Hayes for Senate, South Carolina District 15, York County

WINTER/SPRING NEWSLETTER
2012 LEGISLATIVE REVIEW
Senator Wes Hayes District #15

The second regular Session of the 119th General Assembly convened on January 10, and I am hopeful that we will see some meaningful restructuring and streamlining of state government. A number of Bills are pending that would move us in that direction, including replacing the Budget and Control Board by a Department of Administration and having the State Superintendent of Education be appointed rather than elected. I look forward to the challenges that lie ahead and remain committed to providing sound, efficient government services to insure a good quality of life for all of South Carolina's citizens. This Newsletter summarizes the key points of several pieces of legislation pending before the General Assembly this Session.

THE BUDGET. Recent projections from the Board of Economic Advisors (the “BEA”) seem to suggest that South Carolina’s budget shortfalls over the past several years are beginning to trend in a positive direction. After four consecutive years of declining state revenues, the FY11/12 budget was based on a revenue forecast that projected the Recurring General Fund at $350 million higher than FY10/11. This additional revenue raised the base General Fund budget to $5.45 billion for FY11/12, but this amount is $1.3 billion less than the FY07/08 General Fund budget. Despite budgetary issues, the FY11/12 budget provided over $760 million in tax relief to business and individuals, including $600 million of property tax relief and $146 million to lessen the burden from the employment tax increase. Additionally, as for K-12 funding, the current budget in-creased the base student cost by $265 per pupil to $1,880 (which still remains short of the EFA man-dated amount of $2,700 per pupil). Looking ahead, the Board of Economic Advisors projected last November that there will be an additional $920 million of revenue for FY12/13, and $493 million of that amount will be recurring funds. However, there re-mains much uncertainty about how these additional funds will factor into the FY12/13 budget, given the proposed legislation on spending caps, the $664 mil-lion shortfall on education funding under the EFA, and what initially appears to be an additional $200 million of new money needed to fund Medicaid.

DEPARTMENT OF ADMINISTRATION. Last year, a group of House members sponsored legislation to phase out the Budget and Control Board and transfer most of its components to a newly created Department of Administration (DOA) controlled by the Governor. This restructuring reform was part of Governor Haley’s legislative agenda. This Bill passed the House last year but was still being de-bated in the Senate as Session ended. This Bill was then set for Special Order in the Senate, which made it top priority in the Senate when Session resumed in January. Although it remains subject to debate, the current substance of the Bill would transfer the fol-lowing components of the Budget and Control Board to the DOA: the Division of General Services; the Division of State Information Technology; Office of Human Resources; the State Engineer’s Office; the Insurance Reserve Fund, a portion of the Office of Research and Statistics to support the Governor’s executive budget writing duties, and most of the Of-fice of State Budget. The Employee Insurance Pro-gram, the Retirement Division and the Insurance Reserve Fund Division ultimately would be transferred to a newly created Public Employee Benefit Agency in 2013. The Board of Economic Advisors and the Procurement Division would be transferred to the State Financial Affairs Authority, which would be comprised of the Governor, ex officio, who would be chairman, the State Treasurer, ex officio, the Comptroller General, ex officio, and one Senator and one House member, both ex officio, selected by a majority of their respective legislative bodies.

GOVERNOR - LT. GOVERNOR BALLOT. Last year, Representative Young sponsored a Joint Resolution that would permit the voters to decide whether the South Carolina Constitution should be amended to require gubernatorial candidates to select a lieutenant governor such that they run on the same ticket beginning with the 2014 election. If this Resolution passes, then the voters would decide in the next election of representatives whether to adopt this proposed amendment to the State Constitution. This Resolution passed the House last year, but it initially reported out of the Senate Judiciary Committee with a minority report. Although the minority report has been removed, two Senators have objected to this Bill, and it has been placed on the con-tested calendar.

SUPERINTENDENT OF EDUCATION. Representative Young also sponsored a Joint Resolution last year that would permit the voters to decide whether the State Constitution should be amended to delete the Superintendent of Education from the list of state officers that the Constitution requires to be elected. Instead, the Resolution provides that the Superintendent of Education would be appointed by the Governor, upon the advice and consent of the Senate, for a term coterminous with the Governor. The Resolution passed the House last year, and initially reported out of the Senate Judiciary Committee with a minority report. Although the minority report has been removed, one Senator has objected to the Resolution, and it has been placed on the contested calendar.

DEPARTMENT OF TRANSPORTATION RE-FORM. Senator Peeler pre-filed a Bill that would restructure the Department of Transportation (the “DOT”). This Bill would dissolve the seven- member DOT Commission and make the DOT a cabinet agency under the Governor’s office. The Bill also would make the Secretary of Transportation (the “Secretary”) the governing authority of the DOT. The Secretary would be appointed by the Governor upon the advice and consent of the Senate. This Bill also would dissolve the State Transportation Infra-structure Board and place its functions under the Secretary’s office. All other functions of the DOT would remain in their current form.

