Session Week 7

Key Points for This Week
● Senate Amends (and passes) Income Tax Reform
● Training for alcohol service
● DOT reform moves in Senate

The One-Minute Drill
The Big Picture: Income Tax reform advances, hospitality community gets a break, DOT reform moves in the Senate with no new taxes included in the bill.

1. Senate Amends and Advances Income Tax Reform
The News: The Senate advanced H.4216, the income tax reduction bill, by a vote of 39-5.
● The Details: The SC Senate amended and advanced the income tax reduction bill on Tuesday, with the amendment coming from a surprise source - Senator Lee Bright (R-Spartanburg), co-sponsored by Chairman Harvey Peeler (R-Cherokee). The amended bill accelerates the tax reduction process.

The amended version of the bill:
○ Eliminates the federal standard and itemized deductions, and lets state taxpayers claim a state income adjusted deduction
○ Shifts the state's 6% top income tax rate down to 5.21%
○ Requires that anyone with taxable income of up to $30,000 pay 1.99%
○ Requires that anyone with taxable income above $30,000 pay 5.21%
○ Phases the income tax to zero, if the state takes in enough revenue, but this could take decades.

● The Cost: The House version hit the state budget revenue in year one by $119 million. The Senate doubled that to $308.7 million, which will have a big impact on the budget as they continue to work through the FY 2027 budget process.
● What’s Next: The amended bill now heads back to the House for concurrence. If they opt not to concur, the bill will head to conference committee where three appointees from the House and three from the Senate will hash out the details.

2. Alcohol Training Courses
The News: On Wednesday, the House introduced a Joint Resolution (H.5261) extending the deadline for bars & restaurants to complete State-Mandated alcohol-serving courses, which were supposed to be completed by Monday. However, only about 20% of establishments have been able to complete the courses. Meaning 80% of these business would be operating illegally beginning Monday.
● The Details: Legislation in the alcohol regulation passed last year required bars and restaurant owners to have their staff complete alcohol training and safety courses. However the Department of Revenue failed to create the courses in a timely manner. The new resolution extends the deadline until May.
● What’s Next: The bill was fast tracked on Wednesday, with the body waiving the usual committee procedure. The Senate should get the resolution next week, and the hope is that the Senate will also fast-track the resolution, getting it done by late next week.

On The Floor
House
● 10 Commandments: The House spent Wednesday debating a bill that would require the 10 Commandments to be posted in schools. The legislation passed by a party-line 84-31 vote and requires at least an 11-by-14 inch Ten Commandments poster to be displayed in every K-12 public school and college classroom no later than January 2027. The language mentions other historical documents — the Emancipation Proclamation, the Declaration of Independence, the Mayflower Compact, and the Northwest Ordinance — can also be displayed. 

Senate
● Name, Image & Likeness Wraps: A Senate Education subcommittee held some college athletic directors’ feet to the fire on Wednesday to ensure that public money was not being used toward Name Image and Likeness (NIL) deals for athletes in South Carolina, as they continue to debate whether or not these deals should be transparent for public view. Athletic directors told a South Carolina Senate committee on Wednesday that no "direct institutional support" from their respective colleges goes toward the revenue-sharing program with university athletes. The bill received third reading on Thursday and is headed to the Governor’s desk.
● Abandoned Buildings Tax Credit: The Senate also passed a bill (S.853) that clarifies eligibility rules for these tax credits in response to a S.C. Department of Revenue (DOR) ruling released earlier this year. Attempts to restrict data centers from utilizing the credit were defeated. The bill now heads to the House.

In Committees
Pharmacy Benefit Mangers: S. 342
A Senate Banking & Insurance Subcommittee advanced legislation that seeks to regulate Pharmacy Benefit Managers, and adds a dispensing fee to every prescription filled. This could cost South Carolinians an additional $330 million per year.

DOT Reform: S. 831/H. 5071
A Senate Transportation Subcommittee passed their DOT Reform bill, stripping out all new taxes and fees, leaving those for the House to tackle (by constitutional mandate). The House’s companion bill is awaiting a hearing in the House Ways & Means Committee.

“Clean Air Act”: H. 4624
A House Ag subcommittee took testimony Wednesday on a bill that would regulate aircraft emissions, stating no one can "inject, release, or disperse" any chemicals, or "apparatus and energy frequencies manipulation" in the state's atmosphere with the goal to affect temperature, the dimming of sunlight or storm intensity. The bill was carried over.

Notable Introductions
H1B Visas: H. 5273
This bill by Rep. Steven Long (R-Spartanburg) would bar companies from receiving state incentives, tax breaks, grants, FILOT agreements, or state contracts if more than 2% of their workforce are H-1B visa holders. The bill was referred to the House Ways and Means Committee.

E-Verify Penalties: H. 5279
This bill by Rep. Steven Long (R-Spartanburg) would increase penalties for private employers who violate state employment citizenship verification requirements, raising fines and other sanctions for hiring unauthorized workers. The bill was referred to the House Labor, Commerce, and Industry Committee.

Data Center Moratorium: H.5286
This joint resolution by Rep. Steven Long (R-Spartanburg) would enact a two-year moratorium on new data center construction in the state. The joint resolution was referred to the House Ways and Means Committee.

The Week Ahead
In the Senate:
● Floor Watch: The Senate is expected to continue to fast track the alcohol server bill from the House (above). Other bills on the calendar include a bill that relates to Medical Informed Consent protocols (S.343) and hemp regulation (H.3924).
● Committees: Senate Finance subcommittees continue to meet in the Senate as they begin their work on the state budget, and an Agriculture and Natural Resources subcommittee will continue taking testimony on S.867, the data center overhaul bill. The full Senate Transportation committee will meet to discuss the DOT reform bill (S.831). A Senate Judiciary Committee subcommittee will meet Thursday to discuss the “Small Business Regulatory Freedom Act” (H.3021).

In the House:
● Floor Watch: The House will continue to work to clear the calendar next week in preparation for the budget debate. Bills on the calendar include magistrate election reform (H.3530) and various education bills.
● Committees: The House Ad Hoc committee on Tort Reform will meet Tuesday afternoon to discuss Medical Malpractice (H.4544) and Time Limited Demands (H.4670).

Calendar Update: The House plans to take two weeks of furlough (weeks of March 16 and April 6). The Senate is expected to take the Thursday before Easter off, and be in a perfunctory session the week of April 6, meaning no floor work. The Senate expects to work in committee that week, since the Senate Finance Committee will need to finalize the budget.