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&  W orst

Best

of 2011

   S O  U T H

 C A R O L I  N   A 

P  O  L I C Y  CO U  N C  I   L

the s.C. General 

 a ssemBly 

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 Wih he ocial end o he 2011 legislaive session, we’re releasing he hird insallmen in our annualseries chronicling he bes and wors legislaion o he year.

Te Souh Carolina General Assembly akes upa bewildering array o bills every year, and i’s

 beyond he capaciy o eveninormed ciizens o keep up

 wih hem all. Wih ha inmind, he Policy Council pro-

 vides here a review o signi-can bills and resoluions orhe 2011 session. Our lis isn’

exhausive – and, or he sakeo readabiliy, is brieer han inpas years – bu i does covermajor legislaion on spending,axaion, economic develop-men, educaion, healh care,and governmen reorm andresrucuring.

Te sole crierion used o de-ermine wheher a bill is among

he year’s bes or wors can besummed up by his quesion:Does i make Souh Carolinamore ree or less ree? I a billseeks o expand reedom, limigovernmenal power, encour-age he wise and ecien use o axpayer dollars, or li burdensrom businesses and consum-ers, we consider i good policy.

On he oher hand, i a bill seeks o expand govern-men meddling, encourage unwise or unnecessary governmen spending, inhibi consumer choice, orsaddle businesses wih arbirary and unair regula-ions, we hink i’s bad policy.

 We do no believe reedom is somehing govern-men provides. We believe governmen’s role is oproec reedom – or, o borrow rom he Declara-ion o Independence, o “secure” i. And he mosimporan way governmen can secure reedom is

 by limiing itself . Ta principle underlies every-hing writen in his guide.

 As many o he bills eaured in his guide willmake clear, 2011 wasn’ a grea year or he ad- vancemen o reedom in Souh Carolina. Eco-nomic condiions were poor o sar wih: growh

 was minimal, joblessness sayed high, and incomelevels remained abysmal compared o he res o he counry. And ye, even under hese circum-sances, legislaors decided o increase he budge

 by almos a billion dollars over las year. New programs and agencies were creaed and obsoleeones given new lie. No serious atemp was made

o limi uure spending, a modes school choice bill was rejeced, and legislaors persised in hecorrosive pracice o doling ou special avors o

 well-conneced companies and special ineress.Moreover, when lawmakers realized here would

 be a budge surplus, hey reused o reurn i oaxpayers – spending every penny insead.

Sill, he news wasn’ all bad. Te General As-sembly passed a law requiring a recorded voe on

Introduction

StatuS of billS

2011 was the frst year 

o the two-year 119th

session o the General Assembly. While read-

ing this publication one

 will see that some bills

are still pending – ei-

  ther in a committee

or in one chamber o 

 the General Assembly.

These bills can be (andare likely to be) taken

up when the General

  Assembly returns in

 January or the second

year o this session.

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every bill and resoluion ha would have he orceo law, iniiaed a serious discussion on elimina-ing he Budge and Conrol Board, and passed animporan law requiring agencies acceping ederalmoney o disclose exacly wha “srings” are a-ached.

 We hope every Souh Carolinian who cares abouhe principles o limied governmen, ree ener-prise, and individual libery and responsibiliy willnd his year’s Best and Worst guide insrucive anduseul.

budget R ecap

The appropriated total budget

grew by almost $1 billion, going

 rom $21.1 billion in 2011 to $21.9

billion or 2012.

Every part o this year’s appropri-

ated budget increased rom last

year’s – the General Fund grew by

$339 million, fnes and ees wereup by $246 million, and ederal

 unds rose by $168 million.

Budget vetoes had signifcantly less

o an impact on spending in 2011

as compared to 2010. Last year,

Gov. Sanord issued 107 budget

 vetoes, or a total o $314 million.

Legislators sustained 51 o those

 vetoes or a total o $261 million in

savings. In 2011, Gov. Haley issued

35 budget vetoes totaling $150 mil-

lion. Legislators sustained 8 o those

 vetoes or a total o $507,969.

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[Worst] Pretending to C aP sPending H 3368: Passed House; reerred

to Senate Finance Committee

Souh Carolina desperaely needs an eecive,comprehensive spending cap. Tis one is neiher.Like S 207 (see immediaely below), i would cap

 yearly General Fund appropriaions o eiher 6 per-cen per year, or populaion growh plus infaiongrowh, whichever is lower. Unlike S 207, hough,governmen would ge o keep excess revenue,deposiing i in a “Spending Limi Reserve Fund.”In shor, excess revenue would evenually ge spen

anyway. Finally, an eecive cap should be compre-hensive and so include Oher Funds and FederalFund spending.

[Best] C aPPing sPending By  refunding surPlus revenue S 207: Reerred to Senate FinanceCommittee

Tis bill would limi yearly General Fund appro-

priaions o eiher 6 percen per year, or populaiongrowh plus infaion growh – whichever is lower.

