Jun 27, 2017
South Carolina 2017 Legislative Report
The South Carolina Legislature adjourned sine die on May 11 for the 2017
session year, the first year of a two-year session. The year’s biggest
controversy was settled by the legislature, ending three years of
passionate debate on how to pay for much-needed road maintenance and
improvements across the state.
After Veto and Override, Roads Funding Plan Effective July 1
On May 9, the House and Senate approved the roads funding plan with
veto-proof majorities. Gov. Henry McMaster (R), who
promised to veto the bill
, wasted no time and vetoed the legislation before the end of the day, with
veto message posted on Facebook. On May 10, after
several rousing speeches on the floor about executive leadership, or
lack thereof on this issue, the House voted 95-18 to override the governor’s veto and the Senate
followed with a 32-12 vote to override.
Effective July 1, 2017, the legislation will increase the state’s 16.75 cents per gallon gas tax
to a total of 28.75 cents per gallon by the year 2022. The legislation’s 12
cents per gallon increase, named the motor fuel user fee, will be phased in
as a 2 cents per gallon increase in each of the six years of the plan. The
state’s gas tax has not been subject to inflation indexing over the last 30
years, which will not change since the final legislation does not include
the Senate’s inflation indexing provision.
The legislation requires that all revenues raised from the 12 cents per
gallon increase be placed into the newly created Infrastructure Maintenance
Trust Fund, which is required to use these funds exclusively for repairs,
maintenance and improvements to the existing transportation system.
were also increased or introduced to raise revenue for the trust fund,
including a $16 increase on every biennial registration and license fee in
the state and an increase in the vehicle sales tax, now called the
Infrastructure Maintenance Fee.
The legislation is expected to raise approximately $630 million each year
for road repairs after full implementation. The plan is estimated to cost a
South Carolina driver who travels 15,000 miles in a car that gets 25 miles
per gallon about $1.40 per week in additional motor fuel user fees after
Several of the Senate's various tax credit and rebate proposals, originally
intended to offset the cost of the increase to the state’s taxpayers as
well as help make the legislation veto-proof, are included in the final
legislation. The legislation includes the main tax relief program proposed
by the Senate, the motor fuel user rebate, which will be a refundable
income tax credit for preventative maintenance on the state’s registered
private passenger vehicles. The legislation also implements a state earned
income tax credit that will be a nonrefundable credit equal to 125 percent
of the federal earned income tax credit. The state’s students also received
an increase in the cap on their refundable income tax credits for higher
education tuition, which will now be up to $1,500 for two- and four-year
programs. Finally, in an effort to lower the cost of business in the state,
manufacturers will get a small break on their property assessment ratios
phased in over the six-year plan.
DOT Governance Reforms
Additional Department of Transportation (DOT) reforms were also included in
the final legislation. Legislators opted to add another at-large member to
the DOT Commission, the governing body of the DOT, to make full commission
membership an odd number to avoid tie votes. All nine commissioners will be
appointed by the governor and vetted in some manner by the legislature in a
plan inspired by the Ethics Commission appointment process. The seven
congressional district seats on the commission will be vetted and confirmed
by the legislation delegations of the relevant congressional district,
which will now include all legislators who represent any portion of the
congressional district. The two at-large members will be confirmed by the
House and the Senate.
On June 12, Gov. McMaster utilized his line-item
veto power to remove $56.4 million in spending
from the legislature’s $8 billion budget. The governor’s
focused on transparency in spending taxpayer dollars in light of the
recently passed gas tax increase. Here are some highlights of Gov.
$20.5 million allocated for school bus upgrades because the funding is
dependent upon the lottery raising more than projected and lottery money
should be spent on scholarships as promised.
$8 million for mandatory contraceptive coverage for dependents of state
employees receiving benefits from the state health plan.
$6.2 million to the Department of Parks, Recreation and Tourism; $3.3
million for sports marketing grants; and $4.9 million for medical contracts
because they are vaguely named “port projects.”
The legislature’s cuts to the S.C. Conservation Bank, which effectively
restores funding to the agency at its current levels, because “South
Carolina deserves a reasoned debate about the Bank’s future and mission
through normal legislative processes, not the budget.”
