Hitting “snooze”Legislators putting off TRACBy Bill Davis, senior editor JAN. 22, 2010 -- Faced with a state budget crisis expected to be even worse than previous years, some legislative leaders are backing bills to delay the release of a comprehensive review of South Carolina’s convoluted tax structure.
 Last year, the General Assembly approved a measure to convene a blue-ribbon panel of non-elected experts to review how the state raises revenues through taxation and fees. The Taxation Realignment Commission (TRAC) was supposed to release its report this March.
The report was expected to detail a series of recommendations to broaden the tax base, reduce sales tax exemptions and lower overall tax rates to create a more stable tax and budgeting future for South Carolina.
But last week, state Sen. Hugh Leatherman (R-Florence) and other Statehouse heavyweights began supporting a delay of the commission’s release date to Nov. 15. TRAC chairman Burnet Maybank III, who has served twice as the state’s director at the Department of Revenue, recently sent a letter to Leatherman, who has pushed for the process to be deliberative and inclusive, seeking additional time.
Supporters of the delay contended it would give the commission more time to review the complicated measure and potentially force gubernatorial candidates to tackle the issue on the campaign trail.
But critics have contended the delay could only ensure that nothing would happen to addressing state budgeting woes comprehensively until next year. And that might be too late.
The generally-accepted consensus around the Statehouse this year is that the current budgeting process will be more challenging than last year’s, which needed an infusion of federal stimulus dollars to balance the books and allow the state to provide a reduced slate of services and programs.
Despite the inclusion of a second year of federal stimulus monies, many around the budget process are saying that state tax revenues could be $1.5 billion lower than last year’s projections.
Education now in the mix
 As evidence of the worsening budgeting situation, public education funding was held largely safe from cuts two sessions ago, in 2008. In 2009, education funding was held harmless until the last weeks of the session.
This year, lagging tax revenues increase the chances of deeper statewide cuts. Planned cuts to education have already made front-page news across the state in the first week of the 2010 session.
The TRAC commission has been a lightning rod for criticism since its inception. In its charter, the commission was told it would not include in its review recommendations involving Act 388. That bill shifted the onus of funding public K-12 education to an increased state sales tax from local taxes on owner-occupied primary residences.
Any wisdom in delay?
Combined with the recession and other state tax cuts, such as elimination of the grocery sales tax, the state’s ability to fully fund its annual budget has been deeply affected. As a result, some in the Statehouse are wondering about the wisdom into delaying the process further.
House Speaker Bobby Harrell (R-Charleston) would like to see Act 388 included in the discussion, according to his press officer, Greg Foster.
Harrell has championed the TRAC commission as a way to address the state’s large pool of sales tax exemptions, which total in the billions of potential state General Fund budget dollars lost every year.
“November 15th seems arbitrary to me,” said Rep. Harry Cato (R-Travelers Rest), second in command in the House as speaker pro tempore. “Maybe, the commission needs more time, and there has been precedent for delaying recommendations, like last year with off-shore drilling,” but Cato said that delaying the report until after the elections continued to concern him.
Political football
House Minority Leader Harry Ott (D-St. Matthews) said he would introduce a bill soon that would push the deadline back to November, but would ask that all taxes and fees, presumably including Act 388, be included in the report.
Harrell’s office countered, pointing out that Ott led the charge in the final weeks of last year’s session to block inclusion of 388.
Senate President Pro Tempore Sen. Glenn McConnell (R-Charleston), arguably one of the two most powerful senators alongside Leatherman, said he worried about the issue becoming a “political football” passed from one session to another.
“If the delay does happen, it would be my hope that we would have some legislation pre-filed before the beginning of the next session so we could deal with it immediately next January,” said Sen. Greg Ryberg (R-Aiken).
One Statehouse GOP insider also questioned the political wisdom of the delay, as it could potentially take the issue out of the House reelection year and plant it in the Senate’s next race in 2012.
Long-term fix sought
S.C. Chamber of Commerce president Otis Rawl, who has fought for a more stable taxation future for a better business climate, said he welcomed the delay because, echoing Ott’s sentiment, what the state does not need now is a half-baked bill.
While he acknowledged the General Assembly’s recent inability to pass sweeping legislation, Rawl said that revamping state tax law was not the time for incrementalism, which would be a short-term fix and not a long-term one.
Rawl said he worried that hurrying the process could lead to a bill, or a series of bills, that would only take care of part of the picture, leaving loopholes that would need to be taken up again later.