 While ha ormula may no be ideal (since infa-ion could skyrocke and make he cap virually meaningless), and while i doesn’ include FederalFunds and Oher Funds, he bill’s grea virue isha i reunds excess revenue. I creaes an Incomeax Rebae Fund ha would be used o: 1) replen-ish he General Reserve Fund; 2) ose he cos

o naural disasers; and 3) provide ax rebaes ohose wih individual and corporae income ax li-abiliy. As we have writen elsewhere , an auomaicax rebae mechanism is he only hing ha canmake a spending cap a rue cap.

[Best] inCreasing eConomiC transParenCy  S 832: Reerred to Senate FinanceCommittee

Tis bill would provide proecion o axpayersasked o subsidize economic developmen dealsexended by he sae o privae companies. All

incenives would be srucured as orgivable loanssubjec o repaymen should job and invesmenarges no be me. Public noice and hearings, as

 well as objecive scal analysis, would be required beore he Legislaure could ake up incenivesagreemens. Similarly, all such agreemens would

 be subjec o a sandalone voe by he General Assembly and would auomaically expire aer ve years. (See also S 206.)

[Best] traCking federal  and 

fee /fine sPending S 312: Signed into law by governor 

Revenue rom Federal Funds and ees/nes(Oher Funds) accouned or 77 percen o heoal $22 billion sae budge or FY2011-12.Federal unding alone exceeded $8.6 billion. Teseenormous porions o he sae budge are growinga alarming raes, and here are very ew ways ocheck ha growh. Tis bill, now a law, addresses

Spending and

Taxation

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ha problem. Tis law requires all sae agencies ospeciy he sources o all sae unds (boh Gen-eral Fund and Oher Funds) used o mee ederalmach requiremens. In urn, all agencies seekingederal unding mus submi o he governor arepor explaining wha “srings” are atached ohe unding and wha sae maching unds are

required. In addiion, he sae budge auhorizes via proviso (70.27) he creaion o an Oher FundsOversigh Commitee (c. S 419) o review andexamine he source o Oher Funds. Te budgealso requires agencies o submi an annual ee andne repor – alhough enorcemen o his provisohas been weak. (See also S 740.)

[Best] ProhiBiting fee /fine inCreases H 3051: Passed House; reerred toSenate Finance Committee

One reason governmen spending rises every  year is because sae agencies can adminisraively creae and increase nes and ees. Tis bill wouldprohibi ha pracice, requiring insead ha heGeneral Assembly inroduce ee/ne increases as a

 join resoluion subjec o a recorded roll call voe.(See also S 14, S 205.)

[Worst] using long-term deBt to Cover general oPerating e xPenses S 785: Vetoed by the governor,veto sustainedS 877: Vetoed by the governor,veto still pending S 884: Passed in the Senate, still pending in the HouseH 4149: Vetoed by the governor,veto overriddenH 4049: Passed in the House, still pending in the Senate

Tese bills allow school disrics o use bond debo cover annual operaing decis. Using generalobligaion bonds o suppor day-o-day operaionsis a nooriously unwise budgeary pracice – heequivalen o remorgaging a home o keep up wihdaily living expenses. Te likely resul will be anevenual propery ax increase.

 As repored by SCPC’s online invesigaive news journal, Te Nerve , he governor veoed S 785(Florence Couny disric 4); S 877 (HamponCouny disric 2); and H 4149 (Colleon Couny disric 4). Te Florence Couny veo was sus-ained and is no law; he oher wo veoes will beaken up nex session.

wo oher measures, S 884 ( Jasper Couny) andH 4094 (Charleson Couny), have passed inone chamber, bu no he oher. Passage or bohproposals is virually assured, owing o a quirk inhe law ha allows local delegaions o pass locallegislaion wihou a ull voe rom he General

 Assembly.

[Best] Promoting online sPend-ing transParenCy  H 3067: Reerred to House Ways & Means Committee

Tis bill would promoe ransparency by requiringall sae agencies and local governmen eniies omainain searchable ransacion regisers on heInerne. In addiion, i would require each localgovernmen eniy o pos he number o ull-imeemployees and employees’ annual compensaionsor hose earning more han $50,000. (See alsoproviso 86.13.)

[Worst] B ailout m asquerading  as  a “t ax Cut”H 3762: Signed into law by governor 

 Tis law is a second pass a adjusing he ormulaused o deermine employer conribuions o hesae’s Unemploymen rus Fund. Readers willrecall ha years o mismanagemen by he S.C.

Employmen Securiy Commission le axpayersholding he bag or a $2 billion-plus bailou o heund. A he hear o he issue is wheher requenusers o he unemploymen insurance sysem (hais, employers wih requen layos) should pay more – precisely because hey are drawing morerom public money han hey conribue. Tese re-quen users, however, represen some o he largeremployers in he sae and have complained loudly and requenly abou being orced o pay a higher

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raes. A compromise was reached by allocaing$146 million in windall revenue (proviso 90.18)o help pay down he sae’s obligaions. In shor,money ha could have been used o lower axes oreveryone was used o lower raes or a selec ew 

 businesses. Adding insul o injury, he law requiresha premium raes will be recalculaed, reroac-

ive o January 1, 2011. Employers who paid a hehigher rae will hen be credied or hese “overpay-mens.” H 3762 also reduced he sae’s maximum

 bene period rom 26 weeks o 20 weeks. Inaddiion, he law limis benes or seasonal work-ers. As o July 2011, Souh Carolina sill owed jusunder $1 billion o he ederal governmen or cov-ering previous unemploymen insurance shoralls.Te ineres paymens alone or repaymen o hisdeb have run ino he millions.