The provision expanding the counties’ power to spend gas tax money on
The legislature may override the governor’s vetoes with a two-thirds
majority vote in both the House and Senate, but legislators have suggested
they would not return before the end of June. The state’s budget takes
effect July 1, 2017, and if the legislature does not return before the end
of the year to address the vetoes, the affected agencies will not have
access to the funds until well into their fiscal year.
First Part of Pension Systems Fix Finalized, Phase II Begins
After months of study and discussion, Gov. McMaster
signed legislation authorizing a plan to fix the state's ailing
retirement system. Despite approving the legislature’s efforts to shore up the plan, Gov.
McMaster told lawmakers to continue their work. He believes the state needs
a deferred compensation, or 401k-style, plan to offer to state employees,
as opposed to the current defined-benefit plan, which promises the state's
employees an exact monthly payment based on length of service and salary.
The approved plan, which went into effect immediately upon the governor’s
signature, 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, for a total of 7 percent over the course of the
plan. By the end of the plan, the employer contribution will be 18.56
percent. 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
On June 6, the legislature approved the second piece of “Phase I” of the
pension system fix, providing state funding in the FY2018 to state agencies, cities, counties
and other local entities to cover half of the required 2 percent increase
in payroll allocation.
The Joint Committee on Pension Systems Review, who crafted the plan, met on
May 9 to map out its continued study and discussion on improving the
system. Discussion over the interim will cover deferred compensation plans
or hybrid plans for future state employees. The committee asked interested
parties to submit input regarding potential plans or any other ideas for
improving the state’s pension system.
Legislature Attempts to Strip Power from State College Oversight Agency
The Commission on Higher Education (CHE)
took a hit in the budget, and not just with a loss of funds. The budget conferees agreed to remove
the CHE’s authority to review college construction or renovation projects.
Under the legislature’s plan, capital improvement projects for the state’s
colleges would be reviewed by the Joint Bond Review Committee and the State
Fiscal Accountability Authority.
The House has had serious concerns about the mission and authority of the
CHE throughout this legislative session. House leaders have stated that
they are trying to focus CHE’s manpower on academic program oversight,
instead of requiring the CHE’s limited staff to stretch resources to do
multiple jobs that could be done by other oversight bodies.
On June 12, in his veto message to the legislature, Gov. McMaster
restored the Commission on Higher Education's
power to review capital improvement project proposals from the state’s
colleges and universities, stating that “the CHE must be allowed to
exercise its oversight authority.”
Special Election Results
On June 20, former state Rep. Ralph Norman (R-York)
defeated Archie Parnell (D-Rock Hill) in the
special congressional election
to fill the state’s vacant U.S. House seat. Norman will serve the remainder
of former Rep. Mick Mulvaney’s term; Mulvaney resigned to lead the Office
of Management and Budget after an appointment by President Trump. Norman
narrowly defeated Rep. Tommy Pope (R-York), House Speaker Pro Tempore, by a 221 vote margin in a primary runoff just three
weeks before the special election.
On May 30, Lt. Gov. Kevin Bryant’s (R) vacant Senate seat
was filled, after businessman Richard Cash (R-Anderson)
defeated a last-minute write-in campaign
from supporters of his primary opposition, Carol Burdette, former
Pendleton, S.C., mayor. Sen. Cash was sworn in on June 6, and immediately
began his work on the Senate floor.
Several House seats were also filled in the last month of the session. Ronnie Young (R-Aiken), chairman of the Aiken County
elected to fill the vacant seat
of former Rep. Chris Corley, who resigned from the House in January after
an arrest on domestic violence charges from an incident in December 2016. Bruce Bryant (R-York), a former York County sheriff, was
elected to fill Norman’s vacant House seat
after a quiet and uneventful campaign against Democratic challenger Bebs
Barron Chorak. Wendy Brawley (D-Richland) was
elected to fill the vacant seat of former Rep. Joe Neal, who passed away unexpectedly earlier this year. Brawley, the former chair
of the Richland One School Board, easily defeated Republican challenger
Bill Strickland in the special election.
Upcoming Special Elections
Two House Democrats resigned from their seats this spring, leaving
additional vacancies that must be filled. Rep. Seth Whipper (D-Charleston) resigned to
accept a position as a magistrate
and Rep. Harold Mitchell (D-Spartanburg) decided to step
down in early May, citing