Friday Report - September 25, 2020
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The Senate and House met on Tuesday and Wednesday pursuant to the Sine Die Resolution. The Senate held a perfunctory session on Thursday, while the House met in-person to address some bills passed by the Senate. As this was the last scheduled week for the General Assembly to meet this year, there was a flurry of activity on several bills. The items of interest to county governments are discussed below.
The Budget Bill and Local Government Fund
The Senate amended and passed H. 5201, the Appropriations Bill, that continues to fund the majority of state government at the level provided for in the earlier Continuing Resolution (Act 135 of 2020, H. 3411). In addition, H. 5201 as passed by the Senate appropriated $11,687,035 to the Local Government Fund. This amount would have fully funded the Local Government Fund under the newly adopted formula. However, the House has decided not take up the bill until January due to the uncertainty of the economic forecast for the state due to COVID-19, and the state will continue to operate under the Continuing Resolution. This means that the Local Government Fund will continue to be funded under the appropriation of $233.7 million.
Phase II CARES Act Authorizations – H. 3210.
Reps. G.M. Smith, Clyburn, and Finlay and Sens. Alexander, Jackson, and Davis were appointed by their respective bodies to serve as the conference committee for H. 3210. The conference committee met this week and agreed to the following compromise CARES Act authorizations for reimbursements of expenditures made between July 1, 2020 and December 30, 2020:
- State and local governments and independent colleges and universities: $115,000,000
- Unemployment Trust Fund: $420,000,000
- DHEC – Statewide COVID-19 Testing and Monitoring: $73,022,613
- MUSC – Statewide COVID-19 Testing: $20,150,000
- Non-profit Relief Programs – Grants: $25,000,000
- Minority and Small Business Relief: $40,000,000 (Small business is defined as a business with 25 or fewer employees)
The conferees adopted language from the Senate version requiring counties to submit applications for reimbursement on or before November 15, 2020. The conference report expressly requires counties to coordinate expenditure reimbursements through, and in consultation with, the Department of Administration and the grant manager by submitting information “sufficient to identify other COVID-19 related funding that they are receiving, regardless of the source, and provide a detailed accounting of how the funding is being used.” Additionally, the Executive Budget Office may provide any leftover funds to county governments based on a priority list. The conference committee also adopted language stating that, for FY 2020-21, the earning limitation does not apply to SCRS or SCPORS retirees who return to covered employment in response to COVID-19. H. 3210 has been enrolled for ratification.
Other Bills of Interest
Business License Tax Reform – H. 4431. This bill represents a compromise among all stakeholders to amend the business license tax by standardizing due dates, collection methods, appeals processes, and implementation of business license taxes. The bill also approves a payment portal to be administered by the SC Revenue and Fiscal Affairs Office (RFA). This will make it easier for taxpayers to pay their business license tax as well as streamlining collection for taxing jurisdictions. H. 4431 also provides a standardized business license class schedule to be adopted by taxing jurisdictions by December 31 of every odd year. This schedule is to be recommended by the Municipal Association and approved by the RFA. Taxing jurisdictions will still be able to adopt some sub-classifications. This bill is a standardization effort, which SCAC supports. A conference committee met this week and adopted a final version of the bill which also allows for a taxing entity to enter into a contract with a third party to assist in collecting business license taxes approved by the taxing entity. The contract may include a contingency fee based on a percentage of taxes collected. However, the third party will be subject to oversight from the Department of Consumer Affairs. The Senate and House both concurred with the conference committee report and the bill has been enrolled for ratification.
Redemption of Real Property – H. 3755. This bill originally dealt with automobile insurance coverage but was amended in the House on Wednesday to include language dealing with redemption of real property. Under Section 3 of the bill, if real property was sold at a delinquent tax sale in 2019 and the twelve-month redemption period has not expired as of the date of approval by the Governor, the redemption period for the real property is extended for twelve additional months. If the property is redeemed during the twelve-month extension, additional interest shall accrue in the same manner and rate as interest accrues in the original redemption period. The Senate concurred in the House amendment and the bill has been enrolled for ratification.
