Not a Great Year for Freedom


Every year should be a new opportunity in a supposedly “red” state like South Carolina for lawmakers to cut taxes, snip red tape, and promote personal liberty. Yet aside from a few bills that passed like restaurant carry and hemp production legalization, economic and personal freedom were not a top priority for lawmakers in 2014. Indeed, freedom wasn’t any kind of priority. Here, we take a quick overview of what happened with some of the most pertinent bills of the latest legislative session. A more comprehensive overview of this year’s legislation will be found in our Best Worst publication in the coming months.

“Obamacare Nullification” Turned “Anti-Commandeering” Killed in Senate

Last year, the first year in the two-year legislative session, H.3101 was passed in the House. Aimed at “ending” the Affordable Care Act (ACA) in South Carolina, the bill prohibited public employees from assisting in the enforcement of the provisions of the ACA, prohibited the state from running a state-run health insurance exchange, and gave the General Assembly the “absolute and sovereign authority” to refuse to enforce provisions of the ACA that it deemed to exceed the authority of Congress (these provisions were not specified). Unfortunately, this latter provision, along with the absence of any provision regarding the acceptance of federal ACA-related money, made the bill largely meaningless.

A stronger version of the bill was introduced in the Senate in 2014 with a strike-and-insert amendment authored by Senator Tom Davis (R-Beaufort). This amendment would prohibit state officials from enforcing, or using state resources to enforce, certain provisions of ACA, including the assistance of enrollment in any health insurance exchange, the enforcement of sections of ACA requiring individual and employer insurance mandates, and applications for grants in support of enrollment encouraged by these mandates. Most importantly, the amendment required that federal ACA dollars be treated on a contractual basis. That is, all state entities, before applying for and accepting federal dollars, would have to explain in detail what the money is for, what policy prerogatives the state must cede to the federal government in order to get the money, and how the consequently funded program will affect individual businesses. Although the amendment made certain exceptions to the prohibitions of ACA’s enforcement, including the allotment of Medicaid under current standards, it was a much stronger attempt to at least slow down or inhibit the implementation of the ACA in South Carolina.

After several months of work on the bill by Sen. Davis, and several days of debate in the Senate, Sen. Brad Hutto (D-Orangeburg) raised a point of order that the amendment was not germane to the original bill. Although the amendment clearly was germane – and despite the Senate’s history of approving amendments that bear no relation to the bill whatsoever – Lt. Governor Glenn McConnell sustained Hutto’s motion, thus killing the amendment and giving political cover for those who didn’t want to actually vote on the amendment. Sen. Davis took the rare step of challenging the ruling of the president (in this case McConnell), but that vote failed 14-28. The vote then came down to the version of H.3101 that passed the House, and that failed by a wide margin.

Final Deeply Flawed “Ethics Reform” Bill Dies on Last Day

Last year, H.3945 was introduced and approved by the House Judiciary Committee without anyone actually seeing a written version of the bill. Far from being “ethics reform,” the bill actually decriminalized ethics violations of lawmakers and forced citizens and groups who testify before legislative committees to first register as lobbyist and pay a $200 fee. Although these provisions were taken out after a strike-and-insert amendment was approved – legislative leaders publicly called both provisions “mistakes” – the bill that passed the House last year was deeply flawed.

This year, the Senate approved their own version of the bill, and after the House in turn did their own strike-and-insert amendment, the bill went to conference committee. Both the Senate and House versions contained private income source disclosure (although with at least one potential loophole). Yet the bill amounted to a major setback. The House version contained, among other things, a failed attempt at implementing independent investigations of lawmakers. It created a new commission that consisted of four lawmaker appointees, four gubernatorial appointees (with consent and approval from the General Assembly), and four appointments by the Supreme Court. Given that lawmakers appoint Supreme Court members, lawmakers would have influence over all twelve members. Moreover, the commission only had investigatory, not, punishment, powers; so any investigation of lawmakers would have gone back to the House or Senate Ethics Committee – as is the case now. It also contained a provision that would allow candidates to spend campaign funds on almost whatever they wanted – a measure seemingly designed to protect the Speaker of the House from any criminal charge that may arise from an ongoing grand jury investigation.

