Tag: SC General Assembly

SC Joint Pension Committee Fails Review Test

The South Carolina Joint Committee on Pension Review failed miserably in its task to recommend solutions to the state’s failing public employee retirement system.

Made up of a mixture of Democrats and Republicans from the SC House and Senate, the committee’s basic recommendations were to throw more money at a failing model and to silence the one statewide elected official who has been calling for changes in the system over the past six years.

The state’s public employee retirement fund has been one of the worst, if not the worst, performing public pension funds in the country. It is known for two things – extremely low rates of return on investment combined with extremely high fees paid to the institutions doing the investing.

The public retirement system is currently plagued with an estimated $25 billion shortfall on future liabilities.

The committee’s solution to closing the shortfall is to throw more money into the pot. Employee contributions will rise slightly from the current 8.66% of earnings to a cap of 9% of salary.

However, the employer contributions, those contributions paid by tax dollars from public agencies participating in the system, will rise from the current 11.56% of earnings to 13.56% beginning next fiscal year and rising each year until it reaches 18.56% in 2023. That is a 60.5% increase in tax dollars over the next six years.

As egregious as that rise of public spending is, even worse is the recommendation to remove SC Treasurer Curtis Loftis as Custodian of the pension funds and as a member of the SC Retirement System Investment Commission.

Loftis is the only public official who has routinely criticized the mismanagement of the retirement system by the Public Employee Benefit Authority and the SCRSIC as well as the high salaries and bonuses paid to SCRSIC staffers and their often cozy relationship with risky hedge fund investment managers.

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RIDE III and Horry County Voters

Horry County voters will be asked to tax themselves for another seven years for what is known as RIDE III.

The referendum question will ask voters to approve an additional one-cent sales tax for seven years with the proceeds going to road projects.

When the Capital Projects Sales Tax legislation was initially approved by the SC General Assembly over 20 years ago, its goal was to provide a funding mechanism for the Conway Bypass Project, or what we now call S.C. 22.

A one-cent additional sales tax levied for seven years to pay for the county’s portion of the cost of construction of S.C. 22 wasn’t a bad idea. The projects now proposed are in the “nice to have”, instead of a justifiable “must have”, category.

But, a tax once levied is a difficult thing to do away with and creative ways were found to extend this taxing ability to other jurisdictions.

Since the initial RIDE I project constructed S.C. 22, politicians have found (manufactured?) justifications to ask voters to make this a recurring tax in Horry County.

The politicians found this was such an easy sale to the voters that RIDE II was added in 2006, a one-cent sales tax for school construction was added in 2008 and the one-cent sales tax for tourism advertising was added in Myrtle Beach in 2009.

Of course, the tourism tax was never subjected to a referendum by voters because that would probably have failed at the ballot box. Instead, our local legislative delegation and Myrtle Beach City Council conspired to have that tax approved by a super majority vote of city council.

In my opinion, we have reached the point where one-cent local option sales taxes are out of control in Horry County.

This is especially true in the case of the tourism tax where citizens are forced to pay increased taxes in order to reduce the marketing budgets of Myrtle Beach hoteliers and golf course owners.

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Charleston County School District Budget Problems

The Charleston County School District thinks it has found a way to close the continuing $18 million projected shortfall in its budget.

School District Superintendent Gerrita Postlewait told local media money in the capital fund could be moved to the general operating fund to help solve the shortfall with no impact on taxpayers.

According to a board member with knowledge of the plan, capital fund millage would be reduced with a corresponding increase in operating fund millage.

The idea is the overall plan to shift millage would be revenue neutral, thereby prompting the claim that taxpayers would not be affected.

However, this solution appears to fly in the face of Act 388 of 2006, which limited school budget operation fund taxation.

Act 388 specifically exempts owner occupied residences, what is known as 4% property, from taxation by school districts for operating funds. Only rental or second homes (6% property) and businesses (10%) property may be taxed for school operating funds.

The state raised the sales tax by one cent, which is designated to be turned over to school districts, according to a complex formula, to make up for the loss of 4% property tax revenue from operations millage.

However, when it comes to the capital fund millage, all three classes of property are taxed.

In addition, Act 388 sets limits on the amount operations fund millage can be raised in any one year with another complex formula involved.

Therefore, it’s not just a simple reduction of millage for one fund with a corresponding increase in millage for another fund that can be made.

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SC Supreme Court Slaps Down Alan Wilson

By a 4-1 margin, the SC Supreme Court ruled yesterday that Attorney General Alan Wilson had no authority to remove solicitor David Pascoe from a continuing investigation into corruption in the SC General Assembly.

The investigation began in 2014 and is reported to center around misuse of campaign funds and abuse of power for personal gain by what is called in yesterday’s opinion the “redacted legislators.”

The Attorney General recused himself from the case for possible conflict of interest in July 2015 and his office turned the investigation over to Pascoe. Pascoe, from that point, was acting as the “state’s highest prosecutor.”

