2008 Legislative Year-In-Review

Despite the fact that 2008 was an election year for both House and Senate members, the South Carolina Chamber of Commerce still had a moderately successful year saving South Carolina businesses more than $510 million. Combined, the two-year cycle of the 117th General Assembly garnered almost $1 billion in savings for businesses in the state.

Immigration Reform Deemed Issue of the Year

The immigration bill eventually stalled in a conference committee, led by Sen. Jim Ritchie (Spartanburg), in late February. At the same time, the deadline for South Carolina to comply with the federal REAL ID program, passed in 2005 by Congress to fight terrorism and reduce fraud by making it more difficult for imposters to obtain ID cards, was rapidly approaching. States that did not apply for an extension by the end of March 2008 would face restrictions on citizens’ ability to board commercial aircraft and enter federal buildings. In 2007, the General Assembly passed legislation refusing to comply with REAL ID. With the state facing the deadline, the General Assembly passed a joint resolution urging the governor to file for an extension. Governor Sanford worked closely with Department of Homeland Secretary Michael Chertoff, and although the governor is opposed to complying with REAL ID, the Department of Homeland Security granted South Carolina an extension, just hours before the deadline. Throughout this process, the Chamber reminded legislators that compliance with REAL ID would ultimately help solve the illegal immigration problem because it would force the state to issue tamper proof ID cards after verifying the legal status of residents.

As the General Assembly continued to work on a compromise bill, they began to realize that the slightest change to language created unintended consequences and that immigration reform was best left to the federal government. Legislators eventually approved a plan requiring employers to verify employees through the eVerify program or state driver’s licenses or a combination of documents that prove eligibility for a South Carolina driver’s license - requirements very similar to the federal I-9 form.

Governor Sanford quickly signed the legislation into law surrounded by many members of the General Assembly. The law creates an implied state business license, which can be revoked if an employer is found to knowingly hire an illegal worker. The law also mandates fines for employers each time they fail to verify the legal status of a worker and charges employers who knowingly hire an illegal worker with a felony.

Cigarette Tax Increase Up In Smoke (Again)

With so many days spent on immigration reform, lawmakers didn’t leave much time to delve into other major issues like the rising cost of health insurance. Early in the session, lawmakers did pass legislation that allows small businesses to pool together to purchase health insurance for employees. Employers are increasingly facing escalating premium costs that are ranking just behind payroll in expenses for small businesses.

For over a year, the business community, health care professionals, the insurance industry and other allied groups – the Covering Carolina Collaborative – worked together to develop a comprehensive plan to address the uninsured, which is estimated at more than 700,000, while eventually stabilizing premium rates. The plan would have provided tax credits for small businesses to provide health care coverage for employees and provided premium assistance to employees ineligible for Medicaid. It also would have extended Medicaid coverage to low-income parents living below 100 percent of the Federal Poverty Level and expanded Medicaid coverage to many uninsured children. A safety net pool for low-income citizens to compliment the disproportionate share (DSH) pool and ultimately encourage managed care was also part of the plan.

The General Assembly grappled with increasing South Carolina’s lowest in the nation cigarette tax, currently 7-cents per pack, to fund the initiative. In early April, Senator Thomas Alexander (Oconee) unveiled a revenue-neutral amendment that would have provided a tax credit of $1250 for employees and an additional $650 for dependents by raising the cigarette tax by 50 cents. Unfortunately, due to committee amendments, those credits were reduced to insignificant amounts. The Senate Finance Committee instead chose to allocate more than $150 million to Medicaid. The Chamber maintained that the Covering Carolina plan could best work if all tenants were incorporated.

Other Senate leaders rallied around a 50 cent increase in the cigarette tax with the first $5 million going to smoking cessation programs and the remaining dollars being split between premium assistance for employees of small businesses and a Medicaid match, providing coverage for an additional 120,000 South Carolinians. The Senate passed the cigarette tax increase and sent the bill to the House. In the waning days of the legislative session, the House largely supported the Senate compromise. Governor Sanford vetoed the legislation, and the House sustained his veto, killing the cigarette tax increase for another year.

PACT Test Replaced, Endowed Chairs Reauthorized

The General Assembly passed its major education reform initiative of the year to replace the outdated Palmetto Achievement Challenge Test (PACT) in favor of a more diagnostic-style examination to provide student results to teachers more expediently. The legislation also will eliminate redundant paperwork in academic planning.

The General Assembly overrode the governor’s veto of legislation that reauthorizes the Endowed Chairs program that is helping build South Carolina's knowledge-based economy and creating higher paying jobs in the state. And, as South Carolina faces a severe future nursing shortage, legislation was achieved to provide scholarships and salary improvements for nurses.

Unfortunately, one initiative supported by the Chamber, the expansion of four-year-old kindergarten for at-risk children, passed the Senate but stalled in the House Ways and Means Committee.

Highway Funding Stalls Again

Infrastructure was again a leading priority for the House and Senate in 2008. Many legislators rallied around an idea to transfer dollars from the state sales tax on vehicles to South Carolina roads. The legislation would have invested $700 million over 10 years, which is currently going to the General Fund. The House passed the legislation in April, but Sen. Hugh Leatherman (Florence), chairman of the powerful Senate Finance Committee, repeatedly stated that he wanted funding for highways to come from an increase in the state’s gas tax, which is an unpopular political solution with gas prices close to $4 per gallon. Unfortunately, the Senate has failed for two years in a row to address this critical issue.

In Lean Year, Economic Development Incentives Achieved

In a tight budget year, marquee items that passed the General Assembly included numerous economic development incentives for the manufacturing and construction industries and additional dollars for tourism marketing.

After the General Assembly rallied around 2006-property tax reform that negatively impacts South Carolina businesses, legislators realized this year that their property tax bill creates numerous funding issues and shortfalls while placing additional burdens on business. Legislation to undo portions of point of sale provisions in the 2006 property tax legislation was introduced, which would have exacerbated property tax inequities for the business community. The Chamber helped defeat the piecemeal measure in support of comprehensive tax reform at the state level.
The Senate debated state spending caps but in the end fell one vote short in sending a bill to the House.