Friday Report - May 6, 2022

Revenue, Finance and Economic Development

Use Fee Authorization – S. 984. S. 984 is in response to the June 30, 2021, SC Supreme Court decision in Burns v. Greenville County, which imperils various user fees, especially road use fees, imposed by counties and cities in South Carolina. Prior to this decision, user fees were analyzed under the Brown test that found a fee to be valid if:

1. the revenue generated is used to the benefit of the payers, even if the general public also benefits;
2. the revenue generated is used only for the specific improvement contemplated;
3. the revenue generated by the fee does not exceed the cost of the improvement; and
4. the fee is uniformly imposed on all the payers.

Under the newly imposed Burns test, fees must benefit fee payers differently than the general public regardless of the purpose of the fee or how it benefits the fee payer. S. 984 would legislatively reinstate the Brown test and allow the general public to benefit from a user fee provided the fee payer benefits and the other elements of the Brown test are met.

984 is pending 2nd reading on the contested House calendar and is facing significant opposition. It is imperative that you contact your House members this weekend and express the importance to county governments for passing this bill!! House members are under immense pressure from opponents of the bill to kill it. Calls are needed from their county officials to keep them in support.

Local Option Sales Tax Flexibility – H. 3948. This bill, an SCAC policy position, would allow counties that impose a Transportation Penny Tax pursuant to Chapter 37, Title 4 to also conduct a referendum to impose a 1 percent Capital Project Sales Tax. The bill deletes the restriction that the area of the county can only be subject to one of those authorizations. Counties with the Capital Project Sales Tax may also conduct a referendum to impose the transportation penny as well. This would provide flexibility to all counties across the state. H. 3948 is pending second reading on the Senate calendar. One Senator is currently blocking the passage of this bill. Please contact your Senators and ask them to give this important bill second and third readings next week! 

State Budget – H. 5150.  

The Senate debated and passed their version of the budget last week. Both the House and Senate versions of the budget increase funding to the Local Government Fund (LGF) by $12,583,080 statewide. This represents full funding to the LGF under the statutory formula. The Senate also directed $10 million into the rural stabilization fund (discussed below), while the House directed $12 million.

Other funding of note in the Senate budget includes:

• $72 million to cover a 3 percent base pay increase for all state employees;
• $37 million to cover the state’s share of the 1 percent retirement contribution increase;
• $101.7 million for the state’s share of the state health plan, including expanded well visits;
• $750,000 for PTSD treatment for first responders;
• $100,000 for a statewide housing needs assessment to determine the affordable housing needs throughout the state;
• $3.784 million for the Firefighter Cancer Benefit Plan;
• $14 million for destination-specific tourism advertising;
• $690,000 to supplement the sheriffs; and
• $690,000 to supplement the clerks of court.

Rural Stabilization Fund – Due to the recent census and the shifting of populations into the state and throughout the state the Senate put $10 million into a Rural County Stabilization Fund. Under this proviso, any county that had a population growth, as determined by the 2020 Census, of less than 5.35 percent since the 2010 Census shall be eligible to receive monies from the fund as follows: 

1. a baseline of $300,000 to each eligible county;
2. an additional $100,000 to eligible counties with a population between 50,000 and 99,999; and
3. an additional $200,000 to eligible counties with a population of more than 100,000.

After disbursal of funds, any monies remaining shall be distributed to each eligible county on a pro rata basis. In the event the amount of funds in the fund is not sufficient to provide monies to counties according to the above formula, the amounts distributed to counties shall be reduced on a pro rata basis.

View new provisos and amended provisos adopted by the Senate.

Continuing Resolution – H. 5278. This joint resolution would provide that if the 2022-2023 state fiscal year begins with no annual general appropriations act in effect for that year, the authority to pay the recurring expenses of state government would continue at the level of amounts appropriated in Act 94 of 2021 (FY 21-22 Appropriations Bill). The continuing resolution would further provide for appropriations from the general fund of the state in whatever amount is necessary for timely debt service on state obligations and other amounts that are constitutionally required to be appropriated, including the Capital Reserve Fund. H. 5150, the state budget bill, remains pending on the House calendar as returned from the Senate. H. 5278 was recalled from the House Ways and Means Committee and is pending second reading on the House calendar.

