Apr 3, 2017

South Carolina State House Month in Review: March 2017

On March 30, Department of Health and Human Services (DHHS) Director Christian Soura announced his resignation and return to the private sector. As DHHS director, Soura oversaw the state’s Medicaid program and the agency’s $7 billion budget, one of the largest in the state. Soura’s press release touted his work with the Birth Outcomes Initiative and the Pay-for-Success Waiver , which received national attention. Deirdra Singleton, deputy director of Health Programs at HHS, will serve as acting director beginning April 7.

Gov. Henry McMaster (R) praised Soura for his work and innovative leadership at DHHS, noting that Soura “has been a tremendous asset.” The resignation provides Gov. McMaster with his first opportunity to make a major Cabinet appointment since taking over as governor. He announced that a committee of state lawmakers and industry experts have already been appointed to help select the next DHHS director.

Senate Finance Budget Deliberations Continue as House Unveils Bond Plan

The Senate Finance Committee finalized its budget recommendations, which will be debated on the Senate floor starting April 4. The approved House version of the budget bill may be viewed here .

On March 23, the House unveiled its first draft of the $500 million bond bill for the state’s capital needs. Legislators noted that they tried to keep the bill under $450 million, but given the extent of the state’s capital needs this year and the difficulty in ignoring legitimate requests, the bill is just under $500 million. The bill addresses the state’s most pressing funding issues not covered by the budget plan. Legislators noted that the state’s colleges and universities were each given funds for their top priorities.

The Department of Education (DOE) will receive $30 million to replace roughly a third of the state’s aging bus fleet, which is about 350 buses under the plan. DOE testified early in the budget process that the safety and cost-saving benefits of replacing the state’s fleet justified the investment. The current fleet is unreliable, which puts children at risk, and maintenance for the aging buses comes at great cost.

The state will use $80 million to repair state-owned buildings and $15 million to renovate the armories, which are all in dire need of maintenance and improvements after years of neglect. The Department of Transportation will receive $16.2 million to renovate the state’s oldest rest areas, and some of the state’s dams that were destroyed in the 2015 flood will be repaired under the $11 million given to the Department of Parks, Recreation, and Tourism.

The Department of Commerce will receive $25 million to repair water and sewer infrastructure critical to economic development, and $10 million was granted to the State Ports Authority to increase cargo capacity at the Wando Welch Terminal in Charleston.

The bond bill, H. 3722 , was approved by the Ways and Means Committee on March 28 and introduced on the floor the following day.

Senate Republicans Stall Gas Tax Floor Debate

On March 29, the Senate voted against starting floor debate on the gas tax proposal to fund improvements for the state’s crumbling roads. A special order motion, which would have ensured debate on the bill and requires a two-thirds majority, failed on the floor, with 18 Republican senators voting against the motion.

The opposition comes after attempts to insert income tax breaks or other tax relief were not considered in committee. In a press conference at the State House after the vote, Sen. Shane Massey (R-Edgefield, majority leader) said, “We are not going to support a straight-up tax increase.” He also stated that the members who voted against the special order motion are not trying to kill the bill. Sen. Sean Bennett (R-Dorchester) said everyone voting against the debate “and many others are committed to getting this accomplished and making sure it’s done right.”

Senator Offers Alternative Infrastructure Revenue Plan With Income Tax Breaks

Sen. Greg Hembree (R-Horry) announced on March 27 his intent to introduce a plan to reduce and restructure the state’s income tax. A press release from Sen. Hembree’s office stated that the legislation makes significant structural changes to the state’s income tax bracket while reducing taxes “to working South Carolina families” by almost $635 million after full implementation. The 3-5-7 Plan will reduce the state’s five income tax brackets to three brackets, with 3 percent, 5 percent, and 7 percent rates. The goal is to cut taxes for the state’s working poor and middle class families, or those households with annual incomes of $5,000 to $80,000.