SPENDING CAPS. In recent years, there have been many legislative proposals to establish spending caps in South Carolina, and many of these proposals were re-introduced in 2011. Such reform is aimed at limiting increases in general fund appropriations from year-to-year at an annual rate deter-mined by the percentage of growth in the state’s population combined with the percentage increase in the Consumer Price Index (i.e., inflation). Last Session, the House passed a Bill that would cap spending at the lesser of 106% of the previous year’s budget or the Consumer Price Index adjusted for inflation. This Bill also would establish a separate account entitled the Spending Limit Reserve Fund, and all general fund revenue accumulated in excess of the appropriation limit would be credited to this account. The excess funds would first be used to guarantee the funding requirement established by the State Constitution and then only appropriated for temporary tax reductions, infrastructure improvements, school buildings, school buses, and natural disaster expenses. This Bill currently is assigned to the Senate Finance Committee.

SYNTHETIC MARIJUANA BAN. Last year, I sponsored legislation to add synthetic cannabinoids, including JWH-018, JWH-073, JWH-200, CP-47,497 and homologues, and HU-210, to the list of Schedule I drugs in South Carolina. This Bill passed the Senate and was referred to the House Judiciary Committee late last Session. These chemical com-pounds are synthetic forms of marijuana that typically have been sold in convenience stores, under names such “K2” and “spice,” and are known for causing the death of some users, including one in South Carolina. Last October, the federal Drug Enforcement Agency classified five forms of synthetic marijuana and three forms of “bath salts” as Schedule I drugs, and the DHEC Board took immediate action to classify such as Schedule I drugs in South Carolina. State law authorizes the DHEC Board to designate a substance as a controlled substance in this state if the federal government has issued the same designation. My Bill would broaden this ban in South Carolina to include other similar compounds of these drugs. Schedule I status is reserved for those substances with a high potential for abuse, no accepted use for medical treatment in the U.S. and a lack of accepted safety guidelines for use of the drug under medical supervision.

REFORMING K-12 EDUCATION FUNDING. Last year, I chaired the Select Committee on K-12 Funding to consider changes to how K-12 funds are distributed. Our goal was to develop a revenue-neutral funding distribution method that increases funding for impoverished students, students with a limited English proficiency, students in gifted and talented programs, students not meeting state standards, and that recognizes the need to fund basic district operational and fixed costs. I sponsored a Bill to accomplish the Committee’s objectives, and it provides for the following: (1) flexibility and transparency (provide districts with the flexibility to transfer and expend funds from designated revenue sources and require an online check registry to ad-dress transparency concerns); (2) deregulation (re-quire the State Board of Education to develop regulations establishing a process for districts to apply for deregulation); (3) teacher pay (require the Board of Education to develop regulations creating a framework for an optional teacher incentive compensation program); (4) the SC Public Charter School District (address additional funding requests and distinguish between brick-and-mortar and virtual schools); and (5) replacing the Education Finance Act with a simpler system where the money follows the child. This Bill passed favorably out of the Senate Education Committee and now rests with the Senate Finance Committee for fiscal review.

CHARTER SCHOOLS. I am disappointed that the charter school Bill was delayed in the Senate last year because of a dispute over early voting. The Bill had passed the House and was up for third reading in the Senate when it was delayed at the end of Session. I am hopeful that it passes early this Session. The Bill would allow charter school students to participate in extracurricular activities at their resident public school if those activities are not offered by the charter school. The Bill also would allow for single-gender charter schools and permit higher education institutions to voluntarily sponsor charter schools. The Bill does not specify statewide charter school district funding but provides that the General Assembly shall provide recurring funds for the district. For FY11/12, the General Assembly allocated $25 million in the budget for charter schools. Thus, in addition to the $1,880 per weighted pupil funding received from the state, students enrolled in virtual charter schools shall receive $1,700 per weighted pupil, and students enrolled in brick and mortar charter schools shall receive $3,250 per weighted pupil.

SURFACE WATER WITHDRAWAL REGULATIONS. In 2010, the General Assembly passed the Surface Water Withdrawal, Permitting, Use and Reporting Act (the “Act”), which requires anyone withdrawing monthly more than three million gallons of South Carolina’s surface water to first obtain a permit from DHEC. Pursuant to powers prescribed by the Act, DHEC is in the process of implementing a regulation that standardizes procedures and pro-vides measures to prevent or mitigate unreasonable adverse effects on surface water users or surface water uses throughout the state. It will establish a sys-tem and rules for permitting the withdrawal and use of surface water from within the State of South Carolina and those surface waters shared with adjacent states. This new regulation will replace and incorporate regulations for the modified “South Carolina Water Withdrawal Reporting Act” and the repealed “Interbasin Transfer of Water Act. The new regulation requires legislative approval before it becomes effective.