South Carolina State House Month in Review: February 2017

February 28, 2017

Pardon Our Dust

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The State House was somber on Feb. 15 after it was announced that Rep. Joe Neal (D-Richland) had passed away the previousevening. Known as a warrior for the underdog, Rep. Neal wasremembered 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 theState House grounds, with some calling it the speech of his life.

Another State House vacancy was announced the following day, after anotherSouth 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 congressionalseat.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 specialelection for his vacated seat at the same time as the congressional specialelection. He also stated that he felt it was unfair to receive a paycheckfrom the taxpayers while he is running for Congress. Rep. Norman has servedin 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 thestate legislature for his congressional campaign.

Both House vacancies, as well as the congressional vacancy, will be filledin the Jun. 20 special election. Party primaries will be held on May 2. Theprimary contest may determine the 5th District congressional race, as aDemocrat 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 FY2018budget this week. Rep. Brian White (R-Anderson), chairmanof Ways and Means, commented that “the good news is nobody lost anything.The bad news is nobody got anything.”

Legislators face alack of nonrecurring funds, which are usually produced from previous year surpluses and the AttorneyGeneral’s Litigation Recovery Account. Although revenue growth for thegeneral fund is on track for $300 million-$450 million, the FY2018 fundingrequestsgreatly outpace the expected growth. Additionally, finding the necessary funds to address the Abbeville school districts lawsuit, to shore up the state’spension system, to fix the state’s failing roads and bridges, and to paythe federal disaster assistance match resulting from two years ofunexpected natural disasters make this year’s budget decisions tougher thanever. The state’s higher education institutions are advocating for a bondbill to address the state’s aging facilities; however, it was not discussedthis week during the budget presentation.

The state’s employees do not receive apay raise in the first draft, but the committee did approve the money required tocover the increase in the cost of providing health insurance to the state’semployees. Thebudget draft also includes the necessary funds to shore up the state’s pension systemand $100 million for the Abbeville school districts to makemuch-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 afavorable report by the House Ways and Means Committee on Feb. 9. Theproposed 10-cent-per-gallon increasewill be phased in over five years and will cost about $60 per year for theaverage driver in the state. The proposal will also increase vehicleregistration 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 Charlestondeepening project. Gov. McMaster also stated on Feb. 7 that a tax hikeshould 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 thebill, House Ways and Means members applauded Gov. McMaster for submittingthe request, but the bill’s sponsor, Majority Leader Gary Simrill (R-York), noted that it takes years for thefederal government to act on state funding requests and that the roads needfunding 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 considera statutory plan, other thanDOT’s proposed rural road safety plan, to specifically address the crumbling roads in the rural parts in thestate. 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 lastresort, and said the focus should be on ensuring that existing gas taxrevenues pay for road maintenance and improvements. He also said the stateshould explore other ideas for road funding, such as toll roads.

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

Inanother interview , Gov. McMaster stated that economic prosperity is important for solvingthe state’s problems. He also spoke about his relationship with PresidentTrump, and the $5 billion ask for roads and infrastructure that he formallyrequested from the president last week. When asked if he was comfortablemaking such a big request, Gov. McMaster stated that he was, consideringthat it is “our money anyway. People of South Carolina send a lot of moneyto Washington, and all we want is just a little bit back to help us withthese projects. They’re very important for the future of our state, and Ihope 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 theHouse version of the remedy for the failing state pension system. The bill was amended toadd minor governance details, thenpassed unanimously. The Senate Finance Committee met on Feb. 21 to consider theSenate bill, which passed after it was amended to ensure the S.C. Retirement SystemInvestment Commission is also a recipient of actuarial evaluations. TheHouse amendment language was discussed by the Senate committee, but notacted on, as the committee opted to leave the language open to furtherdiscussion 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 contributionpercentages. The employer contribution will be raised, by 2 percent, to13.56 percent on July 1 for FY2018, and will then increase by 1 percenteach year until FY2024. This means the employer contribution will raise 7percent to a total of 18.56 percent over the course of the plan. Theemployee contribution will also be increased on July 1 from 8.66 percent to9 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 toorganize its efforts to review the medical marijuana proposal. TheS.C. Compassionate Care Act is sponsored by Sen. Tom Davis (R-Beaufort), who also sitson the Medical Affairs Subcommittee. The bill authorizes people withcertain illnesses to use medical marijuana for medicinal purposes with therecommendation of a physician and proper registration with the SouthCarolina Department of Health and Environmental Control. The bill alsoallows these registered users to possess and purchase up to 2 ounces withina 14-day period.

Although the meeting was purely for organizational purposes, supporters andopponents filled the hearing room. The subcommittee will meet again in twoweeks to hear testimony from law enforcement and medical professionals. Itis likely that the subcommittee will meet more than once to hear testimonybefore acting on the bill.

A House Medical, Military, Public and Municipal Affairs Subcommittee met onFeb. 21 to consider theHouse version of the S.C. Compassionate Care Act, sponsored by Rep. Peter McCoy (R-Charleston), whosedaughter suffers from a rare illness and could benefit from acannabis-based treatment. In a 3-0 vote afterseveral hours of testimony, the four-member subcommittee voted to advance the bill to the fullcommittee. The state’s law enforcement leaders and officers oppose thebill, out of concern about the difficulty of controlling marijuana onceit’s legally allowed for certain people to use. S.C. Law EnforcementDivision (SLED) Chief Mark Keel testified, “Simply put: marijuana is notmedicine.”

Despite such strong opposition, parents, spouses and affected individualstold their stories about the various debilitating illnesses afflictingtheir families. Many of these illnesses require dangerous drugs that oftenoffer little relief. They passionately feel this legislation will helpimprove the lives of their loved ones. Testimony included aheartfelt 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