Surviving Spouse – S. 233. This bill would provide that a qualified surviving spouse may qualify for a property tax exemption in an instance where they do not own the house. The statute previously required that the house be transferred to the surviving spouse by the deceased spouse. The bill also now provides the exemption to surviving spouses of those killed in action and to any structures owned by an otherwise qualified surviving spouse even if these structures are located on heirs’ property.

S. 233 was amended to include language from several other property tax bills, including H. 4243, H. 5144, and H. 5134. H. 4243 would require an adjustment in assessed value for real property and improvements which have sustained damage as a result of flooding or a hurricane, provided that the application for correction of the assessment is made prior to payment of the tax. The bill also includes wind events such as hurricanes and tornadoes.

H. 5144 would amend Section 12-37-220(B)(10) of the S.C. Code that currently provides a property tax exemption to telephone companies and rural telephone cooperatives that were exempt from property taxes as of December 31, 1973. H. 5144 would further exempt all property of these cooperatives, including property used for broadband and other services, which essentially codifies the Farmers Telephone court case.

H. 5134 (discussed below) had not previously passed any House committees or subcommittees before being added to S. 233. S. 233 was sent back to the Senate with the amendments.

Please contact your Senator and ask that they remove this provision from S. 233.

Agriculture Exemptions – H. 5134. This bill would exempt all farm buildings and agricultural structures owned by a producer in this state that are used to house livestock, poultry, crops, farm equipment, or farm supplies beginning in tax year 2022. Currently, all farm machinery and equipment, excluding motor vehicles licensed for use on the highways, are exempt. The Revenue and Fiscal Affairs Office (RFA) contacted county assessors to determine the potential local property tax revenue reduction due to this bill.

Dorchester County estimates that approximately 23 percent of agricultural property value is attributable to the structures and will become exempt. Due to the limited data, RFA anticipates this bill will have an undetermined local property tax reduction due to this bill but estimated a range of the potential property tax revenue impact assuming 10 percent to 50 percent of agricultural property becomes exempt. This results in a range of property tax revenue reductions from $5,452,000 to $27,262,000 statewide beginning in tax year 2022. Please contact your Senator and ask that they remove this provision from S. 233.

American Rescue Plan Act (ARPA) – H. 4408. This legislation would authorize the expenditure of the first phase of the state’s ARPA funds. The Senate amended H. 4408 with a strike and insert amendment that would apply the Senate’s plan of allocating the first phase of funds as passed earlier this year in S. 952.

Under phase one of the Senate’s plan, over $453 million in funding would be allocated to SCDOT, $400 million to the Office of Regulatory Staff (ORS) for the State Broadband Office to expand access to high-speed broadband internet, and $900 million to the South Carolina Rural Infrastructure Authority (RIA). The RIA would be directed to use approximately $800 million of the designated funds to establish three separate grant programs for water, wastewater, and stormwater projects to provide local governments with opportunities to build and update aging infrastructure across the state. The RIA would also designate $100 million of its allotment for projects that are deemed significant to economic development. Additionally, the RIA would be required to transfer $500,000 to each of the 10 Councils of Governments (COGs) for planning assistance, development of grant proposals, and compliance assistance related to improvements in water, wastewater, and stormwater infrastructure for smaller systems.

The House took up H. 4408 once again this week and amended the bill back to the House’s original version which would reduce the amount allocated to the RIA from $900 million to $800 million. This $100 million would instead be sent to the South Carolina Office of Resilience to be used for stormwater infrastructure projects and for the acquisition of property in floodplains throughout the state to lessen the impacts of future flood events. H. 4408 was returned to the Senate once again for concurrence or nonconcurrence with the House amendments.

SCRS and PORS Contributions – H. 3106. This bill would authorize an employer to pay all or a portion of the required employee contributions to either the South Carolina Retirement System or the Police Officers Retirement System. The House amended the bill to clarify that employee contributions picked up by an employer pursuant to Section 9-11-225(E) without a reduction or offset from the member's compensation are not compensation for the purposes of the system. The Senate Finance Committee gave the bill a favorable report and H. 3106 is pending second reading on the Senate calendar.