[Best] inCreasing Budget transParenCy  S 327: Passed Senate and is part o Senate rules

Tis resoluion amends he Senae rules o require bills ha appropriae money or raise revenue,including bond bills, o be made public on heGeneral Assembly’s websie or a leas 72 hours

 beore being considered by he Senae. Te Housedoes no have a similar rule. (See also S 208.)

[Best] Budget n arratives H 3886: Reerred to House Ways & Means Committee

Te way he budge is currenly writen makes idicul o rack unding or specic programs.Tis bill would require he governor’s budge andhe House and Senae budge repors o include

narraive descripions o agency programs. Tesenarraives would include he “mission, goals, sau-ory and regulaory basis o each program, and a

 brie hisory o he agency’s adminisraion o heprogram,” as well as ideniying he specic sourceo unds or he program. Souh Carolina is oneo only seven saes ha do no include programdescripions in heir budges. (See also H 3887.)

 V eto R ecap

The governor issued 11 vetoes

4 vetoes were sustained

3 vetoes were overridden

3 vetoes will be taken up next session

1 bill became law without the governor signature

• The one bill on which the governor too

no action extended special tax breaks t

 Amazon.com — it became law without he

signature.

• The governor’s veto of the I-95 Corrido

  Authority Act, a bill that would create

new agency to “create jobs” in countie

along Interstate 95, was overridden by th

Senate. The House decided not to tak

action on the veto until January 2012.

• Another bill vetoed by the governo

 would have given approximately $1 millio

in retroactive tax breaks to a nonprof

organization that had already located t

South Carolina. The bill was vetoed b

  the governor, and the veto sustained. A

reported by The Nerve, the company st

got its tax exemptions.

• The governor also vetoed three bills tha

  would have allowed local school distric

  to use general obligation bonds to cove

operating expenses. One o these vetoe

 was sustained; the other two will be take

up in 2012.

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[Worst] inCreasing g as t axes S 279: Reerred to SenateFinance Committee

 Wih oil prices near record highs, his bill proposescreaing a “local opion moor uel user ee.” In

plain language ha means counies will be able oraise he gas ax by one cen per gallon. Te money is o be used o pay or road improvemen projecs.Firs, his is a ax increase, pure and simple – noa user ee. Second, i counies need more money or roads, a sounder opion would be o use heirgrowing economic developmen budges raherraising axes. Tey migh also consider cutingsang coss – in he mids o he Grea Reces-sion, local governmen hiring in Souh Carolinaincreased by more han 8 percen.

[Worst] r aising loCal s ales t axes S 584: Signed into law by governor 

Tis bill exends ax increases on Lexingon Coun-y residens by renewing a one cen sales and useax or an addiional seven years. Meanwhile, hecouny is siting on an undesignaed, unreserved

 balance o more han $21 million (20 percen o 

heir yearly expendiures). I’s also worh menion-ing ha Lexingon has one o he highes per capia spending raes in he sae and one o he highesax burdens. (See also S 952 and H 4275.)

[Best] Cutting m anufaCturing ProPerty t axes S 347: Reerred to Senate FinanceCommittee

Souh Carolina has he highes eecive manu-

acuring propery ax rae (3.73 percen) in henaion – more han double he naional average.Insead o cuting i, he Legislaure uses his highrae as an excuse o dole ou economic incenives.Tis bill would cu he ax rom 10.5 percen o6 percen. For he sake o comparison, Virginia’seecive rae is 0.48 percen (ied wih Delawareor lowes in he counry); Norh Carolina’s is 0.98percen; and Georgia’s is 1.52 percen.

[Best] eliminating the CorPorate inCome t ax S 155: Reerred to Senate FinanceCommittee

Tis bill would reduce he corporae income ax 

every year unil 2020, when he ax would bereduced o zero. Te bill would also repeal many argeed ax credis, including he research and de-

 velopmen credi. One problem: aking eigh yearso ully eliminae his ax is oo long, especially given ha corporae income ax revenue represensonly a small porion (jus over 2 percen) o Gen-eral Fund revenue. Whaever he bill’s problems,however, i’s a rereshing deparure rom he usualpolicy o simply subsidizing governmen-avoredindusries and handing ou ax credis o poliicalallies. (See also S 142, S 274.)

[Best] eliminating C aPital g ains t axes S 140: Reerred to Senate FinanceCommittee

Like S 155, his bill would have an immediae posi-ive impac on Souh Carolina’s uncompeiive ax environmen. I would gradually reduce he saecapial gains ax. Tis ax cu would boos inves-men and reduce axes on he sale o homes andoher propery. I is also especially imely, givenha he ederal Aordable Care Ac is increasingcapial gains axes by 3.8 percen.

