2005 Top Legislative Items in SC
June 15, 2005

2005 Top Legislative Items in South Carolina

As compiled by Hodges Consulting Group

The budget debate for fiscal year 2005-2006 was the smoothest in recent memory. With growth in revenues, the House and Senate were able to fulfill the obligations in priority areas of education, health care, and the work force.

Some of the top items included in the budget are:

- The Education Base Student Cost was fully funded for the first time in five years;

- Medicaid growth received $67,562,394 for health agencies;

- State employees received a pay increase of 4%;

- Law enforcement officers received a pay increase of 10%;

- $5 million was appropriated to fund beach renourishment;

- The General Reserve Fund was fully restored ($78 million);

- 40 trust funds that were borrowed from during the recent fiscal crisis are fully restored, and two trust funds are partially restored;

Even though the Governor vetoed 163 budget items, the House and Senate overrode all but 24. As reported in all of state media outlets, the rocky relationship between the Legislature and the Governor's Office continues.

After Rep. Altman called a TV reporter "not very bright" for comparing cockfighting penalties to domestic violence penalties, the domestic violence bill made a major media splash. The bill, which sets tougher penalties of higher fines and felony status for third offenders for domestic violence, sped through both bodies and was ratified on June 2. Signed into law June 7.

Charter Schools - a bill that would have created a statewide charter school district did not pass. The House bill remains on the Senate Contested Calendar for second reading with objections by Senators Pinckney, Matthews and Ford. Did not pass.

Clusters (SC Education and Economic Development Act) - Develops a career cluster system to be implemented in phases through the year 2011. Under this model, high school students will declare an area of academic focus within a cluster of study. Guidance counselor to student ratios will gradually decrease to better implement the program. This bill passed the General Assembly on May 19 and has been ratified. Signed into law.

Financial Literacy - Curriculum and materials regarding financial literacy will be incorporated within courses currently offered in SC High Schools. This will include everything from balancing a checkbook to understanding simple contracts and taxes. Signed into law April 15.

Funding - This was a victorious budget year for public education. For the first time in five years, the base student cost was fully funded. Other mentionables include:

Students' Health and Fitness Act - Elementary students will receive 30 minutes of physical activity daily. The ratio of physical education teachers to students will decrease over the next few years. This bill requires school boards to establish policies limiting sales of foods and beverages of minimal nutritional value during the school day, but does not restrict foods which parents may provide for the child to consume at school. It also provides that each district shall determine which snacks may be sold in vending machines in elementary schools. This bill was ratified on May 26. Signed into law.

Put Parents in Charge Act - After much public debate and out-of-state money spent on lobbying efforts, the Put Parents in Charge Act was tabled in the House on May 4, not to be brought up again during this session. The bill called for giving tax credits to parents with taxable incomes of $75,000 or less to underwrite home-school expenses, or tuition at a private or another public school. Although there were efforts to reconsider the bill and new legislation was introduced late in the session, this debate ended suddenly. It will be back in 2006. Did not pass.

South Carolinians voted in a November 2004 statewide referendum to allow free pour liquor in the state and lawmakers passed a bill to ratify the referendum and allow bar owners to choose to eliminate the sale of mini-bottles. Effective date January 1, 2006. Signed into law.

Restructuring

Although there was much public discussion regarding government restructuring, little was done legislatively. Election of Constitutional Officers was unchanged and the system of state government will see only minor modification. Did not pass.

After years of debate, the primary enforcement of seatbelts was ratified on June 2. Car riders in South Carolina can now be stopped for not wearing a seatbelt and receive a maximum $25 fine. This bill became law without the signature of the governor.

In the last days of the session the conference committee agreed on several steps to strengthen the Retirement System. Senate Bill 618 will allow the TERI benefit to remain with the employee paying the required active share to the system.

Employer contributions will increase by 1% to 8.55% over the next two years and employee contributions will increase by .5% to 6.5% over that same period.

The benefits changes include:

- Elimination of annual leave payout for new TERI participants

- Requires average final compensation calculation to include unused leave at termination

- Removes earnings limitation

- Eliminates at-will/no grievance for state employees (does not apply to agencies not governed by state personnel procedures like school districts.)

