Feb 28, 2017

South Carolina State House Month in Review: February 2017

The State House was somber on Feb. 15 after it was announced that Rep. Joe Neal (D-Richland) had passed away the previous evening. Known as a warrior for the underdog, Rep. Neal was remembered fondly by legislators from both parties and chambers. Many also spoke of Rep. Neal’s 2015 speech calling for the Confederate flag to be removed from the State House grounds, with some calling it the speech of his life.

Another State House vacancy was announced the following day, after another South Carolina official was confirmed to President Trump’s Cabinet. On Feb. 16, Rep. Mick Mulvaney (R) was confirmed as director of the Office of Management and Budget, which triggers a special election for his 5th District congressional seat. Six Republicans have declared for the election, including two House members, SpeakerPro Tempore Tommy Pope (R-York) and Rep. Ralph Norman (R-York).

Rep. Norman, who resigned from his seat in the legislature just before Rep. Mulvaney’s confirmation on Feb. 16, spoke of his desire to save the taxpayers money by having the special election for his vacated seat at the same time as the congressional special election. He also stated that he felt it was unfair to receive a paycheck from the taxpayers while he is running for Congress. Rep. Norman has served in the legislature since 2009 and is a real estate developer. Rep. Pope has not stated whether he also intends to resign from his position in the state legislature for his congressional campaign.

Both House vacancies, as well as the congressional vacancy, will be filled in the Jun. 20 special election. Party primaries will be held on May 2. The primary contest may determine the 5th District congressional race, as a Democrat or independent has yet to declare for the race.

House Ways and Means First Budget Draft Released This Week

The House Ways and Means Committee presented its first draft of the FY2018 budget this week. Rep. Brian White (R-Anderson), chairman of Ways and Means, commented that “the good news is nobody lost anything. The bad news is nobody got anything.”

Legislators face a lack of nonrecurring funds, which are usually produced from previous year surpluses and the Attorney General’s Litigation Recovery Account. Although revenue growth for the general fund is on track for $300 million-$450 million, the FY2018 funding requests greatly outpace the expected growth. Additionally, finding the necessary funds to address the Abbeville school districts lawsuit, to shore up the state’s pension system, to fix the state’s failing roads and bridges, and to pay the federal disaster assistance match resulting from two years of unexpected natural disasters make this year’s budget decisions tougher than ever. The state’s higher education institutions are advocating for a bond bill to address the state’s aging facilities; however, it was not discussed this week during the budget presentation.

The state’s employees do not receive a pay raise in the first draft, but the committee did approve the money required to cover the increase in the cost of providing health insurance to the state’s employees. The budget draft also includes the necessary funds to shore up the state’s pension system and $100 million for the Abbeville school districts to make much-needed improvements to their facilities.

Gas Tax Proposal Approved by House Ways and Means

The House gas tax proposal, H. 3516, will be on the House floor next week after discussion, amendments and a favorable report by the House Ways and Means Committee on Feb. 9. The proposed 10-cent-per-gallon increase will be phased in over five years and will cost about $60 per year for the average driver in the state. The proposal will also increase vehicle registration fees and raise the vehicle sales tax cap from $300 to $500.

Gov. Henry McMaster (R) requested $5 billion from the federal government on Feb. 6 to repair state roads and complete the Port of Charleston deepening project. Gov. McMaster also stated on Feb. 7 that a tax hike should be considered only as a “ last resort.” However, the governor’s office declined to comment on whether Gov. McMaster would oppose any gas tax increase. During their hearing on the bill, House Ways and Means members applauded Gov. McMaster for submitting the request, but the bill’s sponsor, Majority Leader Gary Simrill (R-York), noted that it takes years for the federal government to act on state funding requests and that the roads need funding now.

Many members were concerned about rural roads continuing to be overlooked, even with the extra revenue from the proposal. Rep. Gilda Cobb-Hunter (D-Orangeburg) asked members to consider a statutory plan, other than DOT’s proposed rural road safety plan, to specifically address the crumbling roads in the rural parts in the state. Members will debate the bill on the floor next week.