[Worst] a lternative energy  m andates S 719: Reerred to Senate Judiciary Committee

 As in pas years, legislaors atemped o mandaeha uiliy companies adop a renewable energy porolio requiring cerain levels o elecriciy begeneraed rom alernaive energy sources like

 windmills and solar panels. Tis bill would requireha 20 percen o annual reail sales by elecricpower suppliers be produced by renewable energy resources. No only is he bill a clumsy atempa conrolling he energy marke; i represensgovernmen overreach a is wors. Te legislaion

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aims o do everyhing rom sabilize energy priceso creae jobs o proec public healh. One hing i

 will surely do: raise uiliy raes or Souh Carolinaconsumers.

[Best]higher-ed transParenCy  S 172: Ratifed by General Assembly;

 signed by the governor 

Tis bill would require higher-ed insiuionso creae an online ransacion regiser, updaedmonhly. On he whole, i’s a sep in he righdirecion. Even so, some o he new law’s specicsare problemaic. Te legislaion creaes a workinggroup charged wih creaing “a mehodology o es-ablish a uniorm compensaion and classicaionplan among he public insiuions o higher learn-ing and echnical colleges.” Bu, jus as wih heK-12 sysem, a uniorm sysem o compensaionis unlikely o be he mos ecien or economicalor separae universiies, each wih dieren hiringneeds. Moreover, a uniorm compensaion planmay ail o reward high-perorming employees.

 And his bill lis some curren resricions on JoinBond Review/Budge and Conrol Board approvalo capial improvemen projecs. Proponens o he change argue i will sreamline he spending/deb approval process, saving money in he long-run. On he oher hand, he Legislaure needs oexercise more oversigh over he issuance o deb or new consrucion and oher projecs, especially as regards higher-ed buildings ha are no beingully uilized. (See also S 311.)

local goVeRnment o VeRView 

Local governments receive huge amou

o money rom the state – nearly $2

million in the most recently passed bu

get. Proviso 86.13 o this year’s appr

priations bill would the allocation o the

  unds ar more transparent by requir

local governments to report in their bu

gets where state money is actually g

ing. Local governments would also

required to report spending projects a

donations to non-profts as budget l

items.

These reorms would allow citizens

scrutinize the spending priorities o th

local governments, and would put pre

sure on those governments to disclo

  their relationships with non-profts a

other organizations. The new provis

along with online transaction registe

(see H 3067), will go some way towa

making local governments more respo

sive to taxpayers’ concerns.

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[Best] tort reform H 3375: Signed into law by governor 

Te only kind o governmen-generaed eco-nomic developmen ha’s eecive in he long runinvolves governmen removing impedimens oeconomic aciviy – and doing so or all compei-ors, no or he well-conneced ew. Tis year’s orreorm bill, now a law, akes a sep in ha direcion.Te law esablishes a wo-par rial process beorehe same jury or deermining awards or puniivedamages. In pracice, his requires juries o decideseparaely on wheher a plaini is due resiuionand wheher he is due puniive damages. In ad-

diion, he law caps puniive damages (a roughly $500,000) excep in cases o exraordinary negli-gence. Biurcaed rials and commonsense damagecaps are one way o help reorm Souh Carolina’sliigious business climae, which is he 12h worsin he naion according o a U.S. Chamber o Com-merce survey.

[Worst] funneling eConomiC develoPment dollars to nonProfits H 3191: Recommitted to HouseCommittee on Labor, Commerce& Industry

Tis bill would expand he power o he Jobs-Eco-nomic Developmen Auhoriy (JEDA), allow-ing i o und, no jus businesses, bu nonpros;and no jus programs aimed a creaing jobs, bu

aciviies ha “provide oher signican public benes.” Te proposal would also allow JEDA oissue bonds, “wihou limiaion,” o nance heacquisiion o angible or inangible asses – hais, virually anyhing. Essenially, he legislaion

 would allow JEDA unds or supporing nonprosha don’ creae jobs bu provide vaguely dened“public benes.” In shor, he bill would make anunaccounable agency even more unaccounable.

[Worst] h anding out t argeted t ax Breaks to retailers S 36: Passed by General

 Assembly; became law without governor’s signature

 As originally passed by he Senae, his law ex-emped durable medical equipmen purchased

 wih Medicaid/Medicare unds rom he saesales ax. How i became a vehicle or a ve-yearax break or Amazon.com requires some expla-naion. Apparenly, i all began wih a “promise”rom he Deparmen o Commerce ha he sae

 would exemp Amazon rom having o collec

sales axes on purchases made by Souh Carolinaresidens. Aer grassroos pressure killed he deal, Amazon hreaened o pull he plug on is plannedLexingon Couny disribuion cener. A pledgeo increase job creaion and capial invesmennumbers o 2,000 and $125 million, respecively,swayed legislaors o reconsider. A ha poin, heHouse amended S 36 so as o sipulae ha Ama-zon’s disribuion aciliy would no have nexus inSouh Carolina or he purpose o collecing sales

Economic

Development

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and use axes. Te exempion will remain in eecunil January 2016. Even apar rom he sales ax collecion exempion, Amazon was already slaedo receive millions in argeed incenives. Te oalcos o he deal, no including los sales ax revenueand los local propery axes, is esimaed a $61million or axpayers over 10 years.

