EDITOR’S NOTE: Today’s news analysis is part two of a series on South Carolina’s tax structure. Part one focused on how the state is struggling to find a balance in how it taxes.

SEPT. 19, 2014 -- If there ever is a year for tax policy reform, then 2015 may well be it, according to academics and observers.

Consider that 2015 will be a year when no one in state government will be up for reelection. The governor’s last name will be either Haley or Sheheen or Ervin. All the statewide constitutional offices will be filled. The House elections are over and the Senate will be in the third year of its four-year election cycle.

In the rawest sense, it will be harder for politicians to hide behind politics. In turn, that means the more difficult and nuanced approaches to tax policy can be tackled outside of the usual “cut, cut, cut” and “make the rich bleed” mantras belonging to extremes of the state’s political spectrum.

“When the planets align like they will next year and politicians are not facing instant backlash for difficult decisions, some might be willing to take a more complex approach” to addressing tax policy, said Winthrop political scientist Scott Huffmon. “Real reform is tough to explain to laymen, and it could only happen in a year like this.

“There’s an old saying in an election, ‘If you’re explaining, you’re losing,’” said Huffmon, who runs the state’s most influential polling center.

South Carolina, by many accounts, is facing a tough tax future. As the state adjusts to a more service-based economy, the tax structure will see its taxable base continue to shrink as demands – better roads, better public health programs and better K-12 education – increase, unless something is done.   

Four years ago, the blue ribbon, mostly-GOP Taxation Realignment Commission (TRAC) was formed to address pressing tax policy issues, such as what to do about what billions in lost sales tax revenues due to exemptions. Then, the state lost $2.7 billion annually to the special-interest tax breaks.

So far, little from the commission’s report has been implemented. And after a palsied effort in the House to remove less than $20 million in exemptions failed to pass, guess what? Sales tax exemptions have grown to $3.1 billion.

So what could, should, and most likely will be done toward addressing the state’s tax situation?

Coulda

Phillip Cease, executive director of the conservative S.C. Club for Growth and staffer of former Gov. Mark Sanford, said there was a “partial” chance that some sort of incremental tax policy changes could happen, specifically as it relates to the state’s gas tax.

That tax, referred to as a “user fee” by some, is one of the lowest in the nation. It is seen as a possible and logical funding source for the state’s infrastructure needs. The federal government two years ago reported that South Carolina has more than $27 billion in needed roads, bridges and infrastructure projects. More recently, transportation officials have pegged needs to be in excess of $40 billion between now and 2040.

But in the last couple of years, the General Assembly has bonded out a half-billion to cover those costs, or a little less than 2 percent of the total needed.

When Former Lt. Gov. Glenn McConnell was still in state office and not leading the College of Charleston as its president, he said the gas tax was the only place left where the state could turn to for that kind of big money, as he said the state’s General Fund was tapped out.

But Cease, like other conservative voices, said the only way a gas tax increase would be palatable on the right was if there were an equal cut in state spending or taxation, rendering it “revenue neutral.” He said conservatives would favor a reduction, if not a doing away with, the state personal income tax altogether. Critics contend that seeking revenue neutrality is a way to mask a benefit to disproportionately benefit the wealthy.

In fact, cutting the state’s personal income tax is exactly the opposite of what the state should do, according to Holley Ulbrich, a senior economist at the Strom Thurmond Institute at Clemson. 

Shoulda

“We have got to stop fiddling with the state income tax and leave it alone,” said Ulbrich, referencing many other more prosperous states that have income taxes. She said positions like Cease’s do not take into account the relatively large amount of exemptions the state allows before it begins to tax income, rendering it among the lower effective rates in the country.

• Services. Ulbrich also champions increasing the number of services that are taxed, as they would more directly affect deeper-pocketed taxpayers.

“By taxing services like pet grooming or lawn care, it actually protects the middle- and lower-income families” as those who can afford those services and resulting taxes are already spending less of their discretionary income on taxes in the first place, she said.

Ulbrich does favor increasing the gas tax, pointing out that many trucker groups have said they were in favor of paying more if the payoff is better roads.

• Internet sales. Burnet Maybank III, the former state Revenue head who led the TRAC effort, said the first and best thing residents of South Carolina should do was to write letters to their federal congressmen to demand they vote to pass a U.S. Senate bill ensuring state taxation of Internet marketplace sales.

