Taxing businessJobs bill includes tax-cut smokescreen?By Bill Davis, senior editor FEB. 5, 2010 -- Facing hundreds of millions in state revenue shortfalls that could result in even deeper cuts to state agencies and services this year, more than 100 members of the state House, Republican and Democrat, have banded together to back an election-year economic development bill that includes a notable tax cut.
 The recently submitted Economic Development Competitiveness Act (H. 4478) has been billed as an attempt to re-till the economic soil of a state with the fourth-highest unemployment rate in the country that also is saddled with a governor oft-criticized for lackluster economic development efforts.
Championed most loudly by House Speaker Bobby Harrell (R-Charleston), the bill focuses on a laundry list of economic development efforts -- from investing in nuclear power and establishing a point-of-sale real estate tax to defining better the role and make-up state review boards.
It also includes a provision that would do away with the state’s corporate income tax, currently 5 percent, over a 10-year period in half-percentage point increments beginning in 2011.
Critics say it’s not the right time
And that tax cut has some criticizing the measure as another tax cut that might make sense politically, but not fiscally.
Critics have likened the embedded corporate tax cut to Act 388, which shifted funding of public K-12 education from taxes on primary homeowners to a vulnerable reliance on state sales tax. Popular when first passed, Act 388 has since been perceived as a strangler on the state’s General Fund budget as the economy has slipped into recession.
Harrell spokesman Greg Foster said that by taking care of the state’s current businesses and attracting new companies and investment, the state would create more jobs.
 But Holly H. Ulbrich, an economist at the Strom Thurmond Institute at Clemson, said including the tax cut would be something quite else.
“It would be utterly foolish to get rid of the corporate income tax,” said Ulbrich. “We need every dollar we have to go into social services and education.”
Ulbrich conceded the current corporate income tax didn’t bring in a lot of money – the state’s current estimate is $168 million this year. “But that’s not nickel and dimes,” she said.
Therefore, a half-percent cut would subtract about $17 million a year, and less in succeeding years. To put this in perspective, if a company today has a $1 million taxable profit, it currently faces a corporate income tax of $50,000 now. A cut of a half of a percent would provide a $5,000 savings in the first year. In the big picture, critics argue that a $5,000 tax savings really isn’t that big of an incentive to create a bunch of new jobs.
Ulbrich said if companies were going to locate or expand here and make use of the state’s roads, safety divisions, education and other amenities, “it’s not unreasonable to ask them to pay something.”
Ulbrich also doubted the effectiveness of a reduced rate as a corporate lure, citing that among states that do have corporate income tax, South Carolina isn’t too far ahead or behind the others.
Sticking to the script
Foster disagreed vehemently.
“If it’s not such a big deal, then why are corporate income tax breaks part of every package the Department of Commerce puts together” said Foster, rejecting the election-year jab.
To some extent, state Sen. Phil Leventis of Sumter, the ranking Democrat on the Senate Finance Committee slyly agreed with Foster on one point.
“This bill is not ‘election-year politics’, it’s election-year populism,” said Leventis. He said legislators backing the bill might be more concerned with offering a pleasing platform to their constituents than creating a stable tax base from which the state could move forward.
According to Leventis, getting rid of the tax won’t change the competitive battle between South Carolina and other states for new businesses.
North Carolina, argued Leventis, has several higher tax category rates, but has done better in attracting corporations than South Carolina because it has viewed taxation as an “investment” in educating its workforce. That has resulted in successes in the Tarheel state where public seed money has helped grow jobs and industry magnets such as in the Research Triangle.
A swap based on hope
Taking a page from his frequent political enemy, Gov. Mark Sanford, Leventis said the bill would swap real tax relief for something less tangible, or useful in the state’s current economic situation. “It’s a swap for the ‘hope’ for, or the ‘promise’ of new business,” he said.
Foster countered by saying any losses from the proposed tax cut portion of the bill should be more than offset by an expansion of the state’s tax base via payroll and commercial property taxes.
Crystal ball: This bill will sail through. Here’s why: bipartisan support of the bill likely represents Democrats acknowledging the coming election will belong to the Republicans. As such, to protect their seats, always a looming incentive in an election year, opposing a “jobs” bill could hand an indefensible cudgel to an opposition party opponent.
|
Eyes on the SenateWith the House on furlough next week, there will be more, but not much more, action in the Senate. The biggest item on the agenda next week will be a Judiciary subcommittee meeting on restructuring state government on Thursday in 105 Gressette upon adjournment. More.
The Senate will likely take off the week following Easter, and allow everything on its consent agenda to proceed through third readings to speed up things.
