Friday Report - March 13, 2020
The House passed the budget on Wednesday and did not meet on Thursday. They will be on furlough until the week of March 23rd. The Senate spent the week working through the calendar while on the floor and debating Santee Cooper in the Senate Finance Committee before reporting their findings to the Senate floor. The Finance Committee voted unanimously to reject the three options (sale, management, or restructuring). The Finance subcommittee tasked with renegotiating the three options met this week but has not made a recommendation. Meanwhile, the House bill (H. 5335) that appoints a special committee to further negotiate the three options and make a recommendation to the House and Senate, was amended in the House Ways and Committee and is back on the House calendar pending second reading.
Revenue, Finance, and Economic Development
State Budget and Capital Reserve Fund — H. 5201 and H. 5202. The House passed the budget bill (H. 5201) and Capital Reserve Fund bill (H. 5202) this week, a total budget of $10.2 billion. Both bills are now in the Senate Finance Committee. The Senate Finance budget subcommittees will begin meeting next week. The full Senate Finance Committee plans to debate the budget during the week of March 31st, and the budget should be debated on the Senate floor beginning on Monday, April 20th.
Under the budget passed by the House, the Local Government Fund is funded with an additional $11,687,035 over last year’s amount. The budget bill also earmarks an additional $250,000 for County Veterans’ Affairs Offices, an SCAC policy position, and provides for a 2 percent merit-based raise for state employees. The budget bill includes an increase of over $1500 to the salary supplement for each county coroner, probate judge, clerk of court, and sheriff, as well as a $550,000 increase for the Council of Governments (COGs). Finally, $128 million will be used to provide a one-time income tax credit.
Please see the attached LGF chart. Please thank your House members for approving the increase in the Local Government Fund in H. 5201.
Here are some new provisos of interest in the budget passed by the House:
Proviso 50.21 – Funding for Rural Infrastructure. This proviso would amend qualifications for funding under the Department of Commerce’s Rural School District and Economic Development Closing Fund to include projects located in “Tier IV” counties.
Proviso 108.12 – Return to Covered Employment. This proviso would allow a retired member of the South Carolina Retirement System or the Police Officers Retirement System to be hired and return to employment covered by any system, without regard to earnings. This proviso would not affect the monthly retirement allowance the member is receiving from the system if the member has not been engaged to perform services for a participating employer for compensation in any capacity, whether as an employee, independent contractor, or other classification of worker, for a period of 12 consecutive months subsequent to retirement.
Proviso 113.10 – Capital Project Sales Tax Collections. In the current fiscal year, this proviso would allow counties with capital project sales tax collections in excess of the amount necessary to complete all projects for which the tax was imposed, and the tax has not yet expired, to pledge and use the excess collections to fund road improvements, intersection improvements, and pedestrian transportation. To utilize this proviso, before the tax expires, the county must adopt an ordinance specifying the purposes for which the funds will be used. A county may expend distributions received pursuant to this section to meet the requirements of this proviso.
Proviso 117.160 – Renewable Energy Resource Tax Exemption. This proviso would provide that for the property tax year 2020, a “renewable energy resource” property having a nameplate capacity of and operating at no greater than 20 kilowatts, as measured in alternating current, shall be exempt from ad valorem taxation subject to provisions of Section 12-4-720 of the S.C. Code of Laws. For purposes of this provision, “renewable energy resource” has the same meaning as provided in Section 58-40-10 and includes, but is not limited to, all components that enhance the operational characteristics of the generating equipment, such as an advanced inverter or battery storage device, and equipment required to meet all applicable safety, performance, interconnection, and reliability standards established by the commission, the National Electrical Code, the National Electrical Safety Code, the Institute of Electrical and Electronics Engineers, Underwriters Laboratories, the Federal Energy Regulatory Commission, and any local governing authorities.
Proviso 118.163 – Disaster Relief and Resilience Reserve Fund. This proviso would create the Disaster Relief and Resilience Reserve Fund that would be housed under the State Treasurer’s Office. Funds appropriated to the fund may only be used for disaster relief assistance, hazard mitigation and infrastructure improvements, and statewide resilience planning. Interest accrued by the fund must remain in the fund and unexpended funds shall be retained and carried forward to be used for the same purposes.