[Worst] suBsidizinghigh-risk  startuPs H 3779: Passed House; reerredto Senate Finance Committee

Tis bill is inended o encourage “angel invesing”– early invesing in unproven and risky sar-ups.Te Nerve repored on his roubling idea in July.Te bill would give angel invesors a 35 percenincome ax credi (capped a $100,000 per inves-men). Te oal cos o axpayers would be $5million per year (he cumulaive, annual cap onall credis). In eec, his bill orces axpayers osubsidize risky invesmens – invesmens heree marke migh no oherwise olerae … suchas hydrogen-powered cars. Te bill conains noproecions or axpayers should hese invesmensail. Ordinary axpayers won’ reap any o he pro-is eiher.

[Best] reduCing s ales t axes  and eliminating e xemPtions H 4271: Reerred to House Way & Means Committee

Tis bill would eliminae dozens o sae sales ax exempions, ranging rom exempions on news-papers o exempions on wrapping paper. Exemp-ions on groceries, prescripion medicine, durable

medical equipmen, and uiliy bills would remainin place. In reurn, H 4271 would reduce he gener-al sales ax rae rom 6 percen o 3.85 percen andhe sae accommodaions ax rom 7.0 percen o4.5 percen. Based on previous analysis o a similarplan promoed by he axaion Realignmen Com-mission , he bill would likely resul in increasedax revenue, suggesing he sales ax rae could

 be reduced by even more. As i sands, he sae’s byzanine ax code empowers legislaors o pick 

 winners (hose indusries wih poliical infuence)and losers (hose wihou), harming consumersand ordinary axpayers in he process. (See also S274, S 708, S 709, S 715, S 716.)

[Worst] Creating neW eConomiC develoPment  a genCies S 211: Passed General Assembly;vetoed by governor; veto under consideration by House

Tis legislaion esablishes a sae agency o “carry ou economic developmen and educaionalimprovemen aciviies” aimed a improving heeconomy o any couny wihin 30 miles o I-95.Tese aciviies are o be pursued in ligh o recom-mendaions rom he December 2009, I-95 Cor-ridor Human Needs Assessmen. Te auhoriy 

 would receive sae unding, hough he legislaiondoes no speciy how much. Te auhoriy wouldalso be conrolled by a 19-member board, wihhe majoriy o board members appoined by heLegislaure.

[Worst] Creating redundant eConomiC develoPment  a uthorities H 3633: Reerred to House Agriculture, Natural Resources &Environmental Aairs Committee

Tis bill would creae a semiauonomous govern-men agency under he Agriculure Deparmenknown as he Agribusiness Economic Develop-men Auhoriy. Is uncion would be o oer ax-payer unded incenives o new agriculure-relaed

 businesses in Souh Carolina. Te auhoriy would be permited (among oher hings) o ener ino

conracs wih ederal or sae agencies or privaecompanies; exend, sell, or purchase agriculuralloans; and borrow money and issue bonds. How his new auhoriy would be disinc rom he Ru-ral Inrasrucure Auhoriy, an agency creaed las

 year bu no ye unded, remains unclear.

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[Worst] h anding out ProPerty  deals H 3688: Narrowly ailed on thirdreading in the House

Te good news is ha he sae apparenly wans

o unload is old propery. Te bad news is hahis bill would give ax credis o developers harehabiliae “abandoned” governmen (sae andlocal) properies. “Rehabiliaion” includes he coso virually everyhing bu he expense o acquiringhe propery, including he consrucion o new 

 buildings. “Abandoned” means closed or a leasone year, meaning virually any propery could bemade eligible or his credi.

[Worst] PiCking Winners &

losers instead of Cutting t axes H 3720: Passed House; reerredto Senate Finance Committee 

Tis bill would give a 10-year corporae incomeax break o any company seeking o move or ex-pand is naional corporae headquarers in SouhCarolina. As repored by Te Nerve , he bill seemso have been writen on behal o wo Greenvillecompanies. A similar credi – which cos $9 mil-

lion in FY2009 alone – is already oered by hesae.

[Worst] retroaCtive t ax “inCentives”S 533: Passed by General Assembly; vetoed by governor;veto sustained

Tis bill would have graned sales ax exempions worh approximaely $1 million on machinery,

 building maerials, and elecriciy purchased by nonpros researching he impac o naural haz-ards on buildings. In order o qualiy, he nonpro

 would have had o inves $20 million over hecourse o hree years, including pas invesmens.Only one nonpro acually qualied – he In-siue or Business and Home Saey in CheserCouny. Te bill passed, was veoed and hen he

 veo susained … because he General Assembly 

had already passed his same incenive package(Ac 280 o 2010) or he same nonpro las year.

