Leaders prepare to return to work

COLUMBIA -- — South Carolina lawmakers are about to embark on their 2012

session, but how much will their work in the next six months change the

lives of the men, women and children who call this state home?

Gov. Nikki Haley said that depends on what steps the Legislature takes to

create jobs for the nearly 10 percent of unemployed workers.

Senate President Pro Tem Glenn McConnell said he is focused on pocket book

issues such as limiting what lawmakers can spend in the future and what fees

state agencies can charge.

House Speaker Bobby Harrell puts the emphasis on the big picture and what

will bring long-term economic prosperity.

But the difference between meaningful change and political rhetoric comes

down to the courage lawmakers can muster in an election year. All 170 House

and Senate members are up for re-election in November.

The state’s three top Republican leaders and key Democrats outlined for The

Post and Courier the issues at the top of their agenda for the

January-to-June session that begins Jan. 10.

“Fiscal issues will be the dominate issues of this legislative session from

the budget to tax reform to the retirement system,” Harrell said. “I think

an election year makes it more likely that we’ll get progress because

everybody is on the ballot.”

Money matters: government spending controls, tax breaks and truth in

budgeting

• Gov. Nikki Haley will lay out her vision for economic policy in her

executive budget, due out in early January. She said to achieve strong job

creation numbers in 2012, the Legislature should phase out the corporate

income tax and reduce the tax on manufacturers. The governor also wants the

Legislature to simplify the individual income tax to eliminate three of the

six brackets.

“Our goal in this administration is to get every person in a job,” Haley

said.

She said she wants “truth in budgeting” that looks at overall state

government spending, such as fines and fees imposed by state agencies, not

only the $6 billion-plus portion in the general fund.

Research by the South Carolina Policy Council, a conservative think tank,

puts state spending at nearly $22 billion, which includes federal tax

dollars that flow to South Carolina and tuition paid by students at the

state’s colleges and universities. The Legislature’s general fund budget —

and the portion subject to the most floor debate and committee work — is

about $6 billion, or just 27 percent of government spending.

• Senate President Pro Tem Glenn McConnell, R-Charleston, has a “fiscal

fitness” plan. The plan’s most significant elements call for a

constitutional spending cap and the creation of a commission that uses

zero-based budgeting to prioritize government services.

• House Speaker Bobby Harrell, R-Charleston, adds the elimination and

protection of certain sales tax exemptions to the list of 2012 priorities.

Harrell said the Legislature needs to keep exemptions such as breaks on

residential electricity and water, groceries and prescription drugs on the

books. Others — and he wouldn’t say which ones until he develops some

legislative consensus to avoid a target list for lobbyists — need to go.

Issues to watch

• Deepening of the Charleston port and settlement of the long-simmering dual

rail access issue will prove to be an undercurrent in the 2012 session.

Lawmakers are also expected to stake out positions on the future development

of the Jasper port. Any action will follow the recent controversy over the

role Gov. Nikki Haley played in a water permit South Carolina issued to

Georgia for the deepening of the Savannah port. South Carolina’s ports are

in direct competition with Georgia’s.

• Senate President Pro Tem Glenn McConnell called Medicaid “a financial time

bomb” that has the potential of bankrupting the state. As issues over the

federal health care law, known to some as Obamacare, are sorted out

nationally, the state will develop its plan to pay for the program that has

seen dramatic cost increases as more South Carolinians turn toward social

services.

Restructuring

• First on the Senate floor when the Legislature reconvenes is a bill to

create a Department of Administration, under Gov. Nikki Haley. The proposed

agency will shift authority from the Budget and Control Board, which Senate

President Pro Tem Glenn McConnell said has “grown so big it’s become almost

a fourth branch of government.”

The board is controlled by five members: the governor, treasurer,

comptroller general and the Legislature’s two top budget writers. It manages

state government when the Legislature is not in session with

responsibilities such as maintenance of the state fleet and upkeep of public

buildings. The board can also allow agencies to spend in the red, give

colleges and universities the OK for building projects and set contribution

rates for the state’s retirement system.

Just how much control the Legislature will give the governor over the state

administration and financial oversight is up for debate.

• Following a cash crunch that left the state Department of Transportation

broke in 2011, the Legislature wants to figure out how to improve its

management. The options are to put the entire control of the agency under

the governor’s office or continue to split oversight between Haley and a

commission of political appointees.

Lawmakers may also decide to change the way the agency decides what road

maintenance and construction projects get approved. Some argue that the

state should increase the 16-cent-a-gallon gasoline tax, set in 1987, to

better fund infrastructure. That is unlikely in a GOP-controlled Legislature

during an election year.

Retirement

• The state’s retirement plan for government workers, including teachers and

police officers, is a mess. The Legislature must make decisions about future

cost-of-living increases, retirement age and contribution rates. The state

needs a plan to generate enough cash to cover an estimated $13 billion to

$17 billion worth of currently unfunded pension benefits promised within 30

years.

The consequences of their decisions will directly impact people’s lives,

Senate Minority Leader John Land, D-Manning, said.

“Anytime you under-fund the state workers, firemen, law enforcement officers

or teachers, you’re doing damage to your society in general and especially

the middle class,” Land said.

What won’t happen this year

• Significant changes to the way public schools are funded in South Carolina

will likely have to wait for another year. Politicians constantly talk about

inequities within the schools, with achievement and resources varying

greatly between ZIP codes, but any meaningful change to address that isn’t

likely to happen until after the election year.

Lawmakers may, however, take some Republican-friendly steps such as

increasing the amount of cash the state sends to charter schools.

House Speaker Bobby Harrell, R-Charleston, said changing the education

funding formula is one of the most difficult tasks for the Legislature and

it hasn’t been changed in some 30 years. That’s because changing the formula

will create winners and losers among the school districts.

• A dramatic overhaul of the state’s tax code. Small ticket changes to tax

policy could find support in the next session.

Senate President Pro Tem Glenn McConnell, R-Charleston, said he is hopeful

that election-time pressure will force action.

“With the climate in Washington and across America, and particularly in

South Carolina, we have a unique opportunity,” he said. “There is a perfect

political windstorm.”

Rep. David Mack, D-North Charleston, said he is expecting a different kind

of windstorm: one created by political blustering.

“Forget about Democrat or Republican, liberal or conservative: what’s in

your best interest?” Mack said.