Business License Tax – H. 4431. In its current form, this bill represents a compromise amongst local governments and representatives of the business community. Pursuant to this bill, class schedules would now be “recommended” by the Municipal Association of South Carolina (MASC) and then “adopted” by the Director of the Revenue and Fiscal Affairs Office. The bill would allow the Revenue and Fiscal Affairs Office to contract with software providers and payment processors to implement a payment portal. Overall, the bill provides for standardization, including license forms, renewal dates, and the appeals procedure. The bill also bases a business license tax on a business’s gross income and further defines “gross income.” The original bill language would have based a business license tax on a business’s net income. This change should ensure that the bill will be revenue neutral, an SCAC policy position. A Senate Finance subcommittee gave the bill a favorable report to the full Senate Finance Committee with a few technical amendments.
Property Assessment — S. 545. S. 545 originally repealed a statutory provision that granted the county auditor authority over assessing taxes on certain business personal property and gave the authority to the Department of Revenue (DOR). SCAC’s policy position opposes removing this authority from the county auditor. The Senate adopted an amendment that was agreed to by all parties to allow the county auditor to retain this authority provided they use a standardized form when assessing this tax. This amendment satisfies SCAC’s policy position. The Senate passed S. 545, as amended, and sent it to the House where it was referred to the House Ways and Means Committee.
Rollback Taxes — H. 3596. This bill initially reduced the amount of rollback taxes due when agricultural property is changed to another use from five years to one year. The House amended H. 3596 to reduce rollback taxes from five years to three years. The Senate began debate on this bill this week, first by adopting the Senate Finance committee amendment. That amendment encompasses the three-year term as a compromise and clarifies the triggering mechanism(s) for rollback taxes as it appears that the process varies in each county.
Senators Fanning and Johnson introduced an amendment during debate decreasing the multiple lot discount from five to three years for property being developed that was previously subject to the rollback tax provision. This amendment appears to be school and county friendly and an attempt to recuperate revenue lost from the reduction of the roll back taxes as provided in the bill. The Senate adjourned before voting on the amendment. SCAC staff expects a vote to be taken on this amendment when debate resumes on H. 3596.
If you have questions, comments or concerns about the bill or the amendment, please contact SCAC Staff. If you support the amendment, please contact you Senator.
Public Safety, Corrections and Judicial
Child Abuse Response Protocol – S. 892. This bill, in part, would establish an advisory committee that would review and update annually the South Carolina Child Abuse Response Protocol. Members of the advisory committee include representation from county law enforcement, a solicitor’s office, the executive director of the S.C. Network of Children’s Advocacy Centers, the executive director of the S.C. Department of Social Services, state law enforcement, the State Guardian Ad Litem Program, a child abuse pediatrician, and other at-large seats. The Senate gave the bill a third reading, and the bill has been referred to the House Judiciary Committee.
Operation of Vending Facilities within Local Detention Facilities – S. 1017. This bill, as introduced, would prevent the S.C. Commission for the Blind from operating any vending facility at a local detention center. The bill has been amended to prevent blind persons from operating any commissary services provided in local detention facilities but would allow them to operate vending machines outside of the secured areas of a detention facility, or within the secured areas if those operations began prior to the effective date of the Act. The Senate gave the bill a third reading, and the bill has been referred to the House Judiciary Committee.
Inmate Restraints – H. 3967. This bill provides that pregnant inmates may not be restrained except for when being transported. The bill also provides that during certain situations that are related to pregnancy such as labor, delivery, and postpartum recovery, the inmate may only be restrained if they pose a risk to themselves or others, or if they are a flight risk. The bill provides for the method of restraint when restraint is allowed. The Senate adopted two amendments on the floor last week. The first amendment provides that local detention facilities must not conduct invasive body cavity searches of a known pregnant inmate unless reasonable; must provide sufficient food, dietary supplements and feminine hygiene products to known pregnant inmates; must not assign known pregnant inmates to any bed more than three feet from the floor; and must limit bodily inspections of female inmates by male officers when practical. The amendment provides that indigent inmates must be provided hygiene products at no cost. The second adopted amendment limits a detention facility’s liability if the facility is unaware that a female inmate is pregnant. This week, the Senate gave the bill a third reading, and the bill has been returned to the House with the amendments.
Land Use, Natural Resources and Transportation
Motorcycle High Mileage — H. 3695. This bill provides that for the sole purpose of determining high mileage tax deductions, motorcycles and motorcycle three-wheel vehicles shall be classified as private passenger vehicles. The Senate gave H. 3695 a third reading this week and the bill was enrolled for ratification.
