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ISSUE 10.12
Mar. 25, 2011

RECENT ISSUES:
12/04 | 11/27 | 11/20 | 11/13

Index

News :
Protecting the nest egg
Legislative Agenda :
From voter ID to reforms
Radar Screen :
Split session
Palmetto Politics :
The results are in …
Commentary :
Ad in poor taste but highlights our challenges
Spotlight :
S.C. Senate Democratic Caucus
My Turn :
Losing our way
Feedback :
Share your opinion
Scorecard :
Moore up than down
Stegelin :
Ard vs. Haley
Number of the Week :
$5,000,000.00
Megaphone :
Outclassed
Tally Sheet :
Relatively quiet on bill intros
Encyclopedia :
Ashley River

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NUMBER OF THE WEEK

$5,000,000.00

That’s how much financier Darla Moore pledged for a new aerospace research center at USC this week. Gov. Nikki Haley ousted Moore from her spot on the USC Board of Trustees last week in favor of a campaign donor. Students held on-campus protests against the move and in support of Moore, who had pledged tens of millions to the school in the past. More.

MEGAPHONE

Outclassed

“Without ever mentioning [Gov. Nikki] Haley's name Thursday, Darla Moore made the governor look like a fool. … The governor ought to lay off the knee-jerk press releases and accept the obvious: She's been outclassed.”

-- Post and Courier columnist Brian Hicks comparing philanthropist Moore’s new $5 million donation to USC to Haley’s earlier ousting of Moore from the university’s board. More.

TALLY SHEET

Relatively quiet on bill intros

Over the last two weeks, lawmakers have introduced few bills – last week because the House dealt with the budget and this week because the House is out of session. Among the highlights:

Inspector general. S. 691 (Rose) calls for creation of the office of Inspector General.

Association management. S. 699 (McConnell) would require a community association manager to meet certain certification requirements.

Aeronautics. S. 707 (Leventis) would move the state Division of Aeronautics from the Department of Commerce to Transportation, with several provisions.

Sales tax exemptions. S. 708 (Rose) calls for a new Exemptions Repeal Committee that would be charged with reviewing and recommending repeal of sales tax exemptions in a certain order, with several provisions. S. 709, 715 and 716 (Rose) are similar.

Renewable energy standard. S. 719 (Matthews) calls for establishment of a renewable energy and efficiency portfolio standard for electric power subscribers, with several provisions.

College tuition. S. 729 (Rose) calls for all revenue from out-of-state tuition in excess of in-state tuition rates to go to the state’s General Fund.

Spill notification. S. 733 (Hayes) would require DHEC to notify the public of a domestic sewage spill of more than 5,000 gallons.

Gambling. H. 3931 (H.B. Brown) seeks a constitutional amendment to approve various forms of gambling, including par-mutual betting on horses and casino gaming.

Hand sanitizer. H. 3933 (Jefferson) would require that a building that’s intended as a public place must have hand sanitizer prominently displayed at major entrances.

Abortion. H. 3945 (Barfield) seeks to enact the “Personhood Act of South Carolina” to establish a right to life at fertilization, with several provisions. H. 3946 (Barfield) seeks to create a S.C. Unborn Children’s Monument Commission.

Report cards. H. 3954 (King) would bar public officials from using public funds or resources to grade other public officials.

Telemedicine. H. 3955 (Patrick) would provide for the practice of telemedicine by licensed physicians, with several provisions.

  • To find out more on any of the bills in the General Assembly, go here.

ENCYCLOPEDIA

Ashley River

Mile for mile, the relatively short Ashley River is perhaps unrivaled in the Southeast, if not the nation, for its history, its diversity of habitats, and its location in a major city. Emerging from the Wassamassaw and Cypress Swamps in Berkeley and Dorchester counties, it flows only about 60 miles before joining the Cooper River in Charleston harbor. Its basin of 232,012 acres encompasses much of the Charleston metropolitan region, which includes Summerville and North Charleston.