Tax Exemptions – S. 1087. This bill, titled the “Comprehensive Tax Cut Act of 2022,” would reduce the top marginal income tax rate in South Carolina to 5.7 percent, exempt all military retirement income, and exempt 42.8571 percent of manufacturing property from property tax. The revenue loss resulting from the property tax exemption would be reimbursed to political subdivisions from the Trust Fund for Tax Relief.

The House Ways and Means Committee adopted a strike all and insert amendment to S. 1087 to replace the bill’s language with the House version of the income tax break. Under the House plan, the bill would now lower the individual income tax marginal tax rate for the current 4 percent, 5 percent, and 6 percent brackets to 3 percent. The current 7 percent tax bracket would also be lowered to 6.5 percent in tax year 2022 with additional triggers that could lower the rate for this tax bracket by an additional 0.1 percent beginning in 2023 until the rate hits 6 percent. The bill would also allow taxpayers to claim a full deduction of military retirement income. S. 1087 received a favorable report, as amended, and will be placed on the House calendar for debate next week.

Electrical Utility Storm Recovery Fees – S. 1077. This legislation would allow the Public Service Commission (PSC) to authorize an electric utility's issuance of securitized bonds to offset and reduce costs incurred for storm recovery activity. The PSC would be responsible for reviewing securitization mechanisms to determine approval, which may only be granted if the electric utility's use of this mechanism provides quantifiable net benefits to customers and would result in the lowest storm recovery charges. The bill further establishes the processes for the authorization of these bonds, and as part of the requirements electric utilities would be required to provide functional exhibits and workpapers to the PSC and to the Office of Regulatory Staff (ORS) supporting any petitions, testimony, and exhibits. The House Labor, Commerce and Industry Committee amended the bill this week to further define the term “storm recovery costs” and to allow electric utilities to apply to the Public Service Commission for financing orders only if certain requirements are contained in the petition. S. 1077 received a favorable report, as amended, and was placed on the House calendar.

License Tax Credits Allowed for Contributions to Qualifying Infrastructure and Development Projects – H. 3340. This legislation increases the maximum annual license tax credit amount for eligible infrastructure projects for utility companies beginning in tax year 2021 from $400,000 to $600,000. The bill would also expand the definition of qualifying infrastructure improvements and provides for an additional higher maximum license tax credit at graduated amounts up to an additional $150,000 for eligible projects in Tier II, III, and IV counties based upon the Jobs Tax Credit. The Senate Finance Committee amended the bill to allow utility companies to enter into multi-year commitments to pay cash for eligible infrastructure projects and retain the tax credit. They would also be allowed to make cash payments to a county for the purpose of defraying public debt to pay for infrastructure. H. 3340 is pending second reading on the Senate calendar.

County Green Space – S. 152. This legislation would allow counties to impose by ordinance, subject to referendum approval in the county during a general election, a Green Space Sales and Use Tax of up to 1 percent for land preservation. A county would also be prohibited from imposing this tax when two or more existing sales and use taxes are in effect. S. 152 is pending second reading pending on the House calendar.

Tax Conformity – H. 5057. This bill conforms the state tax code with any changes to the federal tax code and updates the reference year to 2021. The Senate Finance Committee gave the bill a favorable report and H. 5057 is pending third reading on the Senate contested calendar.

Land Use, Natural Resources and Transportation

Lot Clean-up – H. 5036. This legislation, an SCAC policy position, would help counties across South Carolina that continue to assume the cost of repairing or cleaning up certain properties when a landowner fails to upkeep structures on the property. H. 5036 would allow counties to recover costs associated with repairs, improvements, or demolition of structures on commercial or industrial properties falling under Sections 108, 109, and 110 of the International Property Maintenance Code. These costs would be collected from the property owner in the same manner as property taxes. The bill provides for a five-year installment for the payment of the lien, after which the property could be sold by the county at a tax sale if the debt is unpaid. The bill also clarifies that if a property is sold by the owner or through a tax sale prior to all five installments becoming due, the entire balance of the lien would be due and payable as property taxes at the time of sale or disposition of the property. H. 5036 received a favorable report by the Senate Labor, Commerce and Industry Committee and is pending second reading on the Senate calendar.