Affordable Housing — H. 3998. This bill is titled the “Workforce and Senior Affordable Housing Act” and allows taxpayers who are eligible for a federal low-income housing tax credit to also claim a low-income state tax credit through approval from the South Carolina Housing and Finance Development Authority, an SCAC policy position. The bill was amended to delete a provision that exempted these projects from all property taxes and municipal fees for 10 years. H. 3998 received third reading as amended in the Senate and was returned to the House.
Coal Ash Surcharge —S. 1173. This bill provides that the Department of Health and Environmental Control shall charge a surcharge of $30 per ton on any coal combustion residuals transferred to a landfill in a county with a population of less than 19,500, and to provide for the collection, retention, and expenditure of this surcharge. S. 1173 was given a favorable report by a Senate Judiciary subcommittee and will be on the agenda at the next full committee meeting.
Commercial Vehicle Registration Fees – S. 1117. This bill, as introduced, would among other things, exempt all large commercial vehicles from local fees. In 2017, the General Assembly passed a Roads Bill (H. 3516 of 2017) that exempted large commercial vehicles (over 26,000 lbs.) from the previous fee in lieu of property taxes (FILOT) that was formerly collected by the Department of Revenue. Before the 2017 Roads Bill, intrastate trucks were subject to the FILOT and 100 percent of the revenue was remitted to counties. By changing the FILOT to a statewide road use fee, the 2017 bill was able to capture revenue from interstate trucks by subjecting them to the new road use fee. It was the intent of all parties involved that counties would be removed from dealing with these large commercial trucks and that these duties would fall under the purview of the Department of Motor Vehicles (DMV).
To help the DMV defray the cost of processing all transactions for large commercial vehicles, the DMV would receive a portion of the revenue from the new statewide road use fee. Counties would receive 75 percent of the revenue and the DMV and DOT would share the remaining 25 percent. Another intent of the 2017 Roads Bill was to exempt these large commercial vehicles from local fees, as DMV is not able to process and remit this revenue back to the few counties that charge local fees to trucks. Interstate trucks were specifically exempted in the legislation, but intrastate trucks were not. S. 1117 accomplishes this by exempting all large commercial vehicles (over 26,000 lbs.) from all local fees, as intended in the 2017 bill. This exemption will have an estimated $300,000 total statewide impact to counties currently collecting local fees from intrastate trucks. The intent of the 2017 bill was that the increase in revenue counties would collect under the new statewide road use fee system would more than offset this $300,000 loss. S. 1117 is expected to be heard by a Senate Transportation subcommittee within the next two weeks.
County Government and Intergovernmental
Pregnancy Accommodations — H. 3200. This bill enacts the “South Carolina Lactation Support Act,” which provides that employers shall provide employees with reasonable break times (paid or unpaid) to express breast milk. Further, employers would be required to make reasonable efforts to provide certain areas where employees may express breast milk; however, the employer would not be required to make structural changes to the facility in order to accommodate the employee. The bill was amended on the Senate floor to clarify that the bill shall not be construed as requiring an employer to build a room for the primary purpose of expressing breast milk. The bill was then given a second reading in the Senate.
Note: If you would like to offer comments to the SCAC staff, please call us toll-free at 1-800-922-6081, fax to (803) 252-0379, or send an email. You can also go to www.scstatehouse.gov and click on "Legislation," then "Introduced Legislation."
S. 1152 – Updates the reference to the Internal Revenue Code to the year 2019 and provides that if the Internal Revenue Code sections adopted by this state are extended, then these sections also are extended for South Carolina income tax purposes.
S. 1155 – Includes privately owned affordable housing projects within the definition of redevelopment project.
S. 1157 – Provides a state sales tax exemption for items sold to school districts, schools, and institutions of higher learning for the purpose of improving school safety.
S. 1160 – Provides that the Department of Commerce shall keep a record of all economic development incentive claw backs and shall report on all claw backs that have been triggered.
S. 1161– Requires all individual and group health insurance plans, health maintenance organizations, and the State Health Plan to waive cost-sharing requirements associated with testing for COVID-19 and to define applicable terms.
S. 1173 – Provides that the Department of Health and Environmental Control shall charge a surcharge of $30 per ton on any coal combustion residuals transferred to a landfill in a county with a population of less than 19,500, and to provide for the collection, retention, and expenditure of this surcharge.
H. 5365 – Updates the reference to the Internal Revenue Code to the year 2019 and provides that if the Internal Revenue Code sections adopted by this state are extended, then these sections also are extended for South Carolina income tax purposes.