Despite its short length, the river transitions through three separate types of riverine ecosystems: a blackwater stream, a freshwater tidal river, and a saltwater tidal river, each producing extensive and different types of wetlands. These diverse ecosystems and their transitional zones generate an abundant variety of plants and animals and represent the natural history of the lower coastal plain of the state. Since first inhabited by Native Americans, this diverse river region has provided people with rich and accessible resources.

The Ashley River played a central role in the history of South Carolina. The colony's first English settlement was established along its banks at Albemarle Point in 1670. Originally named the Kiawah River after the region's Native American inhabitants, the river was renamed in honor of Lord Anthony Ashley Cooper, one of the original Lords Proprietors. A decade later the settlement was relocated to the peninsula downstream, where the Ashley joins the Cooper to form an outstanding harbor, opening into the Atlantic. This juncture enabled Charleston to become a major colonial seaport, even though the Ashley was short and did not connect the seaport with the interior via a navigable waterway. This circumstance helped isolate the Lowcountry from the upstate and promoted settlement of the upstate by immigrants from North Carolina and Virginia rather than from Charleston.

Although limited to the coastal area, the Ashley did serve as an important route of regional transportation and commerce. Its navigable terminus was Dorchester, a major trading post settled in 1697 about twenty miles upstream from Charleston. Along the river's length were established prominent plantations, such as Middleton Place, Magnolia, and Drayton Hall. Vessels ranging from canoes to rice barges and schooners connected these places and were manned by Europeans and African Americans, both enslaved and free. During the postbellum era, phosphate was mined extensively from lands on both sides of the Ashley, and docks for barges lined the river. These varied activities left some important archaeological sites. As a result of its historical significance and natural beauty, the Ashley was named a National Historic District in 1994 and a State Scenic River in 1999.

The Ashley River has remained a vital resource for South Carolina. Its presence in metropolitan Charleston, its wealth of historic sites, its diversity of habitats, and its scenic beauty all combine to make the Ashley River region a highly desirable place to live and an unparalleled resource for tourism and outdoor recreation. The irony is that its qualities also make the Ashley highly vulnerable to the negative effects of suburban sprawl, pollution, and heavy boat traffic. Private organizations, public agencies, and citizens are taking steps to protect the Ashley and to find ways to balance conservation and growth. Caught amidst these contending pressures, the future of the Ashley River will indicate much about South Carolina in the years to come.

-- Excerpted from the entry by George McDaniel. To read more about this or 2,000 other entries about South Carolina, check out The South Carolina Encyclopedia by USC Press. (Information used by permission.)

PALMETTO PRIORITIES

Palmetto Priorities Statehouse Report encourages state leaders to develop and implement Palmetto Priorities involving several issues to make the state better a better place. Click the link to learn more about our suggestions for bipartisan policy objectives.

Here is a summary of our Palmetto Priorities:

CORRECTIONS: Reduce the prison population by 25 percent by 2020.

EDUCATION: Cut the state's dropout rate in half by 2020.

ELECTIONS: Increase voter registration to 75 percent by 2015.

ENVIRONMENT: Adopt a state energy policy that requires energy producers to generate 20 percent of energy from renewable sources by 2020.

ETHICS: Overhaul state ethics laws.

HEALTH CARE: Ensure affordable and accessible health care.

JOBS: Develop a Cabinet-level post to add, retain 10,000 small business jobs per year.

POLITICS: Have a vigorous two- or multi-party political system of governance.

ROADS: Strengthen all bridges and upgrade state roads by 2015.

SAFETY: Cut the state's violent crime rate by one-third by 2016.

TAX REFORM: Remove outdated special interest sales tax exemptions as part of an overall reform of the state's tax structure to be completed by 2014.

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News

Protecting the nest egg

State struggling with retirement program

By Bill Davis, senior editor

MARCH 25, 2011 – Will they or won’t they? That is the question.

Will future state employees continue to get state pensions or will legislators, as bills in the legislature propose, keep new employees from joining the state pension plan and force them into 401K-like savings plans?