Maybank also said a subtle structural change in how the legislature writes tax codes could deliver major benefits. He said some taxes should have hard-wired into their legislation automatic cost-of-living adjustments so state government funding could rise and fall with the rest of the economy.

• Be cautious. As the director of the Appleseed Justice Center, which advocates for the poor, Sue Berkowitz’s middle name could well be “should.” She is cautious about across-the-board taxation cuts or increases as she said they might affect the lower classes more immediately.

• Property tax fix. At the other end of the economic ladder, Otis Rawl, president of the state Chamber of Commerce, said something should be done to reduce the burden of paying for public K-12 education that was shifted onto businesses and manufacturing as the result of Act 388.

Act 388 stopped localities from taxing owner-occupied real estate for purposes of funding local education in favor of a statewide special 1-cent sales tax. That has meant localities have had to increase taxes on commercial property and second homes to offset cuts in education funding, exacerbated by the legislature’s common habit to cut per-pupil funding.

• Or do nothing. In some ways, people who agree with Ashley Landess, the executive director of the conservative budget hawk S.C. Policy Council, will want to see nothing happen at all.

Why? Because, as Landess sees it, state government is already broken, and throwing good money after bad makes no sense whatsoever. She pooh-poohs the gas tax as a panacea, pointing out that a few counties -- mainly Charleston, Greenville, Horry and Richland – have taken the lion’s share of the state’s infrastructure spending.

Woulda

So what’s the answer? If you take the suggestions related above it would be a bit of a Frankenstein’s monster: a wide base of taxable sales with a limited number of exemptions to buffer the working poor (like groceries, medicine and power), while cutting businesses some property tax slack to speed expansion and a gas tax increase to fix roads offset but cuts elsewhere.

Landess and Cease are part of the ongoing debate within the state’s body politic as to what size state government should be. They want it to be smaller. Voices like Ulbrich and Berkowitz call out for it to be larger.

In general, the consensus likely will be for incremental, glacial change, which has been Columbia’s approach to most pressing issues, according to many.

A bellwether may be on the horizon when the House selects Harrell’s replacement. The frontrunners appear to be Speaker Pro Tempore Jay Lucas (R-Hartsville) and former Majority Leader Kenny Bingham (R-Lexington), who chairs the Ethics Committee.

Whoever becomes speaker, that person could set the tone of the 2015 legislative session by creating a special committee to look into tax policy, many observers said.

If such a committee is stocked with powerbrokers in the House, the game is on. If there is no subcommittee or its members are backbench milquetoasts, then the state can expect more of the same.

Bill Davis is senior editor of Statehouse Report.  He can be reached at:  billdavis@statehousereport.com.

RECENT NEWS STORIES

• 9/12: Bipartisan group seeks to transform S.C. House
  
• 9/5:  State struggles to find balance on taxes
• 8/29: Tech school system doing more with less
  
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Several meetings are on tap next week:

• Education. The state Education Oversight Committee’s Academic Standards and Assessments subcommittee will meet 10 a.m. Sept. 22 in 433 Blatt. On the agenda: A new AP U.S. history framework. the EIA and Improvement Mechanisms subcommittee will meet at 2 p.m. that day in the same room. On the agenda: Education credit for exceptional needs children, summer reading, next year’s budget.
  
  
• Animal welfare. A select committee on animal welfare of the Senate Agriculture and Natural Resources Committee will meet 7 p.m. Sept. 23 at Greenville Tech in the University Transfer Auditorium, Building 104. More. The committee will also meet Oct. 7 in Florence and Oct. 14 in North Charleston.
  
  
• Sentencing reform. The Sentencing Reform Oversight Committee will meet 10 a.m. Sept. 25 in 105 Gressette. An agenda includes no information about the topics of the meeting.
  
  
• Expungements. The joint Expungement Study Committee will meet 9 a.m. Sept. 26 in 105 Gressette. An agenda includes no further information. The meeting is scheduled to be broadcast through the Statehouse Web site.
  
  

Three former governors -- Jim Edwards, Dick Riley and Jim Hodges -- want South Carolina students to get a better education in old-time civics. 

On Wednesday, the 227th anniversary of the U.S. Constitution, they and other state leaders announced the South Carolina Civics Education Initiative, part of a national effort by former U.S. Supreme Court Justice Sandra Day O’Connor and others to ensure people know more about the nation’s system of governance.