Sen. Hembree’s plan also raises revenue for the necessary infrastructure maintenance and improvement projects with the same gas tax increase as the approved Senate plan, with a 12-cent-per-gallon gas tax increase phased in over six years. The plan also includes additional reforms to the gas tax system to ensure that $131 million is restored each year to the state’s general fund to increase education spending . The bill, S. 600 , was formally introduced on March 30.

Long-Time Senator Indicted on Misconduct Charges

On March 17, the ongoing public corruption probe led by special prosecutor David Pascoe announced the indictment of Sen. John Courson (R-Richland) on two counts of misconduct in office and one count of using campaign money for personal expenses. Sen. Courson is the second state lawmaker to be indicted in the last four months after investigation by Pascoe, a state solicitor for Calhoun, Dorchester, and Orangeburg.

Sen. Courson released a statement through his attorney vowing to fight the allegations, which he said are “ completely false .” Sen. Courson has served in the Senate since 1985 and currently chairs the Senate Education Committee. He previously served as Senate president pro tempore from 2012 until 2014.

Sen. Courson disclosed on March 23 that he was diagnosed with a rare form of skin cancer in December 2015, and has been receiving treatment since then. He also stated that he does not plan to resign his Senate seat. On March 29, Sen. Courson was allowed to remain free on personal recognizance after a brief bond hearing as he fights the charges.

Ongoing Ethics Probe Delays Governor’s Nominations

On March 23, the legislature rescheduled the vote to confirm Gov. Henry McMaster’s (R) two nominations to the S.C. Ports Authority board , in an effort to provide more time for further investigation of the nominees’ ties to the ongoing ethics investigation in the state.

Sen. Larry Grooms (R-Berkeley), Senate Transportation Committee chairman, stated that legislators simply wanted to “do a little more homework” on the nominees. David Pascoe, the special prosecutor heading up the ongoing ethics investigation, is now looking into payments made by the Ports Authority, which was recently subpoenaed in relation to the investigation.

Pension Systems Fix Heads to Conference Committee

The House rejected the Senate’s amendments to the plan to fix the failing state retirement system on March 29. The Senate’s amendments align H. 3726 with the approved Senate version, S. 394 . At issue are some minor differences in proposed oversight of the system, as well as the Senate’s additional language mandating that new state hires participate in a defined contribution retirement plan once the system is fully funded and stable.

Sen. Vincent Sheheen (D-Kershaw), co-chairman of the special committee that proposed the plan, stated that closing the pension system to new employees is meaningless, as the state is decades away from fully funding the system. But the legislature will eventually have to decide who shoulders the retirement risk for the state’s employees, as some legislators, including Sen. Tom Davis (R-Beaufort), believe the current system is not sustainable.

The Conference Committee includes Sens. Sheheen, Sean Bennett (R-Dorchester) andMike Gambrell (R-Anderson), and Reps.Bill Herbkersman (R-Beaufort),Tommy Stringer (R-Greenville) and Gilda Cobb-Hunter (D-Orangeburg), who all served on the Joint Committee on Pension Systems Review.

Both the House and Senate versions decouple and raise 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 increase on July 1 from 8.66 percent to 9 percent, but will be capped at 9 percent for the following years.

Real ID Legislation Headed to Governor for Signature

On March 29, the House concurred with the Senate’s amendments to the Real ID legislation in order to bring South Carolina driver’s licenses in line with federal security standards. Once approved by the governor, the legislation will take effect immediately. Currently, the state’s driver’s license does not meet the federal ID standards enacted after the events of Sept. 11. The state is operating under a number of exemptions from the U.S. Department of Homeland Security to allow access to military bases within the state to South Carolina citizens. The Senate amendment addresses the concerns of some members about privacy rights of the state’s citizens.

Without legislative action on this issue, the state’s identification card holders eventually would be prohibited from entering military installations or federal buildings or boarding certain flights without a federally approved ID, such as a passport. Beginning June 6, anyone wanting to enter Fort Jackson or Shaw Air Force Base will need to have a federally accepted ID.

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