The key finding stated, “The initial correspondence from the Attorney General’s Office to both Pascoe and Chief Keel in July 2015, stated, without reservation, that the Attorney General’s Office was recused from the redacted legislators investigation, leaving only Pascoe as the state’s highest prosecutor in that matter.”

In addition, the Court found transferring the case to Pascoe included the right to order a State Grand Jury investigation into the case. “Pascoe has met his burden of proving by a preponderance of the evidence he was vested with the authority to act as the Attorney General in the (probe), and that this authority necessarily included the power to initiate a state grand jury investigation.”

In March 2016, Wilson attempted to remove Pascoe from the case, attempting to replace him with a different solicitor who refused to take Pascoe’s place. At this point, Wilson attempted to politicize the issue by smearing Pascoe in the media.

Central to the issue was an attempt by Pascoe to initiate a Grand Jury investigation, something Wilson claimed only he had the authority to do. The Court tore apart Wilson’s interpretation of the State Grand Jury law.

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General Assembly Extends Tourism Tax

The SC General Assembly extended the tourism tax enabling legislation allowing for the extension of the tax on local residents and visitors through 2029.

Both the SC House and SC Senate overwhelmingly overrode the veto of Gov. Nikki Haley on House Bill 5011 making the extension of the tourism tax a virtual guarantee.

The very best part of the tax extension, for the business interests that want it, is that once again the tax can be imposed by a supermajority vote of Myrtle Beach City Council and the citizens will have no say in the process.

There is a provision in the bill that allows for a voter referendum on the question of extending the tax, instead of a vote by city council, but that’s merely window dressing. Myrtle Beach City Council doesn’t let those kinds of decisions go to the voters and it doesn’t say no to the Myrtle Beach Area Chamber of Commerce.

The Chamber will be guaranteed hundreds of millions more public tax dollars to use in “out-of-area” marketing. I wonder how much of that is being used in China?

The hotel and golf course owners who control the Chamber board get to keep marketing dollars in their pocket while transferring those expenses to the taxpayer.

And we can hear 10 more years of “Oh yeah, it’s working” ads.

You have to give credit where it is due. This extension was slickly handled and was really never in doubt. So far, there have not even been whispers of how many, if any, sequentially numbered cashier’s checks, from those “like minded” individuals, were needed this time around to get the job done.

We are told free market capitalism is a wonderful thing. Maybe we can even experience it in Myrtle Beach, Horry County and South Carolina someday.

Until then, all those “anti-tax Republicans” we supposedly send to Columbia can continue to forget their campaign promises while continuing to practice crony capitalism and corporate welfare with our tax dollars.

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No Renewal Yet on Tourism Tax

The decision on whether Myrtle Beach will be able to reimpose its tourism tax remains in question at this time.

The SC House adjourned debate on a bill (S1122) that would provide a means to reimpose the tourism tax if the bill passes.

Debate on the bill is now scheduled for Tuesday May 31, 2016.

The original bill passed the SC Senate unanimously, but the House amended the bill to eliminate a provision that would allow Myrtle Beach City Council to reimpose the tax by a supermajority vote of at least two-thirds of its members.

If the bill passes in its current, amended form, the tourism tax would have to pass a referendum of city voters in order to be reimposed.

Eighty percent of the revenue raised from the tax goes to the Myrtle Beach Area Chamber of Commerce for marketing the Myrtle Beach tourism attractions out of area.

Since being approved in 2009, the city has transferred in excess of $120 million to the Chamber. This has allowed the private tourism corporations to reduce their marketing budgets by as much as 95%.

Such a transfer of wealth from a public tax to benefit private businesses should be subject to approval by a voter referendum. Actually, it shouldn’t happen at all, especially in an area that prides itself on being so free market capitalist and conservative Republican.

It’s obvious the conservative politicians and their capitalist buddies don’t have a problem imposing taxes and spending the resulting revenue, just so long as it doesn’t come from their pockets.

The bill still has a couple of hurdles. It must pass two more readings in the House. If it passes there in its amended form, a compromise will have to be worked out with the Senate on whether or not to only allow reimposition of the tax after a favorable referendum of the voters.

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Ignoring the Nikki Haley Influence

Now that the SC General Assembly has overwhelmingly voted to override the veto of the Farm Aid Bill by Gov. Nikki Haley, Time Magazine may want to rethink how influential Haley really is.

Time recently named Haley one of Time’s 100 Most Influential Leaders.

After losing votes of 39-3 in the SC Senate and 112-2 in the SC House, you have to seriously question if Haley is one of the 100 most influential people in Columbia. I would say no.

Haley’s veto of the Farm Aid Bill was always a loser.

There are over 25,000 farms in the state that cultivate over five million acres of land. When the October 2015 rains wiped out many crops, it was obvious many had suffered catastrophic loss.