“It is absolutely critical that all South Carolina students have a sound knowledge of civics,” said Riley. “This is not a partisan issue.  It is an American issue.”

According to a press release, research by the Pew Research Center shows only about one-third of Americans can name the three branches of the United States government, much less say what each does. Studies of high school students in Oklahoma and Arizona showed less than a 4 percent passage rate on the Unites States Citizenship Civics test – the test all immigrants applying for U.S. citizenship must pass.  According to United States Citizenship and Immigration Services, which administers the civics test as part of the naturalization process, 92 percent of immigrants who take the test pass it on their first try.  

There’s also another thing that the new focus on civics might do -- inspire more people to read Statehouse Report!

• Learn more about the effort at: http://civicseducationinitiative.com
  
  

SEPT. 19, 2014 -- One thing stands out in the recent vote in Scotland on whether to stay a part of the United Kingdom -- more than 84 percent of eligible voters turned out to cast their ballot.

In the United States, the world’s first modern and “leading” democracy, the percentage isn’t so good. According to the International Institute for Democracy and Electoral Assistance, the U.S. ranked 91st out of 198 countries in voter turnout with 65.95 percent of voters going to the polls in 2012. 

Compare that to counties like Bolivia, Ethiopia, Australia, Singapore, Malta, Luxembourg and, yes, Cuba. What do they have in common?  First, each has turnout of more than 90 percent in elections since 2010. Second, voters pick candidates on a weekend day, not on Tuesdays, as occurs with federal and state elections in the United States.

“Other democracies are not so incompetent,” notes writer Juliet Lapidos in a 2008 story in Slate.com. She pointed to Sweden and Australia, both of which get 96 percent of people on registration rolls. Australia, which like the U.S. requires voters to fill out registration cards, also gets high participation because voting is compulsory (you get a $20 fine if you don’t vote, unless you have a really good excuse.)

So ever wonder why we vote on Tuesdays?

It’s because we were an agrarian society when Congress picked Tuesday as voting day in the early days of the country and later extended the voting day to all federal elections, according to the nonprofit, WhyTuesday.org.

“We traveled by horse and buggy,” explains the organization, powered by a well-connected, bipartisan group seeking change. “Farmers needed a day to get to the county seat, a day to vote, and a day to get back, without interfering with the three days of worship. So that left Tuesday and Wednesday, but Wednesday was market day. “

Today, however, our society isn’t a horse-and-buggy culture, as aptly displayed a few years back in a publicity stunt by former Gov. Mark Sanford when he led a horse and buggy around the Statehouse to draw attention to some of the state’s antiquated laws. (A year earlier, you might remember that he took two piglets to the Statehouse lobby to complain about pork-barrel spending, but the pigs’ bowels didn’t exactly cooperate with the photo op.)

So with all of the fiddling that seems to go on with political factions claiming  they want to boost voter participation, why not look at just moving the date for the whole country from Tuesday to, say, a Saturday?

“I would support voting on a Saturday,” said state Rep. Jim Merrill, R-Daniel Island, pictured at right. “Other than a Saturday -- or Sunday, which is off the table for me -- I don’t think there would be much difference.”

Merrill agreed that moving voting day to Saturday would help because Tuesday voting “hinders turnout and I believe both parties will benefit from additional supporters of the respective parties being able to vote on a day that does not conflict with work.” He aptly pointed out, however, that moving fall voting to December might get around college football season, too.

Already there is some experimenting with weekend voting. This November in Georgia, there will be some Sunday voting in DeKalb County. In 2008 and 2012 in South Carolina, presidential preference primaries were on Saturdays, not Tuesdays. 

Moving voting to Saturdays could reduce the need for other voting changes seen in other parts of the country but absent in South Carolina: true early voting without excuse restrictions, no-excuse absentee voting by mail or all-mail voting. 

While we wouldn’t oppose mandatory voting in elections as is done in Australia, it probably wouldn’t ever fly here in the United States because of our libertarian tendencies. 

“It is a right and a responsibility,” Merrill said of voting. “The very least someone can do to participate in our republic is to take a few moments out of their day, once every two years or so, to vote.  People left their families, fought and died so we could have a participatory government.”

Andy Brack is editor and publisher of Statehouse Report.  He can be reached at:  brack@statehousereport.com.