Insurance Premium Tax – S. 753. This bill transfers one percent of the revenue from insurance premium taxes to the V-SAFE program, which is run by the Office of the State Fire Marshal and under the administration of LLR. Prior to this legislation, one half of the funds were distributed equally to each fire department in the state. The bill also requires the State Treasurer to transfer any funds in the aid to fire districts account that are attributable to insurance premium taxes to the V-SAFE Program. The Senate concurred in the House amendment and the bill was enrolled for ratification.
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. Last year, the House amended H. 3596 to reduce rollback taxes from five years to three years. Senate Finance also amended the bill. 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. This week, the House attempted to amend the bill further, but the Senate did not concur with the amendment. The House then receded from the additional House amendments. The bill has been enrolled for ratification and would take effect January 1, 2021. It only applies to property changed from agricultural use after 2020.
Business Personal Property Assessment – S. 545. This bill originally required the Department of Revenue to follow certain North American classification system manual provisions. It also repealed a provision relating to the appraisal and assessment of personal property of businesses under the jurisdiction of the county auditor, which SCAC opposes. A compromise amendment at the request of SCAC was adopted to create a form, with input from all interested parties, that would be consistent with the state form that the Department of Revenue utilizes. Currently, the form utilized by each county varies. This agreement preserves the auditor’s authority to assess this property, an SCAC policy position. The House further amended the bill to ensure that businesses receiving loans under the Paycheck Protection Program (PPP loans) would have the loans excluded from gross income for state income tax purposes as well as mirror state deductions with any allowable federal deductions of expenses associated with the forgiven PPP loans. The bill has been enrolled for ratification and will take effect upon approval by the Governor. The bill will apply to property tax returns due after December 31, 2020.
Nursing Home Resident 4 Percent Assessment – S. 207. This bill allows a person who is receiving the four percent owner-occupied assessment ratio and becomes a patient of a nursing home or community residential care facility to retain the four percent assessment ratio while they are a patient of the facility. The person must intend on returning to their home and may not rent the home out for more than 72 days in any calendar year. On the House floor, an amendment was offered to provide a property tax exemption for all property of nonprofit housing corporations or instrumentalities of these corporations, including leasehold interests in and improvements to the property, as long as the property is devoted to providing housing to low income or very low income residents; however, the safe harbor provisions of Revenue Procedure 96-32 issued by the IRS must be satisfied to qualify for the exemption. The Senate further amended the bill to update the definition of “redevelopment project” to include affordable housing projects where all or a part of new property tax revenues generated in the tax increment financing district are used to provide or support publicly and privately owned affordable housing in the district or is used to provide infrastructure projects to support publicly and privately owned affordable housing in the district. The bill has been enrolled for ratification and will take effect upon approval by the Governor.
Farm Structures – H. 4327. This bill, as amended by the Senate, exempts structures without a commercial kitchen that are used in agritourism activity and accommodate 300 or fewer guests from the latest applicable Building Code requirement of installing a sprinkler system. This week, the House concurred in the Senate amendment, and the bill has been enrolled for ratification.
Accommodations and Hospitality Tax – S. 217. This bill originally allowed local governments to use state accommodations taxes, local hospitality taxes, and local accommodations taxes for the control and repair of flooding and drainage at tourism-related lands or areas. This bill includes all local governments. It was amended to only allow hospitality taxes for flooding issues. The House amended the bill to allow a local government that has a comprehensive plan that is due December 31, 2020 to delay submission of that plan until December 31, 2021. S. 217 has been enrolled for ratification.
Firefighter Cancer Insurance – S. 1071. This bill as amended by the House establishes a supplemental insurance policy for a firefighter diagnosed with cancer. To qualify for the supplemental insurance, a firefighter has to have served in a South Carolina fire department for at least 5 continuous years and been in active service within 10 years of the diagnosis. It provides for up to $12,000 annually to a firefighter for any out of pocket medical expenses to include deductibles and copayments; a one-time benefit of $20,000 upon the firefighter’s initial diagnosis; and a $75,000 death benefit. This supplemental policy is contingent upon funding. The Senate concurred in the House amendments and the bill has been enrolled for ratification.