House staffers will continue to process provisos and budget requests from various state agencies, with the full Ways and Means Committee to begin tackling the budget as early as Feb. 16.
|
Endless points (of sale)In the Senate, look for the point-of-sale real estate law debate to continue into next week. The fight over whether commercial or private property’s taxable value should be capped when it changes hands will push back discussion on ESC reform and a proposed cigarette tax increase.
Senate President Pro Tempore Glenn McConnell (R-Charleston) said this week that any attempt to “divvy up the money from a proposed cigarette tax increase would be its undoing.”
|
Department of Redundancy DepartmentState Rep. Michael Thompson (R-Anderson) has filed an admittedly tongue-in-cheek bill he authored and submitted (H. 4468) this year that calls for a study committee to be formed to, what else, study study committees. “[N]o study committee has ever studied study committees to specifically study the effectiveness of study committees at resolving or solving the issue or problem that the study committees studied.” Two other lines from the bill would demand for the study committee to “study the various forms of study committees the General Assembly has used to study and or conduct studies … [and] … assess the need for study committee studies in unstudied and understudied areas of study.” Thompson, reached for comment on Friday, said he wasn’t serious about the bill, except for the point it makes. “We studied why people are fat,“ he said. “That takes up valuable staff time.“ Thompson said in retrospect, he wished he’d named H. 4468 the Doing the Most Important Kind of Nothing Act of 2010. He declined comment on whether he has an “abolish the state Senate” bill in his pocket. Waiting game Politics, like fishing, can quickly devolve into a waiting game. Such is the situation with proposed state legislation to open South Carolina’s coastline to offshore drilling. Thanks to a lumbering U.S. Department of the Interior, a final decision on whether the federal moratorium on this kind of drilling will be lifted for the southern Atlantic coast has meant that the state’s efforts to tap into possible oil deposits has been stalled. The federal report is also past due. One thing’s for sure, conservationists hate this question: “Which would you rather have in South Carolina -- a coal plant or offshore drilling?” One conservationist complained that thatthat the question reflected was a false choice, apparently forgetting all of his dirt-worshipping brethren who’ve gotten behind nuclear power over coal.
|
Legislature should back off on search, I.D. billsBy Andy Brack, editor and publisher FEB. 5, 2010 – Something’s fishy in Columbia with two bills that directly impact our constitutional rights.
 In one, state lawmakers want to start so-called “warrantless searches” to allow police to search people on parole or probation without the hassle of getting a search warrant. In another, legislators want to require photo identification for voting, a practice that could dampen turnout among more than 178,000 people who don’t have such identification cards.
In both cases, state legislators want to use the strong arm of the law to impede people’s civil liberties. What’s fishy is that these efforts are being backed strongly by Republicans, the party that preaches the gospel of limited government.
“When they say they believe in less government, watch what they do, and not what they say,” warns Charleston civil rights lawyer Armand Derfner.
First, let’s look at warrantless searches.
Charleston Mayor Joe Riley, a Democrat, started the push for warrantless searches to help cut down on crime in Charleston. If police can search any probationer or parolee any time, proponents believe the threat of searches will discourage those folks from returning to a life of crime.
In the original version of the bill, warrantless searches extended to private homes that a probationer or parolee might be in. In recent days, the House deleted that provision to deal with the very real concern that police would be able to get into anyone’s home without a warrant. Now the proposal calls for searches in cars or in the public if an officer deems it necessary.
| "Fiddling with people’s constitutional rights of being able to vote with few barriers and being able to exist without unreasonable searches is dangerous. State lawmakers need to seriously consider how they are proposing to take away citizen rights before proceeding with either unnecessary bill." |
But it’s a slippery slope. If we allow police searches of parolees and probationers without a warrant, what’s to prevent future proposals to take away more constitutional rights from unreasonable searches and seizures in the future?
“It’s government reaching too far,” said one of the few Republican legislators against the bill. “They’re finding an end run around the Fourth amendment.
“The problem is it’s not narrowly tailored for what they say the intent is,” said the lawmaker, who asked for anonymity. “The repercussions are great as it relates to innocent third parties. Nobody is trying to protect the right of people on parole or probation. The concern is the impact on third persons who have done nothing wrong.”
State Sen. Brad Hutto, D-Orangeburg, notes the whole idea of warrantless searches is odd since getting a warrant isn’t really that hard if police have a suspicion of wrongdoing. Rather than mess with constitutional rights, perhaps authorities should better use existing laws, such as setting higher bonds for probationers or parolees who get in trouble, he added.
Next up: photo identification for voters.