Crystal ball: The delay is all but certain. If the report is not comprehensive, and doesn’t include addressing Act 388, leadership in the Statehouse will have failed on this one. A magic bullet is called for here. Sometimes quick, decisive action without all the information can lead to monumental failure (e.g. Iraq). But, sitting on hands rarely solves anything.
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Busy week aheadNext week’s legislative calendar is a very busy one in the House, as agencies continue to line up to deliver their coming-year budget pitches to Ways and Means subcommittees. In the Senate, demand for debate on the floor regarding reforming ESC has left little time for committee meetings, with two notable exceptions:
- Ag. The full Senate Agriculture Committee will meet at 10 a.m. Wednesday in 209 Gressette to discuss a host of issues, highlighted by a bill that would create surface water draw-down permitting.
Programming note: If you want to see and hear a neat new program involving music, politics and the world, tune in Monday at 10 p.m. for the pilot episode of Sound Tracks on SCETV. More.
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ESC, voter ID, more on tapWord out of the Senate was that next week will be dominated by debate over a bill that would overhaul the state’s unemployment office, the Employment Security Commission. The House passed over an abridged version of its ESC overhaul last week, and the Legislative Audit Council’s report on the ESC is expected next week, too. All of that will doubtless spice up fiery debate – as will today’s news of the increase in the state’s unemployment rate to 12.6 percent. Also on the Radar Screen:
- Voter ID. Once the Senate is finished with ESC reform, the next bill that will dominate in that chamber is expected to be a Voter I.D. bill that would require citizens to provide photo identification before being allowed to vote at precincts. Supporters contend the bill would short-circuit voter fraud, while critics have countered that the measure is a racially-inspired move to counter the surge in minority voter participation that came with President Obama’s election last year. Word is, Voter I.D. could take more than a week on the floor to hash out.
- Cigarette tax. With the federal health care debate set to reset after the GOP won the set formerly held by the late U.S. Sen. Ted Kennedy (D-Mass.), what to do with a House bill increasing the per-pack tax on cigarettes will intensify in the S.C. Senate. The Senate wanted to wait to see what the feds would do about funding a national health care system before committing the funds derived from an increase for state health care programs.
- Education. A charter school bill has wound its way through the House Education Committee and is expected to be introduced on the floor of the House next week.
- Economy. House Speaker Bobby Harrell’s Economic Development Competitiveness bill was launched Thursday, and will likely be debated on the floor of the House next week.
- Tort reform. There has been early and sincere activity on a tort reform bill in the House Judiciary Committee this year, and a bill could be on the floor of that chamber within two weeks.
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Sanford's SOSIn his annual State of the State address this week, Gov. Mark Sanford returned to well-worn themes of the need to restructure state government and sorrow -- sorrow, that is, for the pain his actions with a South American mistress caused the state and his family, especially his wife.
Sanford’s address was met with opposition and equally well-worn rhetoric from the usual suspects, but without the venom present as in years’ past. Either Sanford has become even more irrelevant on the statewide stage, or legislators and other Columbia heavyweights are tired of fooling with him and are keeping their powder dry for later in the year when the budget fights are expected to get especially bloody.
More hats in more rings
The Democratic ballot has gotten thicker, with David Pascoe, the state’s 1st Circuit Solicitor, running and raising money (very little) for his candidacy to fill the Attorney General’s office Henry McMaster is leaving to run for governor.
Charleston lawyer and Democrat Ashley Cooper, after years of considered runs for office, has begun running for lieutenant governor.
On the GOP side, Robert Livingston Jr., a private businessman and major general in the S.C. National Guard, has entered the race to become the state’s next Adjutant General.
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Book’s warning signs may apply to SCBy Andy Brack, editor and publisher JAN. 22, 2010 – Business guru Jim Collins, the bestselling writer who picks apart successful companies for signs of strength, concludes that all businesses are vulnerable to downfalls, no matter how great they’ve been in the past.
 “If companies such as Zenith and A&P, once the unquestioned champions in their fields, can plummet from great to irrelevant, then we should be wary about our own success,” he wrote last year in Business Week in a summary of his latest book, “How the Mighty Fall.” “There is no law of nature that the most powerful will inevitably remain at the top. Anyone can fall, and most eventually do.”
Pondering these conclusions, let’s see whether they can apply to South Carolina’s state government.
Collins and his team of researchers developed a five-stage list of warning signs that a company was headed toward failure. Interestingly, most companies don’t recognize they have a big problem until they’re in Stage 4. And by the final stage, it often is too late.