 A Deparmen o Revenue (DOR) inerpreaiono Ac 280, however, had concluded he insiue

 was no eligible or he incenives. When DOR re- versed course, he new law was no longer needed.Te sory is oo bizarre o be old in ull here, bu

reporer Eric Ward a Te Nerve has covered i indeail. (See also H 3695.)

[Worst] suBsidizing hollyWood ProduCers S 49: Reerred to Senate FinanceCommittee

Tis bill would have increased payroll ax breaksrom 15 percen o 20 percen and doubled re-

 baes (rom 15 percen o 30 percen o expenses)on in-sae purchases made by lm producioncompanies. In lieu o he bill, however, he General

 Assembly again passed a budge proviso (39.13)increasing lm incenives by he same amouns.Te Senae had sripped he proviso ou o is bud-ge, bu i was added back once he budge weno conerence commitee. Te Policy Council has

 writen abou how ineecive lm incenives are acreaing jobs. In ac, hey ypically do he opposie– or each ax dollar given in rebaes, he govern-men loses $0.81 in revenue.

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[Best] Creating eduCation t ax Credits for a t-risk  Children 

H 3407: Failed by one vote in theHouse

Tis bill would have provided educaion scholar-ships and credis o low-income amilies who wano send heir children o qualied privae schools;creaed new ax credis or chariable donaions oschool scholarship unds; and provided ax relie o parens homeschooling heir children. Includedin he bill are provisions requiring independen as-sessmens o he ollowing benchmarks: he scal

impac o implemening a scholarship program;he academic achievemen o he enrolled su-dens; and suden and parenal saisacion levels.

 All in all, he bill would have expanded educaionalopporuniies, enabled chariable giving, and com-pelled he sae o consider wheher governmen-run schools are he mos cos-ecien and aca-demically successul way o educaing our children.

[Best] giving sChool distriCts more disCretion in 

P aying teaChers H 3716: Passed House; reerred toSenate Finance Committee

 Among oher hings, his bill seeks o amendhe “index o axpaying abiliy,” he complicaedmechanism o allocaing sae unds o local schooldisrics. An alernaive explored in our reporUnleashing Capitalism would involve eliminaing

he index alogeher in avor o  weighed sudenunding. Currenly, Souh Carolina allocaes only a porion o is educaion dollars on a weighed

 basis; his bill renes and updaes he caegories.Te bill also gives local disrics more auhoriy in deermining eacher compensaion. Insead o requiring disrics o auomaically increase eacherpay on an annual basis, H 3716 would leave hisdecision up o he disrics. Te bill also esablishesa commitee o develop an incenive pay srucure.

 Again, hough, i seems individual disrics are beter equipped o look a his issue on heir own.Moreover, he commitee only includes eacherrepresenaives. Oher sakeholders, such as ax-

payers and parens, should also be represened.

[Best] e xPanding Weighted student funding S 433: Reported avorably out o Senate Education Committee;reerred to Senate FinanceCommittee

Tis bill would add, rene or expand several im-poran caegories o weighed suden unding:

unding or gied and alened sudens; impov-erished sudens; sudens wih limied Englishprociency; sudens enrolled in virual charerschools; and sudens enrolled in brick-and-mor-ar charer schools. As we discuss in our reporUnleashing Capitalism , weighed suden unding

 would enable schools o provide educaional o-erings ailored o specic suden needs. Unoru-naely, his bill doesn’ go ar enough, mainaininghe sae’s “index o axpaying abiliy” raher han

Education

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sending unding direcly o schools. Te bill wouldalso give school disrics he opion o implemen-ing an incenive compensaion sysem regulaed by he Board o Educaion.

The frst year o the 119th session

of the South Carolina General As-

sembly began January 11, 2011.

The House took two one-week 

  urloughs, while the Senate opted

not to take any urlough days. Per 

  the Sine Die resolution, which es-  tablishes the date by which the

General Assembly must conclude

its business, both chambers ad-

  journed on June 2nd or a brie 

recess. They returned June 14th

 through June 29th or the Senate to

complete work on the budget, and

so both chambers could take up

legislation dealing with reapportion-

ment and congressional redistrict-

ing. Both chambers subsequently

returned or a single legislative day

on July 26th to fnalize details on the

congressional redistricting plan. The

South Carolina General Assemblyofcially adjourned on July 26th and

 will return on January 10, 2012, or 

  the second year o the 119th ses-

sion.

• 1,534 bills and joint resolutions

introduced

• 100 passed

• 3 vetoes overridden by both

chambers

“Green” Tax Credits Not So

Popular

 As in recent years, legislators contin-

ued to push or targeted tax credits

 or environmentally riendly causes.

One o these, H 3059, passed the

House and would extend the cur-

rent $2,000 income tax credit on

plug-in hybrid vehicles or fve more

years. Only 10 taxpayers took ad-

  vantage o the credit in FY2008-

2009. Other green targeted tax

credits include:

S 32: Income and sales tax credits

on the purchase o solar and/or re-newable energy equipment.

