January 22, 2010
General Assembly's Second Regular Session Under Way
The second regular session of the 118th S.C. General Assembly convened Jan. 12. This is the second year of the two-year session. Typically, legislators meet for 20 weeks, but the session is expected to be cut short by at least four weeks and maybe more like last year to save money. That reduces the time committees can work on bills, forcing lawmakers to address legislation of top priority. Republicans control both chambers of the General Assembly.
Some of the key issues addressed will be the budget, point-of-sale property tax relief, 2-for-1 state matching funds for destination promotion, Interstate 73 and the cigarette tax. With 2010 being an election year, legislators are reluctant to take on any new controversial or high-profile issues.
Budget
The legislative session is expected to be a gloomy one, dominated by lower revenues and the need to make still more budget cuts and possibly slash agencies and local governments even more than they were last year. The budget will hinge on health care spending, and much of that will be dictated by what the federal government does.
The session begins with the state facing a budget shortfall of more than $575 million. Lawmakers will push for measures to create new jobs. Chief among their proposals is a bill introduced by House Speaker Bobby Harrell offering a package of economic development incentives crafted by business leaders. To make the state more attractive to potential employers, the bill would phase out corporate income taxes over 10 years and allow local governments to offer broader property tax breaks and other incentives. These initiatives have merit but need careful construction to avoid reducing the state coffers in a year of unprecedented budget woes.
A bill is being considered to reform the Employment Security Commission, the agency responsible for managing jobless benefits and helping the homeless find employment. The state has been forced to borrow close to $1 billion to pay jobless benefits.
2-for-1 Matching Grant
Lawmakers hope to continue funding of the 2-for-1 tourism marketing matching grant and other boosts for tourism because visitor spending is a key piece of the state’s economy.
Point-of-Sale Tax Relief (Act 388)
The proposal for the point-of-sale bill seeks to cap at 15 percent any increases in the value of property when it transfers. The real estate industry opposes the current law, which requires tax values to increase to current ones when property is sold, hurting sales and causing some prospective business buyers to seek property in other states. Heavy debate is expected on the topic, with lawmakers concerned about the subsequent losses of funds to city and county governments if taxes are capped.
The bill, under the compromise currently being considered, exempts commercial real estate, second homes and other properties taxed at 6 percent from reassessments when they are sold, which can add a substantial tax to the transaction. The proposed tax relief doesn’t include owner-occupied homes, which are taxed at 4 percent. Schools, counties and local governments said rescinding point of sale would hit their budgets for an estimated $44 million, according to the Board of Economic Advisors.
The compromise would have suspended point-of-sale reassessment for one year for commercial property and second homes and then stepped up the tax liability for the new, additional property value to a maximum of 80 percent.
Interstate 73
The state must, at a minimum, continue its annual $1 million outlay for land acquisition along the I-73 route, as that will demonstrate to the federal government that South Carolina is committed to the project even during difficult economic times.
Cigarette Tax
A 50-cent increase in the state’s cigarette tax from 7 cents a pack is still alive in the second session. The bill passed the House by a wide margin in the first general session and cleared the Senate Finance Committee, although with some amendments. The national average is $1.34 a pack.
Sources: Information has been compiled from reports in The Sun News (Myrtle Beach), The State (Columbia) and Associated Press.
For legislative tracking on specific bills, visit the chamber's Government Relations page.
On the Net
MyrtleBeachAreaChamber.com
SCStateHouse.net
House.gov
Senate.gov
USA.gov
SCChamber.net
USChamber.com
I-73.com
