Session Week 6

Key Points for This Week
● House Ways & Means Budget Proposal
● Senate Passes Property Tax Reforms

The One-Minute Drill
The Big Picture: The General Assembly wrapped Week 6 with 36 legislative days remaining. The House floor was quiet this week to allow the House Ways & Means Committee to complete their work on the budget, while the Senate resumed their debate on tax relief bills.

1. House Ways & Means advances $15.4 billion budget
The News: The House Ways & Means Committee unanimously voted to approve sending their version of the $15.4 billion general fund spending plan to the floor.
● The Details: This is the first draft of the budget, and was more austere than expected.
●The Catch: The budget included assumptions for the revenue needed to fund the Senate’s homestead exemption property tax bill (see below), and the House’s income tax bill as well as tax conformity – all of which eat at large chunks of the available recurring revenue. Chairman Bruce Bannister (R-Greenville) and the subcommittee chairs emphasized the budget is a “process” and this is the earliest draft of the budget, hoping for additional funds to allocate later this spring. Though recent RFA estimates show there may not be more revenue available as some segments of tax collections appear to be slowing quickly.

● What’s in:
○ $500 million for infrastructure projects
○ $150 million to increase starting teacher pay to $50,500
○ $175 million for the MUSC’s cancer hospital
○ $66.9 million for a 2% raise for state employees

● What’s Out:
○ Member requested projects (those will be taken up in H2 if revenue permits)
○ The $150 million requested by the Department of Commerce to offset cost overruns associated with the Scout Motors project.

● What’s Next: The budget will now be printed and placed on the members desks for the body to review and prepare amendments. The body will debate the bill the week of March 9. The Senate will then run through their budget process, before the House takes a final stab at the spending plan in May.

2. Homestead Exemption
The News: After significant debate, the Senate unanimously passed S.768, a bill that expands the homestead exemption on primary residence property taxes for anyone 65 and older.
● The Details: The bill increases the property tax exemption from $50,000 to $75,000 for anyone 65 and older who moves to SC and lives here for 5 years, and then a full expansion of $150,000 after 10 years (current residents do not have to meet the residency requirement).
● The Guardrails: The bill contains a non-severability clause - meaning if the state or US Supreme Court strikes down a part of the bill (residency requirement clauses are being challenged across the country), the entire bill goes down with it.
● The Aftermath: Debate brought up significant questions and concerns around South Carolina’s property tax structure, and housing affordability, especially for younger professionals. Chairman Harvey Peeler (R-Cherokee) has appointed Senator Sean Bennett (R-Dorchester) to spearhead a new Senate Subcommittee focused on tax reform, and affordability is expected to be a large part of the conversation.

On The Floor
House
● Maximum Unemployment Benefits: The House unanimously passed a bill that would index unemployment based on the current unemployment rate.

Senate
● Name, Image and Likeness: After passing fast-tracked legislation (H.4902) that would shroud details of Name, Image and LIkeness Deals obtained by college students by a vote of 30-13 on second reading Tuesday, the body did an about-face on Wednesday during what is normally a perfunctory vote on third reading. The issue? Transparency.

In Committees
Data Centers: S.867 
A Senate Ag Subcommittee took testimony on the bill, with additional meetings planned for next week.
Concurrency: H.4050
Various concurrency proposals are in committees (and various bills) to regulate development based on available infrastructure. The future of these proposals appears to be dim in this session.

The Week Ahead
In the Senate:
● Floor Watch: Expect a heavy focus on the Income Tax Reduction Bill (H.4216).
● The Budget: Subcommittees will continue to meet in the Senate as they begin their work in preparation to take up the budget in late April.
●Prescription Drug Pricing: A LCI subcommittee will meet Wednesday to debate S.342, a proposal that would dramatically increase prescription drug costs in the state.
● Data Centers: An Agriculture and Natural Resources subcommittee will continue taking testimony on S.867, the data center overhaul bill.
● DOT Reform: A Senate Transportation subcommittee will meet again, and is expected to advance their version of the department overhaul to full committee.

In the House:
● Floor Watch: We expect the House to continue to clear the calendar in preparation for their work on the budget. There are several bills still on the contested calendar that could make for lengthy debate including Hemp regulation (H.4758) and a bill regarding the display of the 10 Commandments in schools (H.4762).