Gov. McMaster Breaks Silence on Issues Facing South Carolina

Gov. McMaster (R) spoke to reporters on Feb. 15 for just the second time since taking office in January. Gov. McMaster reinforced his position that a gas tax increase should be a last resort, and said the focus should be on ensuring that existing gas tax revenues pay for road maintenance and improvements. He also said the state should explore other ideas for road funding, such as toll roads.

Gov. McMaster also predicted “hard decisions” on other issues facing the state, including the failing pension system and education improvements. McMaster said, “We’re just going to have to make those tough decisions. But if we don’t, we’re not going to have the money to do the things that are required.”

In another interview , Gov. McMaster stated that economic prosperity is important for solving the state’s problems. He also spoke about his relationship with President Trump, and the $5 billion ask for roads and infrastructure that he formally requested from the president last week. When asked if he was comfortable making such a big request, Gov. McMaster stated that he was, considering that it is “our money anyway. People of South Carolina send a lot of money to Washington, and all we want is just a little bit back to help us with these projects. They’re very important for the future of our state, and I hope we can get it.”

Pension Systems Fix Easily Passes House and Senate Committees

The House Ways and Means Committee met on Feb. 16 to consider the House version of the remedy for the failing state pension system. The bill was amended to add minor governance details, then passed unanimously. The Senate Finance Committee met on Feb. 21 to consider the Senate bill, which passed after it was amended to ensure the S.C. Retirement System Investment Commission is also a recipient of actuarial evaluations. The House amendment language was discussed by the Senate committee, but not acted on, as the committee opted to leave the language open to further discussion on the floor. Both bills will now be taken up on the floor, likely receiving much debate and procedural delays.

The proposal decouples and raises the employer and employee contribution percentages. The employer contribution will be raised, by 2 percent, to 13.56 percent on July 1 for FY2018, and will then increase by 1 percent each year until FY2024. This means the employer contribution will raise 7 percent to a total of 18.56 percent over the course of the plan. The employee contribution will also be increased on July 1 from 8.66 percent to 9 percent, but will be capped at 9 percent for the following years.

Medical Marijuana Bill Receives First Hearings

The Senate Medical Affairs Subcommittee met on Feb. 16 to organize its efforts to review the medical marijuana proposal. The S.C. Compassionate Care Act is sponsored by Sen. Tom Davis (R-Beaufort), who also sits on the Medical Affairs Subcommittee. The bill authorizes people with certain illnesses to use medical marijuana for medicinal purposes with the recommendation of a physician and proper registration with the South Carolina Department of Health and Environmental Control. The bill also allows these registered users to possess and purchase up to 2 ounces within a 14-day period.

Although the meeting was purely for organizational purposes, supporters and opponents filled the hearing room. The subcommittee will meet again in two weeks to hear testimony from law enforcement and medical professionals. It is likely that the subcommittee will meet more than once to hear testimony before acting on the bill.

A House Medical, Military, Public and Municipal Affairs Subcommittee met on Feb. 21 to consider the House version of the S.C. Compassionate Care Act, sponsored by Rep. Peter McCoy (R-Charleston), whose daughter suffers from a rare illness and could benefit from a cannabis-based treatment. In a 3-0 vote after several hours of testimony, the four-member subcommittee voted to advance the bill to the full committee. The state’s law enforcement leaders and officers oppose the bill, out of concern about the difficulty of controlling marijuana once it’s legally allowed for certain people to use. S.C. Law Enforcement Division (SLED) Chief Mark Keel testified, “Simply put: marijuana is not medicine.”

Despite such strong opposition, parents, spouses and affected individuals told their stories about the various debilitating illnesses afflicting their families. Many of these illnesses require dangerous drugs that often offer little relief. They passionately feel this legislation will help improve the lives of their loved ones. Testimony included a heartfelt speech from 8-year-old Andres Ching, whose sister suffers from mitochondrial disease.

Please contact any member of the McGuireWoods Consulting team if you would like more detailed information about the above issues or any other policy issues in South Carolina.

Governor Jim Hodges, Senior Advisor

William D. Boan, Senior Vice President

Robert Adams, Senior Vice President

Amber S. Barnes, Vice President

Brian P. Flynn, Vice President

Kayleigh E. Hall, Assistant Vice President

Robin T. Crawford, Research Assistant