Electronic Waste – H. 4775. This legislation, an SCAC policy position, establishes a new statewide “Manufacturer Electronic Waste Recovery Program” for covered televisions and computer monitor devices (ex: old CRT TVs). Counties are currently faced with large financial burdens to recycle these items because there is no market for the devices and these devices cannot go into a landfill. Under the old program, manufacturers only had to recycle 80 percent of the pounds sold, leaving counties to shoulder the cost of recycling any devices that remained at county facilities.

The new program would require that all covered television and computer monitor devices must be picked up from counties providing significant cost savings for disposing of these devices. Language in the bill provides protection to counties from financial liability once these devices leave a county facility which addresses issues that have occurred in the past where counties were sued for devices that were stored offsite. The bill provides for a sunset of the program in 2029 and requires all stakeholders to reconvene on June 1, 2026, to assess how the program is working and whether there need to be changes or updates to the program going forward. H. 4775 received a second reading in the Senate and is pending third reading on the calendar.

Hazardous Waste Cleanup – H. 4999. This bill provides standards for certain types of hazardous waste cleanup, removal, and remediation. It also provides site-specific remediation standards. The Senate Medical Affairs Committee gave H. 4999 a favorable report and the bill was placed on the Senate calendar.

DHEC Restructuring – S. 2. This bill divides the Department of Health and Environmental Control (DHEC) into two new departments, the Department of Behavioral and Public Health (DBPH) and the Department of Environmental Services (DES). DBPH would consist of the health-related divisions of DHEC, all divisions of the Department of Alcohol and Other Drug Abuse Services (DAODAS), and most divisions of the Department of Mental Health (DMH). The House Ways and Means Committee amended the bill by removing DAODAS and DMH to allow the Department of Administration to analyze and determine the best way to transfer these departments to either DBPH or DES upon completion of a study committee’s assessment. S. 2 is pending second reading on the House calendar.

Public Safety, Corrections and Judicial

Medical Cannabis – S. 150. This bill would enact the “SC Compassionate Care Act” which would create a regulated medical cannabis program to allow individuals with serious illnesses to access and use medical cannabis when recommended by a physician. SCAC’s policy position is to oppose the legalization of medicinal cannabis due to the lack of FDA approval.

Pursuant to a point of order raised by a House member, the House ruled the bill was out of order because a sales tax provision in the bill raises revenue and as such, a revenue-raising bill must originate in the House and not the Senate. It is likely S. 150 is dead for the session.

Opioid Recovery Fund – H. 5182. This bill is part of the requirement of the opioid lawsuit settlement for this state and the 46 counties and 43 municipalities that were a part of the lawsuit. The bill establishes the opioid recovery fund accounts with the state treasurer. It also creates the South Carolina Opioid Recovery Fund Board which would administer and distribute the funds. As introduced, the board would be composed of nine members, five of which would be appointed by the Governor from a list provided by the South Carolina Association of Counties, with at least one member selected from each of the South Carolina public health regions as defined by the South Carolina Department of Health and Environmental Control.

The House amended the bill so that the Governor would appoint three from the list provided by SCAC and the Speaker of the House and President of the Senate would each appoint one from that list. The Senate Finance Committee further amended the bill this week to add three additional members to the board: one additional member that would be recommended by the Municipal Association of South Carolina, one additional member that would be appointed by the Chairman of the Senate Finance Committee, and one additional member that would be appointed by the Chairman of the House Ways and Means Committee. The Senate Finance Committee gave H. 5182 a favorable report as amended, and the bill is pending second reading on the Senate calendar.

Law Enforcement Certification, Reporting, and Training – H. 3050. As originally drafted, the bill would provide that, beginning on July 1, 2021, a non-certified law enforcement officer shall only perform his duties while accompanied by a certified law enforcement officer. As amended by the House, H. 3050 would also add that failure by an officer to intervene when observing another officer physically or psychologically abusing members of the public or prisoners falls under the definition of “misconduct.” Also, the bill defines “chokehold” and provides that such a method of restraint would be limited to justifiable uses only. Further, the Law Enforcement Training Council would establish required minimum standards for all law enforcement agencies, including policies relating to “no-knock” warrants, implementation of body-worn cameras, vehicle pursuit standards, and more. A Compliance Division would be created that would inspect, at least once every three years, the policies and procedures for every law enforcement agency. The bill would also provide for civil fines if an agency is non-compliant and would allow for certification suspension of every officer within an agency until the agency becomes compliant with the relevant policies and procedures. Finally, H. 3050 would require candidates for law enforcement certification to submit evidence that the candidate has signed an attestation form committing to ethical policing. The Senate made some technical amendments to H. 3050, gave it second and third readings, and sent it back to the House with amendments.

