Best & Worst Preview: 2010

In preparation for the release of our annual Best & Worst legislative review next week, here is a preview of the best of the best and the worst of the worst of 2010. If anything, legislators outdid themselves in 2010 by increasing spending, refusing to record votes and raising taxes. They also failed to pass any form of education or health care reform.

 

The Worst of the Worst:

1. Increasing Spending

In spite of the recession and double-digit unemployment, legislators managed to pass the largest budget in state history. The total budget for FY10-2011 was $21.149 billion: $8.268 billion in Federal Funds; $7.766 in Other Funds; and $5.115 billion in General Funds. The new budget is almost half a billion dollars more than last year’s budget.

2. Raising Taxes

The Legislature’s move to increase the cigarette tax by 50 cents a pack will cost the state’s economy at least 4,100 jobs, with the retail sector being hardest hit. The governor’s veto of this bill (H 3584) was overridden.

3. Handing Out Tax Credits Instead of Tax Cuts

One of the final pieces of legislation to pass the General Assembly this year was an omnibus economic development bill providing an array of targeted credits and subsidies to special interests. Among other things, the legislation (H 4478) extended tax credits to businesses that pay taxes on manufacturing and productive equipment property. At 3.73 percent, South Carolina has the highest effective manufacturing property tax in the country. Why not reduce the rate for everyone, instead of continuing to pick winners and losers?

4. Expanding Legislative Power

House members are elected every two years – a check on their power that helps keep them accountable to the public. But this bill (H 4279) sought to amend the state constitution to change the length of a House member’s term from two years to four.

5. Threatening Personal Liberty

This bill (H 5042) would have provided for fines and criminal penalties for releasing twenty or more helium-filled balloons over the course of an hour.  A better alternative would be to rely on tort law to address any abuses caused by balloon wielding vandals.

6. Restricting Free Speech

This law regulates automobile advertising, dictating that written advertisements must be a certain size font and that oral advertisements must be a certain volume. As the governor’s veto of this bill (H 4607) cautioned, such mandates “have a cost both in the commercial market and on individual liberty.” Possible unintended consequences include higher advertising costs, which could shut out smaller dealers and raise prices for car buyers. The Legislature overrode the veto.

7. Restricting Free Trade

This bill (S 1220) would have prohibited pharmaceutical sales representatives from selling or marketing products at hospitals. Legislators seem not to realize that pharmaceutical reps visit hospitals because it is more convenient for doctors, whose work often requires long hours at … hospitals.

8. Creating New Boards and Commissions to Regulate the Economy

This bill (H 4746) would create the Environmental Justice Equitable Redevelopment Commission to address the absence of “awareness of environmental justice issues” in South Carolina. The commission would educate folks in these matters – as well as promote government-driven economic development schemes in the name of environmental justice. The Legislature would control appointment power over the commission.

9. Introducing More Fine and Fee Increases

Legislators introduced more than 80 bills in 2010 that would have raised fines and fees. Targets included: hunters/fishermen (S 1340); seniors, the disabled and other persons in need of home health care (H 4413); repo men (S 1073); talent agents (H 4235); and musical therapists (H 4624).

10. Pushing Through More Insider Deals for Well-Connected Lobbyists

This bill (S 1054) would have given The Sembler Company a multimillion tax break to build a retail mall at Okatie Crossings – in spite of the fact that even the state’s own Board of Economic Advisors concluded the deal wouldn’t create any new jobs, but just shift jobs from one locality to another. The idea was also likely unconstitutional. The proposal came just short of passing.

 

The Best of the Best:

As might be expected, legislators introduced far fewer good bills than bad. Here are five of the best:

1. Capping Spending

The S.C. Taxpayer Protection Act (H 4232) would have capped General Fund spending at a formula tied to inflation, plus population. Given that General Fund appropriations accounted for less than 25 percent of the FY10-2011 budget, Other Funds spending should be capped as well, with excess revenue from taxes and fees returned to taxpayers. This bill would also have instituted zero-based budgeting.

2. Recording Votes

This bill (H 3047) would have required a recorded vote be taken on bills/resolutions having the force of law: second reading of every bill or joint resolution, final passage of any amended bill or joint resolution, separate sections of the budget, and conference reports. The measure passed the House, but was stymied in the Senate over objections that Senate rules should take precedence over a statutory requirement to record votes.

3. Expanding Health Care Choice

S 986 is a perfect example of how free market health care reform could make health insurance more affordable for all consumers. The legislation would have enabled consumers to purchase insurance from approved out-of-state insurers, thus ending the current monopoly enjoyed by S.C. providers. The reform could lower insurance costs by as much as 30 percent by indirectly eliminating coverage mandates.

4. Shortening Session

This joint resolution (SJR 1003) called for shortening session by switching to a six-month (January to June) biennial, or every-other-year, session. Legislators currently meet every year for 5 months – one of the longest sessions in the country.

5. Requiring Transparency for Economic Incentives Deals

This bill (S 1229) would have required targeted tax incentives/subsidies to be introduced as separate legislation subject to a recorded vote. The measure also provided for additional protections – including independent review and public notice and hearings – on all taxpayer subsidized economic development deals.

Nothing in the foregoing should be construed as an attempt to aid or hinder passage of any legislation.

Copyright © 2010 South Carolina Policy Council

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