State Sen. Chip Campsen (R-Charleston), the primary author of the Senate version of the retirement plan bill, said state government needed to follow the private sector’s lead in handling its pension obligations. How? By segueing from defined benefits plans, or pensions, to defined contributions plans that are controlled by employees and seeded with government contributions.

Campsen pointed to General Motors as an example of how “legacy costs” -- retiree benefit plans -- can help bankrupt a system.

Gov. Nikki Haley says something has to be done, claiming the state’s retirement system is burdened with $13 billion in unfunded liabilities.  Critics say the number is vastly overstated. But what Haley wants done is unclear as she has yet to spell out specifics in her administration’s plan.

Reached for comment Friday morning, Haley’s spokesman Rob Godfrey said the governor has said state government needed “to protect the benefits promised to current retirees. She has also said that the current unfunded liability is not sustainable, and is probably the greatest financial risk facing South Carolina.”

Godfrey continued: “We can no longer stick our head in the sand and pretend everything will just be fine – we have to give taxpayers a retirement system that is solvent. (Newly appointed S.C. Retirement Systems director) Bill Blume is the right guy to get us there, but he’s in his first week, and it would be premature to comment on specifics of how we tackle this looming crisis.” 

Treasurer Curtis Loftis, who has clashed with Haley publicly over Blume’s appointment, told Statehouse Report this week that the state employee retirement pension fund was $88 million underfunded just from 2010 alone.

On the hook

Currently, the state retirement system has roughly 450,000 members, with about 190,000 active members and 110,000 pensioners members and 150,000 members not yet eligible to receive benefits, according to the Budget and Control Board, which oversees the retirement system.

Loftis said he worried the state may be on the hook in the future if new hires were cut out of the defined benefits system. The treasurer worried that if the state didn’t continue to add new hires to the pension system, then the state eventually might have to contribute more money over time to fund any gaps in the pension system.

Loftis said he had a list of 17 items that need to be discussed in retooling the retirement system, like potentially moving the years of service needed before an employee becomes fully vested in the system from 28 years back to 30 years.

Campsen worried that the current retirement model mimicked the federal Social Security program where new contributions were being used to fund existing benefits. “If that’s what happening in the state system, then we need to stop the bleeding sooner rather than later,” he said.

But that’s not what is happening.  The state retirement system is fully solvent because the state is not borrowing from the pension fund to pay other bills, as is the case with Social Security on the federal level. 

Bob Borden, who oversees the retirement pension fund, has said publicly that the fund is “back in the black” and exceeding investment projections, with a total value of about $23 billion.

Problems with ‘official line’

Borden did not return several days of calls for comment on the fund, so it is not clear what he means by saying the fund was “back in the black.”  In 2008, the fund’s value was $29 billion -- $6 billion higher than it is today. The $23 billion fund now, however, has regained $3.5 billion from a $19.5 billion low point two years ago.  

Joe Benton, the interim executive director for the S.C. State Employees Association, disagreed with Haley’s assessment of the pension fund. He said she was playing games with the numbers – that her $13 billon number was premised on the unrealistic idea that everyone would who could retire in state government were to do so tomorrow.

Benton likened the crusade against the state’s retirement system as saber rattling, considering, he said, that the average pension recipient receives less than $20,000 a year. And Benton, a former economics teacher, worried that it might not be the safest idea to let state employees with little investment savvy manage their retirement savings. Most of his college students, for example, didn’t know the difference between a stock and a bond, he said.

Crystal ball: South Carolina has always fought hard to protect its past. But the pension fund question of how do we take care of “past” state employees and the fiscal future of the state is tough. There is no doubt someone is going to have to put more money into the system. And it’s either going to be the state or the employees or a combination of both. Until that decision is made, the retirement fund may continue to suffer from chronic anemia.

Bill Davis, editor of Statehouse Report, can be reached at:  editor@statehousereport.com.

Legislative Agenda

From voter ID to reforms

The floor agenda in the House will return once again to a bill requiring citizens show photo identification before being allowed to vote, and then to a bill regulating all-terrain-vehicles.