- Guarantees 1% COLA and allows Budget & Control Board to grant more

The committee also set up an investment commission with the state Treasurer as a non-voting member. The panel will be responsible for hiring a Chief Investment Officer to set targets for investment strategies and also be allowed to invest up to 70% in the stock market, up from 40%.

Signed into law.

One of the governor's signature proposals for the 2005 legislative session was to lower personal income tax from 7% to 3.9% over several years. Although this measure passed the House, the Senate substituted the Small Business Income Tax Reduction in an effort to encourage growth and expansion of small business. The amended version was accepted by the House as the small business rate drops to 5 percent from 7 percent, putting them in line with what large corporations already pay.

The new law provides a State income tax reduction for "pass-through" businesses, defined in the bill as sole proprietorships, partnerships, and 'S' corporations, including limited liability companies taxed as sole proprietorships, partnerships, or 'S' corporations. The bill reduces the state income tax rate for these businesses by 0.5 percent a year over the course of four years beginning in 2006 so that, after 2008, such businesses are to be taxed at a rate of 5 percent. This bill approved by the General Assembly has been signed into law as was the Jobs Creation Act which will offer tax credits to smaller companies locating in South Carolina. Employers paying less than 120 percent of the county's average income would get only half the tax credit. This was ratified by the General Assembly June 6. Signed into law.

Gas and Tobacco - Attempts to increase taxes on gas and tobacco failed again in 2005. Did not pass.

Local-Option Tax - Lawmakers failed to agree on legislation that would let voters in the state's 46 counties decide whether to pay an extra penny sales tax for seven years to pay for school construction and related bills. Did not pass.

Property - Although several attempts were made, lawmakers could not reach a consensus on cutting property taxes. The House and Senate each created panels to study the issue over the summer. One proposal: a constitutional amendment that could be on the ballot in November 2006. Did not pass.

After a three-year debate on changes in the Civil Justice System the legislature passed two bills this session that will impact Medical Malpractice and General Torts.

- Caps on awards will be limited to $350,000 on up to three liable defendants for maximum non economic exposure of $1.05 million.

- Occurances of gross negligence and economic damages are not subject to a cap on jury awards.

- Signed into law April 4.

There were six areas of debate on the General Tort legislation.

1. Caps - No caps on jury awards set on general torts or punitive damages

2. Frivolous Proceedings - establishes new provisions designed to prevent frivolous lawsuits

3. Joint and Several - If indivisible damages are caused by more than one defendant, joint and several liability does not apply to any defendant whose conduct is determined to be less than 50% of the total fault for the indivisible damages. A defendant whose conduct is determined to be less than 50% of the total fault shall only be liable for that percentage of the indivisible damages determined by the jury or trier of fact. The law does not apply to a defendant whose conduct is determined to be willful, wanton, reckless, grossly negligent, or intentional or conduct involving the use, sale, or possession of alcohol or drugs.

4. Statute of Repose - Regarding construction defects, the Statute of Repose or time when a lawsuit may be filed is lowered to eight years from 13.

5. Venue - the place where a jury is drawn and in which the trial is held. Civil actions may take place in -

1. The defendant's county of residence;

2. Where the action arose;

3. Where a corporate plaintiff has its principal place of business

6. Attorney Advertising - it is unlawful for an attorney to advertise services in a false or misleading manner. Nicknames (such as the "Heavy Hitter") are included in this prohibition.

* Signed into law March 21.

After serving 11 years as Speaker of the SC House and 25 years as a legislator, David Wilkins is off to Canada to serve as Ambassador. President Bush's appointee several times became emotional during his farewell speech, as Wilkins reflected on his years of service and those who have touched him along the way.

A heated race for a new Speaker developed for three months and was potentially divisive to the Republican Caucus. In the end, candidates Jim Harrison, Doug Smith and Doug Jennings withdrew and Rep. Bobby Harrell (R-Charleston, Chairman House Ways & Means) was elected. This creates an opening to lead Ways & Means, one of the state's most powerful positions as it carries a seat on the Budget & Control Board.