According to the League of Women Voters of South Carolina, there are more than 178,000 registered S.C. voters who don’t have a state-approved photo I.D. or driver’s license. Requiring those people to get more identification for voting would cost about $1 million and could create longer lines at the polls, the League says.
More importantly, requiring photo IDs is solving a problem that really doesn’t exist. Derfner said the state already has adequate identification requirements.
“We’ve never had a complaint of that kind of fraud,” he said, later adding that the voter I.D. proposal “is just a fraud because there’s no need for it. The only reason they want to do it is cut down on voters.”
State League President Barbara Zia said the proposal is something that, if it passed, might be held up by the U.S. Justice Department because of the state’s history of discriminatory voting practices.
“The current bill covers only voter impersonation and the fact is there are no documented cases of such voter fraud in South Carolina,” she said.
What’s interesting about the whole controversy is that just a few years back, Republicans squawked about national identity cards as an intrusion into a person’s privacy. And while some still are against national IDs nationally, the playing field seemed to change after the Sept. 11 attacks.
Regardless, fiddling with people’s constitutional rights of being able to vote with few barriers and being able to exist without unreasonable searches is dangerous. State lawmakers need to seriously consider how they are proposing to take away citizen rights before proceeding with either unnecessary bill.
|
Electric Cooperatives of S.C.  The public spiritedness of our underwriters allows us to bring SC Statehouse Report to you at no cost. This week's spotlighted underwriter is the Electric Cooperatives of South Carolina. More South Carolinians use power from electric cooperatives than from any other power source. South Carolina’s 20 independent, consumer-owned cooperatives deliver electricity in all 46 counties to more than 1.5 million citizens. As member-owned organizations, cooperatives recognize their responsibility to provide power that is affordable, reliably delivered and responsibly produced. More at www.ecsc.org or www.livinginsc.coop.
|
Time to buy a seat at the education tableBy Jon Butzon and Peggy Huchet
Part 1 of 2
FEB. 5, 2010 -- Rip van Winkle has surely missed the quantum changes that have occurred in the world’s economy and what it now takes to compete: compete for business, compete for jobs, compete for leadership. When he wakes up, he will not recognize the world or its new global economy or what it takes to compete. The same will be true when we wake up.
 Report after report demonstrates that the United States no longer has the benefit of the economic, technological or educational high ground. In the words of New York Times journalist and author Thomas Friedman, today’s world is “flat.” U.S. students fare less well on international tests than students in many other countries. For the first time, U.S. students are less likely to graduate from high school than their parents making our country the only industrialized nation in the world where that is true. U.S. colleges and universities graduate about the same number of mathematicians, scientists and engineers as 20 years ago. Unfortunately, too many of those graduates go home to another country.
In South Carolina, we have a hard time even getting to the “education for a global economy” conversation. It is not a matter of improving instruction in calculus, physics and economics. We still don’t do all that well teaching the 3 R’s. According to some researchers, half of our students don’t finish high school. In manufacturing, the number of products you make that can’t perform to specification is called the “scrap rate.” We could take a giant leap forward if we could just cut our education scrap rate in half.
| "South Carolina may be making progress but we have lots of catching up to do in order to bring our schools onto a par with the rest of the country." |
At the same time, the elements of a globally competitive high school education keep getting tougher. The folks who produce the ACT, a college entrance exam, also provide Work Keys, a work skills readiness assessment. They tell us that entry-level jobs paying enough to support a family of four require the same high school education in math and English as entry-level college work. There is no market for a second rate, “minimally adequate” education.
Inevitably when people get together to talk about funding public education, somebody will declare that we can’t “fix” public education by throwing lots of money at it. Maybe we should try it to see what happens. Then there is the assertion that we spend much more on public education than we used to and that we haven’t seen improvement commensurate with the increased expenditures. They have a point until you consider a couple of things.
First, we could get by on fewer education dollars when our economy was based on cotton, tobacco and textiles and the related jobs were low- or no-skill and you didn’t need a diploma, much less a degree to get or keep one. That was when our notion of a global economy was the Germans, the Brits, the Canadians and West Virginians vacationing in Myrtle Beach. The knowledge and skill needed to compete in the global economy now far surpasses what it took to compete in the “old” South Carolina. Second, South Carolina may be making progress but we have lots of catching up to do in order to bring our schools onto a par with the rest of the country.
The work of a recent statewide school funding task force strongly suggests that even though we are spending more, it’s still not enough. We know that money alone won’t make public education in South Carolina what it needs to be. But we also know that everything we need for our public schools to deliver a high-quality education costs money and more of it.
Next week: Embracing education as an investment.