The floor agenda in the Senate will return for the second week to a bill dealing with construction insurance. Waiting in the wings: Tort reform and political action committee reform waiting in the wings.

In the House:

  • Ways and Means. The full committee will meet Tuesday an hour and a half later adjournment in 521 Blatt to discuss a very full agenda of bills. More.

  • Judiciary. The full committee will meet Tuesday at 2:30 p.m. or an hour and a half after adjournment in 516 Blatt to deal with a host of subcommittee recommendations. More.

  • Education. The full committee will meet Wednesday at 9 a.m. in 433 Blatt to discuss education bills. More.

In the Senate:

  • Redistricting. A subcommittee will hold four public hearings on redistricting across the state next week. More.

In related agendas:

  • Cabinet. Gov. Nikki Haley will hold a cabinet meeting Monday at 10 a.m. in 252 Brown, on the Statehouse grounds.
Radar Screen

Split session

Word out of the Statehouse this week is that the legislature will likely stay in session, taking care of its regular business until May or early June, but then return in August to deal with redistricting. Some legislators had hoped the session would be cut short to mitigate having to come back later. They will be sad:  Leaders in the House and Senate aren’t looking for early release dates, according to several sources.

Palmetto Politics

The results are in …

… And the winner is Horry County! U.S. Census counts for 2010 have been received by state government this week, and they show big jumps in growth along the coast. That means that the state’s new, 7th congressional district will most likely be centered in Horry County, with tendrils in the Pee Dee section of the state.  That is, until a federal court redraws the lines for us anyway.

Transparency fight

Treasurer Curtis Loftis is openly warring with Gov. Nikki Haley over the selection of Bill Blume to replace Peggy Boykin as the head of the state’s retirement system.

Loftis complained this week he received information that the deal to name Blume as Boykin’s successor was more than a week old before he found out last Friday. He complained that Haley had cut a backroom deal to put in Blume, whom he has just met, with other members of the Budget and Control Board, which oversees the retirement system.

Loftis criticized Haley, who chairs the board, for not including him, a voting member of the board, in the discussions. “I don’t want to fight with a fellow Republican,” said Loftis, who vowed to fight anyway, because the issue of transparency in government was worth it. Some in and around the Statehouse scoffed at Loftis’ public complaints and rancor saying he wasn’t apparently aware of whom was elected governor.

Commentary

Ad in poor taste but highlights our challenges

By Andy Brack, editor and publisher

MARCH 25, 2011 – A 36-second ad by a North Carolina advocacy group should make you steaming mad about what it says about South Carolina. And then you might get embarrassed about its implications.

Together NC, a coalition of organizations seeking a balanced approach to budgeting in the fiscally-troubled Tar Heel state, started running a Web-based cartoon ad in January that thumbed its nose at South Carolina. Here’s a transcript:


“North Carolina is a great place to live. Our world-class university system is the envy of other states. Our public investments make us the number one place to locate a business.

 

“But now some want to slash our award-winning schools and other investments we’ve made in the future. North Carolina can keep teachers in school, cops on the streets and firefighters at work. We can stay on the path to prosperity through smart investment, not short-sighted cuts.

 

[Screen shows sign: “South Carolina Welcomes You”]

 

“Of course, there is a different path, but wouldn’t we rather stay in North Carolina?”

 

[Ad ends with screen: “Stand Up for North Carolina at www.TogetherNC.org”]

Yep, they’re using South Carolina as the example of what they don’t want North Carolina to become. Make you feel a little hot around the collar?

“I am taken back by it,” said state Sen. Phil Leventis, D-Sumter. “It is so unseemly to select a neighbor for such derision.”

If you want to get a little more steamed, the folks at Together NC are unapologetic. When asked if the ad were rude, organizer Rob Thompson had a one-word answer: “No.” He also claimed the ad wasn’t a poke at people who lived in South Carolina. (How could it be anything but a slam to everyone here, we wonder?)