• 9/12:  Legislature not corrupt, but has work to do
• 9/5: Leadership problems at state agencies
  
• 8/29:  How a weekly column is written
• MORE BRACK:  See our archives
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By Herb Hartsook
Special to Statehouse Report

SEPT. 19, 2014 -- It’s the 50th anniversary of Barry Goldwater’s 1964 presidential campaign, which caught the hearts of many South Carolinians and helped create an environment in which a nascent Republican Party began its rise to parity and eventual domination of South Carolina.

A South Carolina Political Collection exhibit in the University of South Carolina Hollings Library’s Brittain Gallery from October 16 through November will celebrate the anniversary and feature campaign ephemera. The exhibit is called “In Your Heart, You Know He’s Right: 50th anniversary of Barry Goldwater’s 1964 Presidential Campaign.”

Neal Thigpen, a historian of the state Republican Party, wrote a guest column for the Florence Morning News on Dec. 5 1977, titled “South Carolina Was Key to Goldwater Candidacy.”  In that column, he traced the origins of the Goldwater boom of 1964 to events in South Carolina in 1959 and 1960.  The following is an extensive quote from that article:

"It all began in the fall of 1959 when South Carolina Republican chairman Gregory D. Shorey Jr. brought Goldwater to Greenville to speak at a party banquet.  There and over statewide television he introduced the senator as his choice for the 1960 Republican nomination.  Goldwater evidently didn’t take Shorey very seriously at the time.  But many people who attended the banquet that evening and thousands more who saw the television program, took Shorey’s endorsement to heart. In fact, the response to his announcement was so encouraging that Shorey and Roger Milliken, the state party’s finance chairman, invited Goldwater to come to Columbia to deliver the keynote address at the 1960 state convention.  The speech the Senator gave that day unwittingly won him the unanimous support of the more than 500 Republicans at the gathering.  Before they adjourned, South Carolina’s 13 national convention votes were officially pledged to Goldwater for president.  Not wishing to appear a political orphan in his own home state, the senator got Arizona Republicans to back him as a favorite-son, intending all the while to throw his support to Richard Nixon.
 
"But by July, when the Republican national convention opened in Chicago, pressure on Goldwater to become a bona fide candidate and to seriously oppose the vice president for the nomination had begun to build.  Volunteers from the Goldwater-for-President Committee, which Greg Shorey headed, scurried about the convention hotels attempting to line up delegate support.  Goldwater realized, however, that Nixon had the nomination sewed up, and he decided t discourage those working on his behalf by releasing the delegates formally pledged to him so they could cast their ballots for the winner.

"Members of the South Carolina delegation, from its leaders, Greg Shorey, Roger Milliken and Robert F. Chapman, who later succeeded Shorey as state chairman, down to the last alternate, urged Goldwater to remain in the contest.  Many argued that he should at least allow his name to be placed in nomination.  By so doing, he could then make a withdrawal speech to the convention that would give him and the conservative cause he represented invaluable nationwide television exposure.  Reluctantly, Goldwater went along with the South Carolinians.
 
"That night, to the thunderous applause of the delegates, the senator mounted the convention rostrum and asked that his name be withdrawn from nomination.  In his now famous address, he expounded his conservative political philosophy and urged his followers to stay within the party: Let’s grow up, conservatives!  If we want to take this party back, and I think we can someday, let’s go to work!  Goldwater did work loyally for the Nixon-Lodge ticket and the South Carolinian Republican returned home more determined than ever to make him the party’s presidential nominee four years hence. . . ."

The South Carolina Political Collection holds a number of collections (and oral history interviews) documenting the rise of the Republican Party in South Carolina.  A number of our collections include wonderful ephemera documenting the Goldwater campaign.  The collections of Greg Shorey, Charles Boineau, and, surprisingly, Democrat Bryan Dorn, are particularly rich in Goldwater material.  Please plan to visit starting Oct. 16, see a little of what captivated South Carolinians just 50 years ago, and marvel at the changes in our political landscape.

Herb Hartsook is director of the South Caroliniana Library at the University of South Carolina. The column above is the first of several posts to the SCPC’s blog, A Capital Blog, on the Goldwater campaign 50 years ago. Click here to find more.

Domestic violence. Hats off for the special House study committee on domestic violence for hearing from experts on things that can be done to reduce violence by men against women, such as taking guns away from those convicted of criminal domestic violence. Just make sure you do something about it. More.