ways and Means Committee, and the Executive Budget Office. The Executive Budget Office shall establish the expenditure authorization adjustments upon review of the listing provided.
108.18 – Return to Work Extension. This proviso extends the suspension of the earnings cap to retired members of the Police Officer Retirement System who return to work after not having been engaged to perform services for a participating employer in the system in any capacity for at least 12 consecutive months subsequent to retirement.
108.19 – PORS Return to Work. This proviso provides that if a member of PORS chooses to engage in the Return-to-Work program, their 12-month period spent not engaging in officer duties shall not cause a member to lose their license or be unable to perform the duties of a police officer. These officers also shall not be required to meet the continuous training and education requirements of the South Carolina Law Enforcement Academy.
117.165 – Disinfection and Cleaning. Allows agencies and political subdivisions to utilize federal funds to implement cleaning, sanitization, and disinfection to meet the most current requirements issued by DHEC.
117.167 – Job Order Contracting Pilot Program. Allows Procurement Services of the State Fiscal Accountability Authority to pilot test a job order contracting method on behalf of one or more governmental bodies or public procurement units by entering into job order contracts to acquire construction services when the exact time or exact quantity of future jobs are not known at the time of contract award.
118.19 (67.1) – Airport Growth Response. This proviso allows for 20 percent of the $53 million appropriated for statewide airport growth response to be made available to fund airport(s) in counties that do not currently have a public airport.
Tax Exemptions – S. 1087. The House and Senate conferees reached an agreement on S. 1087 titled the “Comprehensive Tax Cut Act of 2022.” Under the agreement, S. 1087 will lower the individual income tax marginal tax rate for the current 4 percent, 5 percent, and 6 percent brackets to 3 percent. The current 7 percent tax bracket would also be lowered to 6.5 percent in tax year 2022 with additional triggers that could lower the rate for this tax bracket by an additional 0.1 percent beginning in 2023 until the rate hits 6 percent.
S. 1087 will also exempt all military retirement income and reduce manufacturing property tax from 9 percent to 6 percent. The revenue loss resulting from the property tax exemption will be reimbursed to political subdivisions from the Trust Fund for Tax Relief.
The House and Senate adopted the conference report and S. 1087 has been enrolled for ratification.
Storm Fee Securitization – S. 1077. The House and the Senate took up and adopted the conference report on S. 1077 on Wednesday. This legislation will allow the Public Service Commission (PSC) to authorize an electric utility's issuance of securitized bonds to offset and reduce costs incurred for storm recovery activity. The PSC will be responsible for reviewing securitization mechanisms to determine approval, which may only be granted if the electric utility's use of this mechanism provides quantifiable net benefits to customers and will result in the lowest storm recovery charges. The bill further establishes the processes for the authorization of these bonds, and as part of the requirements, electric utilities will be required to provide functional exhibits and workpapers to the PSC and to the Office of Regulatory Staff supporting any petitions, testimony, and exhibits. S. 1077 also defines the term “storm recovery costs” and will allow electric utilities to apply to the Public Service Commission for financing orders only if certain requirements are contained in the petition. The bill has been enrolled for ratification.
Land Use, Natural Resources and Transportation
Electronic Waste – H. 4775. Conferees from the House and Senate met Wednesday morning for the conference committee on H. 4775 relating to electronic waste. This legislation, an SCAC policy position, will establish a new statewide “Manufacturer Electronic Waste Recovery Program” for covered televisions and computer monitor devices (ex: old CRT TVs). Counties are currently faced with large financial burdens to recycle these items because there is no market for the devices and these devices cannot go into a landfill. Under the old program, manufacturers only had to recycle 80 percent of the pounds sold, leaving counties to shoulder the cost of recycling any devices that remained at county facilities.
The new program will require that all covered television and computer monitor devices must be picked up from counties, providing significant cost savings for disposing of these devices. Language in the bill provides protection to counties from financial liability once these devices leave a county facility which addresses issues that have occurred in the past where counties were sued for devices that were stored offsite. The bill requires counties to enroll in the new program by August 1, 2022, and provides for a sunset of the program in 2029. All stakeholders involved in the program will reconvene on June 1, 2026, to assess how the program is working and whether there need to be changes or updates to the program going forward.
The conference committee adopted a clean version of the bill by striking an amendment to the legislation that was attached during the last week of the regular session in the Senate relating to pre-production plastics, more commonly referred to as “nurdles.” The House and the Senate both adopted the conference report on H. 4775 and the bill has been enrolled for ratification.
Please be on the lookout for additional information from SCAC and DHEC regarding the sign-up process for the new e-waste recovery program. The deadline to enroll in the new recovery program is August 1, 2022.
Public Safety, Corrections and Judicial
Heirs’ Property Study Committee – S.560. This joint resolution establishes the Heirs’ Property Study Committee to examine current and prospective methods to address heirs’ property issues in South Carolina; to provide for the membership of the committee, including the requirement that the committee seeks assistance from groups, including SCAC; and to require the committee to prepare a report for the General Assembly.
This week, the conference committee reached an agreement on the bill that removed the early voting bill provisions added by the House. The House and Senate adopted the conference report and S. 560 has been enrolled for ratification.
County Government and Intergovernmental Relations
Permit Extensions – S. 17. A conference committee reached an agreement on this joint resolution, also known as the “Permit Extension Joint Resolution of 2022,” which would extend the approval of certain permits issued by DHEC as well as permits issued by local governments. The permit must be current and valid at any time between December 1, 2016, and December 31, 2023. The bill does not preclude a local government’s authority to revoke or modify a development approval pursuant to law or the issued permit. The House adopted the conference report on S. 17. However, the Senate adjourned without taking up the report. Under the terms of the sine die resolution, the Senate can consider the conference report on S. 17 when they return on June 28th.
Veterans Service Organization Burial Honor Guard Support Fund – S. 968. This bill establishes the "Veterans Service Organization Burial Honor Guard Support Fund" as a new fund created in the State Treasury. Revenues of the fund may include gifts, grants, federal funds, donations, and appropriations from the General Assembly. These funds are to be used to offset costs paid by organizations that provide honor guard burial details at the funerals of qualifying South Carolina veterans.
The conferees reached an agreement and split the difference between the House and the Senate cap provisions by amending the bill to “amounts not less than $50, but not exceeding the per funeral cap established annually by the Secretary of the Department of Veterans' Affairs.” The House and Senate adopted the conference report and the bill has been enrolled for ratification.