“What we were making fun of was not the people of South Carolina or the state, but some of the decisions that leaders of the state have made that we don’t want North Carolina to follow,” said Thompson, executive director of the Covenant with North Carolina’s Children.

Otis Rawl, head of the S.C. Chamber of Commerce, said this week the ad made him mad when he first saw it. But he’s been using it as an example of how the state needs to do a better job of communicating its real story – that South Carolina has a good education system and climate for business.

“What we are and what the perceptions are external to South Carolina are two different things,” said Rawl.  “We’ve got to create a different brand for South Carolina when we talk about education quality, and quality of life issues --  when we start talking about who we are and what we are.”

Recent polling of people outside South Carolina showed many business leaders had a blank view of South Carolina, compared to positive views about the business environment in Florida and North Carolina and negative views of Mississippi and Alabama. What’s worse, Rawl said, is that people who live in South Carolina tend to have a worse view of the state than those outside it, according to polling.

“I think we’ve got the worst inferiority complex of any state,” he said, adding that the Chamber was developing a campaign to refute myths and rebrand South Carolina’s image. “We’ve got to educate our businesses, employees and citizens as to what we really are and who we are so we can rebuke anything said about us.” 

On education, for example, many assume the state is at the bottom. But that’s not true, Rawl said. It will be in the middle in an apples-to-apples standardized comparison soon to be released by the National Governors Association, he added.

“Things are not as bad as we perceive them ourselves,” Rawl said. “What really is our problem, we found out, is our political and public policy-makers continue to embarrass the state and that gives us the biggest black eye.”

So while the rude North Carolina ad is annoying and impolite, maybe it will lead us to toot our horn a little more about what’s good in South Carolina.

Andy Brack is publisher of Statehouse Report and can be reached at: brack@statehousereport.com. If you want to see the ad by Together NC, go to YouTube.com and type in the organization’s name or visit this link: http://www.youtube.com/watch?v=TEWLV21jg-0

Spotlight

S.C. Senate Democratic Caucus

The public spiritedness of our underwriters allows us to bring Statehouse Report to you at no cost. This week's spotlighted underwriter is the SC Senate Democratic Caucus. Organized almost 25 years ago, the Caucus has played an important role in many of the historic issues facing our state. As a vibrant minority party in the Senate, its role is to represent our constituents and present viable alternatives on critical issues. The SC Senate Democratic Caucus remains a unique place for this to occur in our policy process. Learn more about the Caucus at: www.scsenatedems.org.
My Turn

Losing our way

A need to change development policy


By Lacy Ford

Special to Statehouse Report
Part 1 of 3

NOTE:  Over the next three weeks, we turn to a prominent state historian for a look at economic development in the Palmetto State and lessons for policymakers.  University of South Carolina history professor Lacy Ford discussed the state’s development efforts March 19 at the Global American South forum at the University of North Carolina.  This week in Part 1, Ford suggests doing things the way we’ve always done them might not work too well in the global economy.
MARCH 25, 2011 -- When South Carolina’s new Commerce Secretary took office in January 2011, Bobby Hitt quickly proclaimed himself  “ready to go buffalo hunting,” referring to the standard economic development strategy of luring large, potentially transformative companies like BMW and Boeing to locate manufacturing facilities in South Carolina. 

Hitt’s metaphor belied the wisdom of his strategy.  After all, we all know what happened to the buffalo. They were hunted to the verge of extinction – and revived as a species, much like the financial sector during the recent Great Recession, only through careful government assistance, attention and forbearance.  Surely hunting buffalo, even metaphorically, cannot pass for a 21st century development strategy.


Ironically, the choice of Hitt as Commerce secretary suggested a new day for S.C. development efforts.  When Nikki Haley, an outsider Republican with tea party support who roared from last place in the polls to win the Republican nomination over a strong field and the general election over a formidable Democrat, won the governorship, the state’s business community worried that they might be in for four more years Gov. Mark Sanford, whose reported indifference to development efforts had grown legendary.  So when the victorious Haley announced the choice of Hitt, the response was almost universally positive.  Republican and Democrat, Upstate, Midlands and Lowcountry, business and education interests all praised the S.C. native and longtime BMW director of communications as an excellent choice.