- Stage 1: Arrogance. Collins says when a company starts to regard its success as an entitlement and loses sight of why it was successful in the first place, it is poised for decline.
- Stage 2: Wanting more. Arrogance often leads companies to the “undisciplined pursuit of more,” an acquisitiveness that can lead to undisciplined growth and leaps into areas that might not fit.
 Stage 3: Denial. When core businesses are being overlooked, warning signs may mount, but be ignored. “Those in power start to blame external factors for setbacks rather than accept responsibility.”
- Stage 4: Grasping at straws. When things start to go bad, companies often grasp at straws for salvation, which can start a big downward spiral. “The very moment when we need to take calm, deliberative action, we run the risk of doing the exact opposite and bringing about the very outcomes we most fear.”
- Stage 5: Atrophy. If a company stays in Stage 4 too long without turning it around, it faces irrelevance or death, Collins says. To get out of this warning stage is tough, but takes leaders “who retain faith that they can find a way to prevail in pursuit of a cause larger than mere survival.”
With this as a backdrop, consider what’s been going on in South Carolina for the last few years:
- A now-tainted governor has been battling with leaders of the legislature in his own party to the point that he is virtually ignored on policy issues.
- The legislature, faced with more than $1.5 billion in budget cuts from just two years ago, forms a big tax study commission to revamp how the state generates revenue. But just as the study is due, its report is put off until after the election. While leaders say they need more time to do a good job – a perfectly valid point because the problem is so big – it also looks like they’re putting off doing something for another year while doing nothing now. Fiddling while Rome burns?
- Lawmakers voted for a huge property tax relief measure for taxpayers because they listened to squeaky wheels. The ill-conceived measure has been roundly criticized by the business community as being short-sighted because it shifted the burden to commercial businesses.
The lessons for state government that stem from Collins’s business analysis are that it is time for state lawmakers to be leaders and to accept responsibility for what’s happened. They need to take considered action to avoid problems like the property tax swap, but they can’t sit on their fingers all year.
With unemployment at 12 percent, now is the time for action, not stasis. Taxpayers deserve leadership from elected officials, not just more of the same wishy-washiness. There’s no need for state government to atrophy. Our state’s elected leaders need to stop partisan bickering and remember that they’re in office for the good of the state.
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1/17: Column on targetTo the editor:
Today's column [Commentary, 1/15] was right on target -- even more so than usual. It seems that there is plenty of money in South Carolina, but mostly in the pockets of the richest.
Today's was a courageous column. Just think how much better things would be if we had a few courageous legislators. Don't think that you are not appreciated.
-- Joseph T. Stukes, Florence, S.C.
1/21: Bottle collection, better roads
To the editor:
S.C. has been in poverty since development. I was in a state that had deposits on cans and bottles. The bottle companies were responsible for collection. Some cans/bottles were never returned so the state took the excess money. This state tried to run the system and lost when they should have made the company run it.
Someone will pick up and make money on it and the state might as well get in on it. I have seen dirt roads in Maine/NH with better roads than here. And if they got leaf vacuum trucks, they could go down road sucking the trash up. And may be get the dead deer – it’s disgusting to see a deer carcass rotting away. Nice column.
-- Ted, Manning, S.C.
MAD ABOUT something we wrote or just need to vent some? Send us a letter to the editor and we'll print it (as long as it isn't libelous!). Please include your name and town for identification purposes.
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Up, down and in the middle Water war. By denying Charlotte to enter the water fight between South Carolina and North Carolina over the Catawba River, the federal justices created a fairer fight for our state. More.
 Governing governors. Bills changing the way the governor passes on power when he leaves the state, spurred by Gov. Mark Sanford’s South American tryst, are winding their way through the legislature. Then again, legislators have proven they won’t act, beyond censuring. More.
 Quack. Deciding to put off the TRAC report deadline until after the election reeks of ducking.
Greed? State Realtors are opposing a Senate plan to provide tax incentives to spur a dulled statewide commercial real estate market because the incentives aren’t “big enough” and do not include primary residential sales. Hmmm. More.
Double greed? Some state business interests, largely untouched by an under-manned, under-funded and under-toothed DHEC, are flip-flopping now by opposing moving the agency into the governor’s cabinet? Why not just issue them a hall pass to destroy the environment in exchange for more short-term profits? More.
Irony. Ted Kennedy’s death has killed national health care reform, and may scotch a cigarette tax increase in South Carolina. Geez.
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