It is estimated over $400 million of crops were destroyed by the resultant flooding.

But, aiding suffering farmers is not something that draws national headlines. Therefore, it is of no interest to Haley.

Haley had no problem declaring the “1000 year flood” and requesting federal aid for those affected by the storm.

She was merely unwilling to give some aid on the state level, aid that many farmers in South Carolina need, but does not put Haley’s name in national headlines.

While ignoring the plight of farmers around the state, Haley was more interested in the “A Great Day SC” PAC that is raising money to target state lawmakers Haley doesn’t like.

Included in the list of Haley hit targets is Horry County’s Luke Rankin.

Haley blames Rankin for the failure of the SC Senate to pass an Ethics Reform Bill.
Whether that characterization is fair or not, I would submit that Haley was the beneficiary several years ago of the same ethics laws that she now wants to change.

Hypocrisy, thy name is Nikki.

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Important Week for Political Junkies

One of the most important weeks of the year for political junkies in the area is upon us.

On Tuesday, they should get a reasonable idea of how long the Republican Party can hold off the nomination of Donald Trump for president with another round of ‘Super Tuesday’ primaries in five important states.

For locals, however, Wednesday is even more important as filing opens at noon for a number of local offices and all seats in the SC General Assembly.

And the dynamics involved in this year’s political races make them even more interesting for those who follow politics.

Five countywide statutory offices are up for election – Auditor, Clerk of Court, Coroner, Sheriff and Treasurer. Normally these races bring little excitement, but this year two will be open seats and two more are expected to be contested.

Clerk of Court Melanie Huggins Ward and Treasurer Roddy Dickinson have announced they are retiring leaving their seats up for grabs in the primaries and general election.

Two others, Auditor Lois Eargle and Sheriff Philip Thompson are reported to have opposition this year for the first time in a number of years. Only Coroner Robert Edge appears not to have any opposition as filing opens.

Horry County Council will have five seats, Districts 3,4,6,9 and 10 up for election, as well as a special election to fill the unexpired term of retired member James Frazier in District 7.

To make it more interesting, council member Jody Prince is retiring, leaving his District 10 seat open and council members Jimmy Washington in District 3 and Cam Crawford in District 6 will be running for election for the second time in two years as both were elected to office in special election in 2015.

We are hearing reports of possible contested elections in Districts 3 and 9 at this time with District 10 having a number of possible candidates for the open seat. The District 7 seat is expected to have contests in both party primaries as well as the general election.

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First Education Reform Bills in SC House

Eight bills were introduced into the SC House this week in what was called part of the first phase of the House Education Reform Package.

On first glance, it seems House education reform means more bureaucracy.

One proposal calls for the establishment of an authority that could borrow money on the state’s behalf to spend on school facilities. This is seen as a means for school districts with low tax bases to obtain money to repair deteriorating school buildings.

Another bill calls for recreating the Education and Economic Development Coordinating Council in an effort to “ensure our students are college and career ready.”

This goes along with a bill that would redefine the expectations of a South Carolina high school graduate. Sounds like the “minimally adequate education” that is now called for in state law is no longer good enough.

The bill that bothers me the most is H. 4777 that would allow the state to take over a school district that is failing financially. This has been tried in other states with minimal success at best.

I could be wrong, but these proposals sound like centralization of decision making, centralization of goals and centralization of new financial resources.

Historically, the SC General Assembly has sought to keep as much power and control in its hands as possible while giving only lip service to smaller government and home rule.

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Gasoline Taxes and Roads on Tap in Columbia

An increase in the gasoline tax is part of the SC General Assembly debate on road funding and tax considerations this week.

This debate will potentially be the one that affects taxpayers the most in the coming years.

One thing I believe you can count on is that before this debate is finished and by the time next year’s budget kicks in, gasoline taxes in the state will have been increased.

South Carolina’s current 16.75 cents per gallon tax on gasoline is one of the lowest in the nation. Last year, the SC House passed a proposal to increase that tax by 10 cents per gallon.

The SC Senate Finance Committee is currently considering a proposal to increase the gasoline tax by 12 cents per gallon.

When both Houses of the legislature are considering a tax increase, it’s a pretty good bet one will be forthcoming.

Additionally, with gasoline prices as low as they’ve been in 10 years, this is the perfect time to raise gasoline taxes because consumers have been accustomed to paying much more than the $1.60 or so per gallon currently charged at the pumps.

Along with the gasoline tax debate are proposals to reduce the state’s income tax.

This ploy was introduced by Gov. Nikki Haley last year and the legislature has picked up on it.

If you can get the taxpayers concentrating on how much they could save in reduced income taxes, maybe they won’t notice, or at least oppose, a gas tax increase.

Haley’s proposal last year even went so far as to call the increased gas tax combined with the reduced income tax “revenue neutral.”

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