WINTER/SPRING NEWSLETTER
2010 LEGISLATIVE PREVIEW
Senator Wes Hayes            District #15

The second regular session of the 118th General Assembly convened on January 12 with even greater economic uncertainty and budget shortfalls than in prior years. Since South Carolina’s revenue peak in fiscal year 2006-07, state revenue has fallen $1.7 billion, which is approximately 25% of all state general funds. South Carolina currently is in its third consecutive year of “negative revenue growth.” This means negative growth- not a slower rate of growth. The last time South Carolina had negative growth was briefly after 9/11, and the last time before 9/11 was in 1955. Additionally, South Carolina’s unemployment rate steadily increased in 2009 from 9.5% in January to 12.3% in November, which is the latest date reported. Regardless of our current circumstances, I am still committed to provide sound, efficient government services to insure a good quality of life for all of South Carolina's citizens. I am glad that we were able to tightly regulate payday lending last year, but I am disappointed that we were unable to increase the cigarette tax or pass a surface water removal bill. Nonetheless, my efforts to pass these laws this year, along with many others, already are underway. This Newsletter summarizes the highlights of several key pieces of legislation currently pending before the General Assembly.

THE BUDGET. After tapping the General Reserve Fund for $108.1 million, South Carolina closed fiscal year 2008-09 with a $98.2 million net budgetary fund deficit. In September, the Budget and Control Board approved the borrowing of $98.2 million from the state’s general deposit account to balance the Budgetary General Fund. In December, the Budget and Control Board approved an additional 1% across-the-board reduction to repay the funds borrowed from the State’s general deposit account. Over the last 18 months, the Board of Economic Advisors has revised downward its revenue expectations eight times, which had the net effect of reducing the State’s available net general funds from $6.7 billion to approximately $5 billion. For fiscal year 2009-10, revenue cuts, coupled with the Budget and Control Board’s actions to insure a balanced budget, have resulted in a total depletion of the State’s capital reserve fund of $127 million and direct cuts to state agencies of more than $430 million. For fiscal year 2010-11, the picture still looks grim, and budget writers face the prospect of having to cut state government by more than $500 million. Such cuts would reduce the State’s general fund appropriations down to levels not seen in more than 10 years.

CARD CHECK CONSTITUTIONAL AMENDMENT. Rep. Bedingfield has introduced a Joint Resolution that would establish by referendum an amendment to the State Constitution to expressly require a vote by secret ballot for unionization elections. Such amendment would nullify the federal Employee Free Choice Act (EFCA) if it is ever en-acted by Congress. The EFCA proposes to allow labor unions to be certified by the National Labor Relations Board if a majority of workers sign cards designating such union as their bargaining representative. Under the EFCA, union elections would no longer be required. This Resolution is important, because it would invalidate any federal attempt to allow labor organizers to make unionization possible without a secret ballot vote. A secret ballot vote insures that employees can make their choices in absolute privacy and be insulated from intimidation and retaliation. The Resolution made it through the House and received a favorable recommendation from the Senate Judiciary Committee before the last Session ended. I anticipate that it will eventually make its way through the Senate.

SURFACE WATER PERMITTING ACT. Currently, in South Carolina, a large withdrawal of surface water from rivers or lakes does not require permitting, unlike most states, including Georgia, that require permitting. The need for this legislation be-came apparent during recent droughts, and also due to disputes that we have had with Georgia and North Carolina over allocation of surface water between states. In 2008, I introduced a Bill that would create permitting in this state, and although it did pass out of the Agriculture and Natural Resources Commit-tee, it was never passed by the Senate. Therefore, I introduced another Bill last year, and a similar Bill is in a position to pass out of the Senate Agriculture and Natural Resources Committee very soon. The two opposing forces (industrial groups and environ-mental groups) have agreed on all issues except for the scientific calculation of “minimum flow.” This represents the amount of water that must remain in a given body of water at all times to insure what is known as a “safe yield.” Hopefully, we can get quick action very soon on this legislation. The North Carolina General Assembly also is working on a version of water permitting for its State.

SC vs. NC: CATAWBA RIVER LAWSUIT. The Attorney General's Office continues to be aggressive in pursuing the ongoing lawsuit against North Carolina in the United States Supreme Court. The Court heard oral arguments for this case in October, but it has not issued its Opinion. This lawsuit seeks to halt North Carolina's attempt to establish an Inter Basin Transfer of Water from the Catawba River to the Concord/Kannapolis area. This action has broad ranging implications as to the availability of water for South Carolina that flows over the Stateline from North Carolina. I am grateful to Attorney General Henry McMaster for taking up this cause. Many municipalities and county governments have contributed large sums of money to this effort.