S 190: An extension o income tax

credits related to the production o 

ethanol and soy-based biodiesel.

H 3218: Sales tax exemptions on

solar panels.

SeSSion o VeRView 

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[Worst] destroying the free m arket for health insuranCe 

H 3738: Reerred to HouseWays & Means Committee

Tis bill would esablish a sae-based healhexchange in Souh Carolina ha gives sae andederal bureaucras vas new powers over healhcare insurance. Te exchanges are widely regardedas he linchpin o he ederal Aordable Care Ac (popularly known as “Obamacare”). Tis billsalled in commitee, bu look or healh exchangelegislaion o gain momenum in 2012 once Gov.

Haley’s planning commitee issues is repor inOcober 2011.

[Best] e xPanding health C are ChoiCe S 185: Reerred to Senate Banking &Insurance Committee

Tis bill would allow he sale o ou-o-sae insur-ance plans ha oer dieren coverage mandaes

rom hose required by Souh Carolina law.(Georgia has already passed such a reorm.) SouhCarolina healh insurance plans currenly have29 mandaes, which raise he price o insurance

 by an esimaed 30 percen. Oher saes – Idaho(13); Alabama (19); Hawaii (23) – have ewermandaes. Tis law would allow consumers morechoice in selecing he level o mandaed coveragehey are comorable wih. An even beter opion is

o eliminae mandaes alogeher, allowing insurerso cusom-ailor plans suied o consumer needs.

[Worst

]inCreasing state health insuranCe Costs S 586: Vetoed by governor; vetooverridden by both chambers

Tis law expands coverage oered by he SaeHealh Plan o ye more groups. Te plan already covers eachers and oher ull-ime sae employ-ees, in addiion o couny/municipal employeesand a hos o oher groups, including employees

o special purpose disrics. Now legislaors haveadded wo more caegories: municipal saniaionservice workers and employees o join municipalpower agencies. In ligh o he massive amouno ununded reiree medical liabiliies – abou $9

 billion – he sae is already carrying, i’s an espe-cially bad idea o add more paricipans o he SaeHealh Plan. (See also S 524.)

Health Care

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[Best] reCording e very v ote H 3004: Signed into law by governor 

Tis law requires every bill and join resoluionpassed by he Legislaure o receive a recorded voe. In he pas, large numbers o bills passed orailed on anonymous “voice voes,” wih he resulha individual legislaors couldn’ be held accoun-able or many o heir decisions. Tis law allows

 voice voes only on hird reading when he billunder discussion has no been amended (he bill

 would have already received a recorded voe onsecond reading). In shor: all legislaion passed by he Souh Carolina General Assembly will have a

recorded voe associaed wih i.

[Best] restruCturing the e xeCutive BranCh H 3066: Passed House; amendedon second reading in Senate 

Originally his bill would have creaed a Depar-men o Adminisraion, creaed hree new sub-agencies o ake over some o he Budge andConrol Board uncions, and ye kep he Board

inac – hus duplicaing governmen raher hanconsolidaing and limiing i. Bu he Senae radi-cally amended he legislaion o include a measureabolishing he Board alogeher. Deails aside,eliminaing he Budge and Conrol Board is asignican sep in he righ direcion. Bu muchremains o be done. As our repor on he sub-

 jec showed in more deail, abolishing he Boardshould also mean requiring he governor o wrie a

robus execuive budge, orcing he Legislaure oake responsibiliy or making argeed budge cusand auhorizing bond deb, and requiring moreransparency and beter scal impac analysis romhe Oce o Sae Budge. (See also S 10.)

[Worst] P assing B ad Provisos into Permanent l aW S 418: Reerred to SenateFinance Committee

Tis bill has already received a avorable commiteerepor, in spie o he ac ha i doesn’ ye haveany conen – lierally. Expec legislaors o su iull o pe projecs and pork beore i his he foorin 2012 – and all hose bad provisos we repor onevery year will simply disappear ino he perma-nen code.

[Best] Putting the governor  and lieutenant governor on the same tiCket H 3152: Passed House; avorable

majority report rom Senate Judiciary subcommittee

Several resrucuring bills inroduced his year would srenghen he Execuive Branch – a much-needed reorm in a sae dominaed by he Leg-islaure. Tis join resoluion would iniiae heprocess o amending he sae consiuion so as oprovide or he join elecion o he governor andhe lieuenan governor.

Government

Reform and

Restructuring

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[Best] governor a PPoints suPerintendent of eduCation H 3070: Passed House; avorablemajority report rom Senate Judiciary subcommittee

Tis join resoluion would iniiae he process o amending he sae consiuion so as o auhorizehe governor o appoin he superinenden o edu-caion. Legislaors inroduced similar bills aimeda reducing he number o eleced consiuionalocers, such as H 3071 and H 3072.