Sex Offender Registry – H. 4075 and S. 1073. H. 4075 conforms the sex offender registration provisions for second degree criminal sexual conduct with a minor to third degree criminal sexual conduct with a minor. The Senate amended this bill by adding the provisions of S. 1073. S. 1073 would establish a procedure for an offender who is required to register, after a specified period of time and based on the tier of his offense, to apply for removal of the requirements of the sex offender registry. H. 4075 was given third reading by the Senate as amended and sent back to the House.

Motor Vehicle Carriers / V-SAFE – S. 1045. As introduced and passed by the Senate, this legislation would amend the current process relating to the issuance and regulation of various moving company motor vehicle operators within the state. The House Labor, Commerce and Industry Committee amended the bill to add the language from H. 3252, commonly referred to as the “Volunteer Strategic Assistance and Fire Equipment Program (V-SAFE) Bill.” H. 3252 updates the V-SAFE program so that it would be housed within the Division of the State Fire Marshall. The program seeks to provide grants to eligible volunteer and combination fire departments for the purposes of protecting local communities and regional response areas from incidents of fire, hazardous materials, and to provide for the safety of volunteer firefighters. In order to be eligible for grant funding, a fire department must have at least 50 percent of its staff serving as volunteers, which was reduced from the 75 percent volunteer requirement in previous years. The existing funding cap of $30,000 to a single fire department once every three years was also removed. Eligible fire departments would receive annual grants totaling approximately $20,000 per department that would be funded. Funding for the V-SAFE program would be provided by increasing the percentage of the insurance premium tax revenue that is allocated to the program and crediting 1 percent of the manufacturer’s depreciation reimbursement amount to the program. S. 1045 received a favorable report, as amended, from the House Labor, Commerce and Industry Committee and is pending second reading on House calendar.

State Fire Marshal / V-SAFE – S. 460. As introduced, this bill would transfer the state fire marshal’s office and all of its duties and functions to the South Carolina Department of Labor, Licensing and Regulation. The House amended the bill to add the language of H. 3252 (V-SAFE) without funding and gave the bill second reading. S. 460 as amended is pending third reading on the House calendar.

Immigration Enforcement – S. 1032. This bill would repeal the Illegal Immigration Enforcement Unit within the SC Department of Public Safety and move the unit to the South Carolina Law Enforcement Division (SLED) to enforce state and federal immigration laws. SLED would be required to enter into a Memorandum of Agreement with US Immigration and Customs Enforcement. The bill would also allow counties and local law enforcement agencies to enforce applicable state and federal immigration laws. The House recalled the bill from the Judiciary Committee and placed it on the calendar. S. 1032 is pending second reading.

Corrections Officer Age – S. 1092. This bill would require a detention or correctional officer to be at least 18 years of age at the time of employment. The Senate adopted an amendment to exempt correctional officers employed by the Department of Juvenile Justice from this requirement. A House Judiciary subcommittee gave the bill a favorable report, as amended; however, the House Judiciary Committee amended the bill by adding the provisions of H. 4919 (discussed below). S. 1092 is pending second reading on the House contested calendar.

Register of Deeds Qualifications – S. 1031. This bill would provide that in order to hold the office of register of deeds, a person must be a US citizen, must be a qualified elector of the applicable county, must hold a four-year bachelor's degree or have four years of experience in law, real estate, accounting, or as an employee in a register of deeds office. They must also not have a pattern of failing to record documents in the office in the time and manner prescribed by law. Any register of deeds serving prior to the enactment of S. 1031 would be grandfathered from these requirements. S. 1031 applies to both elected and appointed registers of deeds and allows an action to be brought by the Attorney General to remove a register of deeds who does not meet the qualification requirements or who has a pattern of not recording documents in a timely manner. A House Judiciary subcommittee gave the bill a favorable report as amended; however, the House Judiciary Committee amended the bill by adding the provisions of H. 4919. (discussed below). S. 1031 is pending second reading on the House contested calendar.