VOTER ID/EARLY VOTING. Speaker Harrell has introduced a Bill that would require voters to present photo identification before being allowed to cast a ballot in an election. Permissible forms of photo identification would include a South Carolina driver’s license or other photo identification issued by the Department of Motor Vehicles, a passport, military identification, or an employee identification card bearing a photograph issued by the federal government, the State of South Carolina or a political subdivision of the State. An exception is provided for persons who object to being photographed for religious reasons. The Bill also requires the Department of Motor Vehicles to issue identification cards to persons aged 17 or older free of charge and establishes an early voting period beginning fifteen days before the election and ending three days be-fore the election. Unlike with absentee ballots, no special circumstances would be required for a voter to participate in early voting. This Bill has made its way through the House, and a majority of the Senate Judiciary Committee found it favorable with some amendments.

CIGARETTE TAX. Last year, it appeared that a cigarette tax was destined to pass the General Assembly, but support for the bill diminished when the details of the bill emerged. Speaker Harrell's bill raising the cigarette tax by fifty cents a pack passed quickly through the House and found its way to the Senate Finance Committee. Here the bill met resistance, because it called for a major portion of the proceeds to be given as a tax credit to low income citizens to use to purchase health insurance. The Senate Finance Committee disagreed. It voted to raise the tax by fifty cents but agreed only to create a trust fund for the proceeds and put off spending decisions until next year. Presently, the bill is on the Senate Calendar but is stalled by a coalition of Senators who oppose any new taxes. I remain confident that a cigarette tax increase will happen this Session, but how the tax dollars will be used remains to be determined.

TEXTILE REVITALIZATION ACT. In 2004, this Act was passed to provide incentives to investors to redevelop old, deteriorating textile mill properties like the “Bleachery" and the "Celanese." The incentives in this Bill make it reasonable to demolish and redevelop these vacant and deteriorating proper-ties into revenue generating facilities. An example of how this has worked successfully is "The Cotton Factory" at White Street and Dave Lyle Blvd. Changes were made to this law in 2006 that diminished its effectiveness. Last year, I introduced corrective legislation that returns the law to its original intent. Because a new Bill would not have passed before the last Session ended, I added my Bill as an amendment to another bill sponsored by Rep. Herb Kirsh. His Bill has passed the Senate with minor changes. A conference committee, which I chair, has begun working out the differences between the House and Senate versions of the Bill, and I am optimistic that a compromise will be reached very soon.

PROPERTY TAX REFORM- POINT OF SALE. In 2006, the General Assembly passed property tax reform legislation that capped increases in the fair market value of real property upon countywide reassessment at 15% of the property’s fair market value. As a counter-measure, that legislation also included certain events that automatically trigger a new appraisal of a property’s fair market value without ap-plication of the 15% cap. For example, a sale or other conveyance of real property automatically triggers an appraisal of the property at fair market value. This generally results in property taxes for such property being assessed upon the sale price. Thus, the common result is that a newly purchased piece of real property is subject to much higher property taxes than a neighboring property with a substantially similar fair market value but limited by the 15% cap. Many realtors believe that this discrepancy has discouraged many people from purchasing homes or other real property. To remedy the inequities borne by new purchasers of real property having no improvements since the last countywide reassessment, Rep. Dan Cooper has sponsored a bill that would postpone the new appraisal until the next countywide reassessment year and make any in-crease in fair market value at such time subject to the 15% cap. This Bill made its way through the House last year, and has received a favorable review with some amendments from the Senate Finance Committee. The Bill is now on Special Order, which means that it will be taken up soon after the Senate returns.

TAXATION REALIGNMENT COMMISSION (TRAC). Last year, the General Assembly established the TRAC to conduct a comprehensive review of the State’s tax system to examine the effective-ness of the system’s structure, as well as the likely systemic impact of any proposed changes effecting tax revenues. The Commission is to submit a report, which is due March 15, 2010, to the General Assembly on its recommended changes. The Commission currently is reviewing the State’s sales and use tax exemptions and caps to determine which need to be retained, modified or repealed. The Commission has not begun to review income taxes, property taxes, and fines and fees. Thus, meeting the March 10 deadline is very unlikely given the need for a thorough consideration of the remaining issues. TRAC Chairman, Burnie Maybank, is considering asking for an extension of the deadline into the fall.

CLINICAL TRIALS FOR CANCER PA-TIENTS. Last March, I introduced legislation that would require health insurance plans, including the State Health Plan, to provide coverage for an insured who is referred for participation in an approved clinical trial for cancer treatment. The Bill requires that the referral be made by two oncologists and that the trial be approved by one of the following: the National Institutes of Health; the FDA; the Department of Defense; or the Department of Veterans Affairs. The Bill is currently pending before the Senate Med-ical Affairs Committee and has been assigned to a sub-committee, which I will chair. Currently, 29 other states already have similar legislation in place, or have voluntary consensus agreements with insurers, requiring coverage of “routine care” costs for clinical trials.

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