[Best]offiCe of insPeCtor general S 258: Passed Senate unanimously;debate adjourned in House

Tis bill would sauorily esablish he posiiono inspecor general. Te inspecor general would

 be appoined by he governor or a our-year ermand asked wih “invesigaing and addressing al-legaions o raud, wase, abuse, mismanagemen,misconduc, violaions o sae or ederal law, and

 wrongdoing in agencies.” Te law gives he inspec-or general auhoriy o conduc invesigaions andoer policy recommendaions aimed a rooing ougovernmen corrupion and wase. I also requireshim o repor all alleged crimes o he governorand law enorcemen. Tis law would apparenly supersede he governor’s own execuive order esablishing he Oce o Inspecor General. (Seealso H 3052, H 3066.)

[Best] shortening session H 3889 and H 3890: Both reerredto House Judiciary Committee

Souh Carolina has he longes legislaive sessionin he Souheas (we’re ied wih ennessee), andhe sixh longes in he naion (ied wih sevenoher saes). Longer sessions mean legislaorsspend more ace ime wih lobbyiss and less wihconsiuens, and hey mean higher adminisra-ive coss and more per diem expenses. Te rso hese measures would shoren session by onemonh, rom he rs Tursday in June o he rs

uesday in May. Te second would iniiae he pro-cess o amending he consiuion in order o moveorward he sar o session rom he second ues-day o January o he second uesday o February.Boh measures ailed o emerge rom commitee.

[Best] Biennial session S 173: Reerred to Senate JudiciaryCommittee

Tis join resoluion would begin he process o amending he consiuion so as o implemen a

 biennial session.

[Best] ProhiBiting t axPayer funded loBBying H 3175: Reerred to House JudiciaryCommittee

Tis bill would prohibi every agency rom usingsae unds o engage in lobbying aciviies. In hemeanime, he General Assembly passed a budgeproviso (90.20) ha orbids agencies rom usingGeneral Fund appropriaions on lobbying acivi-ies. Agencies may sill use Oher Funds revenueor such purposes. A relaed bill, H 4309, wouldprohibi school board associaions and similar

 bodies rom unding lobbying aciviies.

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Souh Carolina’s long legislaive sessionprovides pleny o opporuniies or legis-laors o ake up bills ha are eiher rivial,nonsensical, or boh. Here is a sampling:

S 86 would regulae he pracice o braid-ing hair using hair exensions – apparenly he public’s healh and saey are a risk here. Status: In commitee; sill pending(may come up in 2012).

S 87 would require barbers o obainconinuing educaion credis. Because we

know how oen men’s hairsyles change.Status: Inroduced in 2009; re-inroducedin 2011; sill pending.

S 105 would direc he Deparmen o ransporaion o pos signs along hesae’s major roads direcing drivers o“agro-ourism-oriened aciliies engagedin educaional or agro-ourism aciviies.”Status: In commitee; sill pending.

S 591 would give ax credis o compa-nies ha hire unemployed workers. As

 we wroe in he 2009 Best and Worst  , his bill arbirarily rewards some businessesover ohers, and in any case he credi isoo narrow and oo emporary o acu-ally work. Te esimaed cos o his badidea is $100 million. Status: Inroduced in2009, given a avorable repor by SenaeFinance Commitee in 2011; sill pending.

S 823 designaes collards as he ocialsae vegeable. Status: Aer lenghy andsomeimes conenious debae, his bill

 became law in June.

S 850 would cap he price o gasoline soldin Souh Carolina. Status: In commitee;sill pending.

H 3030 would require schools o providewo years o (axpayer unded) swimminglessons o high school sudens atend-

ing schools wihin a cerain geographicalproximiy o a swimming pool. Nevermind ha babies and small children, nohigh school sudens, have he highes risk o drowning. Status: Inroduced in 2009;re-inroduced in 2011; sill pending.

H 3093 would require musical herapisso be licensed and subjec o oversigh

 by he Souh Carolina Board o Music

Terapy. Te usual regulaions and licens-ing ees would apply. Status: Inroduced in2010; re-inroduced in 2011; sill pend-ing.

H 3136 would impose nes and criminalpenalies or releasing 20 or more helium-lled balloons over he course o an hour,even hough here are already laws againslitering and vandalism. Status: Inro-duced in 2010; re-inroduced in 2011; sill

pending.

H 3397 designaes he Florence Couny Pecan Fesival as he sae’s ocial pecanes. Status: Signed ino law by governor.

H 3776 is a concurren resoluion cel-ebraing ree arming in Souh Carolina.Status: Adoped by boh chambers.

H 4073’s purpose is o “saeguard lie,healh, and propery, as well as consumerproecion, and o promoe he public

 welare by improving he qualiy o hu-man environmenal design.” Tis is o bedone by requiring inerior designers oregiser wih he sae and assess ees andnes on oulaw inerior designers. Status:In commitee; sill pending.

long SeSSion leadS to Silly legiSlation

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   S O  U T H

 C A R O L I  N   A 

P  O  L I C Y  CO U  N C  I   L

The South Carolina Policy Council

 was founded in 1986 as an independent, private,

non-partisan research organization to promote

 the principles of limited government, free

enterprise and individual liberty and

responsibility in the state of South Carolina.

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