Jon Butzon is executive director of the Charleston Education Network. Peggy Huchet is education director for the League of Women Voters of the Charleston Area. RECENT MY TURNS
|
2/3: The nerve of BauerTo the editor How can he [Andre Bauer] have the nerve to say something like this. I have always had my doubts about this man but this is it. Hopefully voters in this state will wake up and see we don’t need any more politicians embarrassing the state. While SC seems to be headed in the right direction, along comes Governor Sanford and now this. Too bad Lt. Gov. Bauer can’t be demoted to “Private Bauer.” -- Thurman L. Thompson, Florence, S.C. 2/3: Voter photo ID bill unnecessary, expensive To the editor: The League of Women Voters of South Carolina wants to express our strong opposition to the Senate amended version of House Bill 3418. This bill requires voters to obtain and show a photo ID before exercising their right to vote. Unnecessary and costly, this legislation creates barriers that would disenfranchise approximately 178,000 citizens who are currently eligible to vote. In its rush for passage, the Legislature held no public hearings where citizens could comment on this important voting rights bill.
Conservative estimates of the costs to implement H. 3418 top $1 million annually. The amended Senate version of the bill will dramatically increase this estimate. Not factored in are considerable costs of legal challenges that South Carolina could incur.
Photo ID requirements are one of the most serious threats to our efforts to ensure the right of every eligible American to vote. Current laws have been an effective deterrent. Indeed, there have been no prosecuted cases of voter impersonation in our state in recent history. This legislation is genuinely a solution in search of a problem.
Any proposal that raises barriers to voting is a fear-based approach instead of a fact-based solution. The Legislature should do the right thing by opposing this legislation and instead focus on provisions that would help make election administration more efficient, secure, accurate and accessible.
-- Barbara Zia, president, League of Women Voters of South Carolina, Columbia, S.C. 2/2: Bauer, others tearing down GOP To the editor: A very well written article. Are Greenville/Lexington the seat of Conservatism? First Joe Wilson, then Jim DeMint now Lt.Gov. Bauer. These men are singlehandedly bringing down the Republican Party in SC.? Are the voters of South Carolina going to turn a deaf ear to these type of stupid actions by a politician? It is about time that the news media brought to light what is going on in this state regarding the conservative politicians. We certainly need some new blood in the politics of this state.
-- Jim Norton Charleston S.C. 2/2: Voter ID bill may face hurdles To the editor: I believe it would be helpful to the readers of Statehouse Report if it followed up with a full account of the issues involved in the extraordinary procedure in which Sen. McConnell, with his total mastery of the Senate rules, manipulated (and I believe that would be the most precise word) a procedure that bypassed the standard legislative process on the Voter ID bill. First, to my knowledge there have has been no reports of any proven voter fraud in the state of persons using false identification. As a covered jurisdiction under the Voting Rights Act, legislative passage of this legislation will invite a Justice Department full review, which no doubt will show it is aimed primarily at poor and elderly voters who do not possess a driver's license. Because white per capita income in the state is almost double that of blacks, there would clearly be a highly disproportionate impact among registered African American voters. This bill clearly represents an effort by the Republican majority in the Senate and its rules committee to discriminate against black voters, who overwhelmingly vote for Democratic candidates. Acts with such obvious racially discriminatory impact are illegal under the VRA.
-- Name withheld upon request, Charleston, S.C. NEED TO VENT? Or mad about something we wrote? 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.
Send up to 200 words to feedback@statehousereport.com.
|
Up, down and in the middle Drucilla Baker. The director of women and gender studies at USC who doesn't plan to read First Lady Jenny Sanford’s just-released memoir, viewing it as a distraction from the state's real problems. You go, girl. More.
LAC. The S.C. Legislative Audit Council’s recent apolitical report on goofs and gaffes at the Employment Security Commission once again highlights the need for objective review of state government’s arms and agencies. More.
 Sanford. The governor used the state plane this week (booooo!) to go to Washington, D.C., to tell President Obama that South Carolina does, in fact, want $300 million in stimulus funds for education (yaaaa!). A little late, though, Mark. More.
Voter I.D. A Senate compromise allows for more early voting in exchange for voters having to present photo I.D. before stepping into the voting booth. The controversial bill is, according to detractors, is racist and political in nature. The bill still has to clear the House, as well as the U.S. Department of Justice. More.
 Education. The PACT test’s replacement – the PASS (Palmetto Assessment of State Standards) -- showed 3 of 10 students across South Carolina are still not at grade level. And the first letters of “assessment” are? More.
Bauer. The Greenville News checked Lt. Gov. Andre Bauer’s stray dog/welfare comments, and he was wrong there, too, factually. More.
Columbia, hic. State capitol named 13th drunkest city in nation. More.
|
|
|