The version that made it out of conference committee did not contain the new “super commission” included in the House version, but it did include the provision apparently meant to protect Speaker Harrell, as well as many other provisions that would have taken the state backwards on ethics reform – including loopholes for Leadership PACs and a section that would likely have forced some issue-based groups to disclose their donors merely for criticizing lawmaker by name during the run-up to an election. This version was passed in the House before session ended, and was brought up for debate on the last day after the House and Senate returned for budget vetoes. Sen. Davis spoke against the bill in the final hour of session, and the motion to end debate from Senator Larry Martin (R-Pickens) did not have enough votes to bring the bill to a vote before session ended at 5:00.

Budget and Control Board Renaming Act Signed into Law

In the first year of the just ended session, legislators finally got around to addressing the Budget and Control Board, one of the longstanding separation of powers issues in our legislatively dominated state. The Budget and Control Board (BCB) is composed of the governor, treasurer, comptroller general, Senate Finance chairman, and House Ways and Means chairman. It assumes both legislative powers (inter-agency loans, and mid-year budget cuts) and executive powers (especially procurement).

The legislature’s proposed solution didn’t address any of the actual problems associated with the entity. Both House and Senate versions of the restructuring bill created a hybrid legislative/executive board that would retain the BCB’s most noteworthy powers. The final conference version of the bill, which was passed in early 2014 and signed by the governor, was consistent with its predecessors by creating a new hybrid agency known as the State Fiscal Accountability Authority (SFAA). But that agency was comprised of exactly the same members as those of the BCB. The SFAA will take on the BCB powers of procurement, and authority over bonding and loans. A new Department of Administration was also created by the bill but its powers are insignificant when compared to the SFAA.

Finally, the conference legislation contained a number of other highly problematic provisions. One gave the General Assembly power to subpoena citizens and hold them in criminal contempt. The bill also failed to fully transfer deficit recognition to the legislature – meaning lawmakers can go on avoiding accountability for granting agencies permission to overspend.

In short, the effort to eliminate the BCB and reform the balance of powers between state branches of government was a failure. It began badly, and ended as the Budget Control Board Renaming Act. The real problem with it, though, is that it has killed any move to restructure government for another decade or two.

Budget Growth – Even More Than Usual

The General Assembly outdid itself once again this year by passing an FY 2015 budget that will spend $25.5 billion. Included in this monstrosity are $137.5 million in new spending on a changed school funding formula that will spend more money on comparatively high-spending schools (despite the fact that throwing more money at public schools has repeatedly proven a failed policy when it comes to improving academic performance), $45 million for the deal closing fund (a slush fund used to bribe companies to relocate to or expand in South Carolina), and $100 million to the Infrastructure Bank Board under the authority of Act 98, which will be used to issue billions in new bond debt for purposes of unnecessary new road construction.

Continuing another menacing budget trend, over a third ($9.4 billion including food stamp money lawmakers no longer include in the budget) of FY15’s appropriations, much of it going to the Department of Health and Human Services, will come directly from the federal government. As long as South Carolina government officials continues to accept such a large portion of state government funding from the federal government, South Carolina will continue to see many of its policies determined on the federal level.       

Beyond its sheer size, the FY15 budget is also notable for just how its final version came to be. While both the House and Senate passed budgets, the final version of the budget was created by an unofficial “conference” of two people – House Ways and Means Chairman Brian White (R-Anderson) and Senate Finance  Chairman Hugh Leatherman (R-Florence). These two lawmakers arranged a deal by which they clandestinely crafted a series of amendments to bring the two chamber budgets into alignment. These amendments, when passed by each chamber, enabled legislators to avoid the scrutiny of a public conference committee on the budget.

Once this final legislative version of the budget reached the governor’s desk, she saw fit to veto only $18.5 million in appropriations, or 0.07 percent of the entire budget and less than 2 percent of the increase from the FYY14 budget. In turn, lawmakers sustained only $4.5 million worth of these vetoes, or 0.018 percent of the budget.

Not a great year for the taxpayer. Or indeed for the freedom movement.

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