Heirs’ Property Study Committee – S.560. This joint resolution establishes the Heirs’ Property Study Committee to examine current and prospective methods to address heirs’ property issues in South Carolina; to provide for the membership of the committee, including the requirement that the committee seek assistance from groups, including SCAC; and to require the committee to prepare a report for the General Assembly. The House Judiciary Committee amended the bill by adding the provisions of H. 4919 (discussed below) and gave it a favorable report. S. 560 is pending second reading on the House calendar.

County Ambulance Service – H. 4601. This bill would designate ambulance service as an essential service in South Carolina, thereby requiring each county to ensure that at least one licensed ambulance service is operating within the county. Last month, the House gave the bill second and third readings and the Senate Judiciary Committee gave the bill a favorable report. The Senate gave H. 4601 second and third readings this week and the bill has been enrolled for ratification.

County Government and Intergovernmental Relations

Early Voting and Absentee Ballot Voting – H. 4919 and S. 108. H. 4919 provides a two-week period of no-excuse early voting prior to an election, including two Saturdays. County boards of voter registration and elections would have the discretion to determine the location of early voting locations in each county but could have no more than seven locations based on the population of the county. After receiving the bill back from the Senate with amendments, the House committed H. 4919 to the House Judiciary Committee. The House then proceeded to attach the provisions of H. 4919 onto S. 560, S. 1031, and S. 1092. They also amended S. 108 and added the provisions of H. 4919.

S. 108 as initially drafted, requires the state geological survey unit to conduct topographic mapping for the state. The House gave S. 108 third reading and sent it back to the Senate as amended. 

Permit Extensions – S. 17. This joint resolution, also known as the “Permit Extension Joint Resolution of 2022,” extends the approval of certain permits issued by DHEC. The permit must be current and valid at any time between January 1, 2020, and December 31, 2023. DHEC indicated that there is no expenditure impact on the agency because the bill's implementation would be accomplished using its existing resources. The House amended the bill by restricting the types of permits and making the extension retroactive to permits valid between December 1, 2016, and December 31, 2023. S. 17 is pending third reading on the House calendar. 

State Health Facility Licensure Act (Certificate of Need) – S. 290. As initially drafted, this bill overhauls the State Certification of Need and Health Facility Licensure Act by repealing the Certificate of Need (CON) provision. SCAC's policy position is to support legislation that would reform the state's CON to limit the appeals process, reduce the projects that require approval, and streamline the system. Although there appeared to be cooperation among the stakeholders on a working document for this bill, they could not reach a consensus and the House Ways and Means Committee adjourned debate on S. 290. S. 290 is likely dead for the session.

Alarm System Ordinances – H. 4889. This bill would provide that if a local government enacts an ordinance requiring a fine for a false alarm, the alarm business must not be fined or assessed a civil penalty for such false alarms which are not attributed to improper installation, defective equipment, or operational error by the alarm business contractor. Such a fine may be imposed on the homeowner if user error is determined to be the reason for the false alarm. The Senate Labor, Commerce and Industry Committee gave the bill a favorable report and H. 4889 is pending second reading on the Senate calendar.

Sign Language Interpreters Act – H. 3795. This bill would enact the “Sign Language Interpreters Act” to require a specific level of competence for sign language interpreters used by detention facilities, police stations, and other agencies. The Senate amended the bill to clarify that when a government entity has a need for a sign language interpreter, the entity must use a properly credentialed sign language interpreter as determined by the South Carolina Association of the Deaf, the South Carolina Registry of Interpreters for the Deaf, and the National Registry of Interpreters for the Deaf. H. 3795 is pending third reading on the Senate calendar.

Veterans Service Organization Burial Honor Guard Support Fund – S. 968. This bill would establish the "Veterans Service Organization Burial Honor Guard Support Fund" as a new fund created in the State Treasury. Revenues of the fund may include gifts, grants, federal funds, donations, and appropriations from the General Assembly. These funds are to be used to offset costs paid by organizations that provide honor guard burial details at the funerals of qualifying South Carolina veterans. A House Medical, Military, Public and Municipal Affairs Committee amended the $100 cap provision in the bill to “no less than $100” and gave the bill a favorable report as amended. The House gave the bill second and third readings, and the bill was returned to the House with amendments. The Senate amended S. 986 back to the Senate version and returned the bill to the House.