Disaster Relief and Resilience Act – S. 259. This legislation enacts the “Disaster Relief and Resilience Act” and creates the South Carolina Office of Resilience. The Office of Resilience will be governed by a Chief Resilience Officer and must develop, implement, and maintain the Statewide Resilience Plan with a goal of coordinating statewide resilience and disaster recovery efforts with federal, state, local and non-governmental entities. The bill also establishes the South Carolina Disaster Relief and Resilience Reserve Fund that will be used to maintain the Statewide Resilience Plan and for disaster relief assistance, hazard mitigation, and infrastructure improvements.
S. 259 also creates the South Carolina Resilience Revolving Fund, which will be governed by the Disaster Recovery Office within the Office of Resilience. These funds will be used to provide low interest loans to counties and other governmental entities in order to buy out homes that have sustained repetitive damage from floods. Damages must be more than $1000 per occurrence to qualify for the fund. The fund also has certain incentives for relocating residents in areas outside of the floodplain for a specific period of time. The acquired properties must be turned into open space and some type of floodplain restoration must be conducted on the properties.
Another notable component of the bill requires an additional element that must be included in a local comprehensive plan under Section 6-29-510(D) of the SC Code relating to resiliency. The additional element must consider the impacts of flooding, high water, and natural hazards on individuals, communities, institutions, businesses, economic development, public infrastructure and facilities, and public health, safety and welfare. This includes an inventory of existing resiliency conditions, promotes resilient planning, design and development, and is coordinated with adjacent and relevant jurisdictions and agencies. “Adjacent and relevant jurisdictions” and agencies means those counties, municipalities, public service districts, school districts, public and private utilities, transportation agencies, and other public entities that are affected by or have planning authority over the public project. “Coordination” means written notification by the local planning commission or its staff to adjacent and relevant jurisdictions and agencies of the proposed projects and the opportunity for adjacent and relevant jurisdictions and agencies to provide comment to the planning commission or its staff concerning the proposed projects. Failure of the planning commission or its staff to identify or notify an adjacent or relevant jurisdiction or agency does not invalidate the local comprehensive plan and does not give rise to a civil cause of action. This element shall be developed in coordination with all preceding elements and integrated into the goals and strategies of each of the other plan elements. S. 259 went to conference and the House and Senate adopted the Conference Report on S. 259. The bill has been enrolled for ratification.
Broadband Access for Rural Counties – H. 3780. As originally introduced, the bill would have provided grants to internet companies providing service to rural counties in order to expand broadband access and increase internet speeds to areas of the state that are economically disadvantaged. The Senate amended the bill by striking the original language and inserting the language from S. 1076, a bill introduced by Senator John Scott. H. 3780, as amended, enacts the “Broadband Accessibility Act” and encourages South Carolina’s electric cooperatives to offer high-speed internet by partnering with private telecommunication businesses to finance and build the necessary lines. The bill allows broadband affiliates to offer retail broadband services using existing electric cooperative easements and existing infrastructure to over 1.5 million citizens across rural areas of the state. The Office of Regulatory Staff is also vested with the authority and jurisdiction to make inspections, audits, and examinations to ascertain compliance with all administrative guidelines contained in the bill. The House concurred with the Senate amendments to the bill and H. 3780 has been enrolled for ratification.
Small Cells – H. 4262. This legislation would enact the “Small Wireless Facilities Deployment Act,” the intent of which is to accelerate the placement of small cell technology in South Carolina. Small cells “boot strap” off of cellular towers to provide greater capacity to users within a dense community. Therefore, the legislation is aimed at allowing wireless providers to readily place this technology in municipalities. Generally, the more rapid placement of technology in dense communities allows the providers to then move this technology into rural areas. Additionally, small cell technology allows less stress to be placed on existing cellular towers, which should enhance the ability for these towers to serve communities outside municipalities. Local governments may prohibit the installation of small cell technology within their jurisdiction if certain guidelines contained in the bill are met. The bill requires small cell facilities to pay for the relocation costs of poles and structures when the county engages in a road widening or repair project. The Senate amended the bill this week to allow municipalities to charge applicants a fee in the event that an outside consultant must be hired for the review and processing of its applications. The fee provision will sunset four years following the Act’s effective date. H. 4262 has been enrolled for ratification.