The corporate communications veteran knew the problem with his buffalo-hunting expression.  Hitt quickly qualified himself:  “You don’t get Boeings and BMWs as often as you would like, every eighteen years if you use BMW and Boeing as an example.”  Hitt even went so far as to proclaim himself a “true believer” in S.C.’s efforts to balance manufacturing with a stronger knowledge-based economy through the funding of high-technology research at the state’s research universities (USC, Clemson, and MUSC).  In fact, Hitt has served on the board that selects the CoEE (Centers of Economic Excellence) projects used to attract endowed chairs to those universities. Yet he used his earliest public exposure as Commerce secretary NOT to announce a revamping of S.C.’s development strategy but to reflexively pay homage to the tried and true economic big-game hunting that the state’s politicians and voters know and like so well.

So one might ask, what is the problem with business as usual in the economic development arena? Well, for much of the past decade, S.C.’s unemployment rate, both in times of recession and times of growth, has run well above the national average, often a full two percentage points above, on a consistent basis.  The chronic elevation of the unemployment in S.C. suggests systemic problems with its development strategy.  But more fundamentally, for the past 30 years, even as much applause and back-slapping occurred at times within the state’s political and economic development community (at least from 1980 until 2000), the state’s per capita income, like that of much of the old cotton South, fluctuated around 80 percent of the national average, ending a 40-year period of rapid convergence on the national standard of living.

Between 1950 and 1980, South Carolina’s per capita income increased by some 400 percent (in constant dollars), and increased from just over 50 percent of the national average in 1940 to nearly 80 percent in 1980.  During this era, South Carolina, armed with newly-minted state development policies and led by a highly capable modernizing elite headed by Governors Fritz Hollings and Robert E. McNair, encouraged the improvement of  human capital in South Carolina as well as keeping business costs low as part of its growth strategy.  

These policies enjoyed the support of the one-party Democratic state of the mid-20th century and were initially embraced by the business-oriented leadership of the emerging Republican party during the 1970s and early 1980s, forging and sustaining what had been called a Neo-Whig development coalition.  But after four decades (1940-1980) of impressive income growth in South Carolina and convergence on national norms, per capita income in South Carolina has hovered near 80 percent of the national average since 1980. 

Three decades of comparative economic stagnation has not been effectively countered by changes in the state’s economic development policy, leaving the state without a viable strategy for growing its economy and improving its standard of living.  In fact, since 1980, the state’s has struggled to grow fast enough to keep up with the national average, and the post-WWII convergence on the national standard of living has screeched to a halt. And there is little evidence to suggest that state should expect the convergence to resume anytime soon -- unless an unexpected number of buffalo wander into target range.


Next week:  Political structure influences development policy

Lacy Ford is a distinguished and award-winning historian at the University of South Carolina.  Twice a fellow with the National Endowment for the Humanities, he most recently is author of “Deliver Us from Evil:  The Slavery Question in the Old South,” which was published in 2009 by Oxford University Press.
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Scorecard

Moore up than down

Darla Moore. How does the financier respond to Gov. Nikki Haley removing her from the USC Board of Trustees for a campaign supporter? She ponies up another $5 million. Elegant comeback. More.

Unemployment.
The state unemployment rate dropped yet again, this time to 10.2 percent, which is still too high. More.

Medicaid. The Budget and Control Board voted this week to give the Department of Health and Human Services, the cabinet agency which oversees the costly Medicaid program, a second $100 million bailout. Good news for the sickly poor, bad news for state government, which can’t seem to manage the program or its $227 million deficit … oops, $27 million deficit. More.

Transparency. Last week, Haley didn’t include the state treasurer in discussions about who should head up the retirement system, and this week, a new email has been uncovered that draws more scrutiny as to why exactly she was getting paid $110,000 a year in a part-time job at a Lexington-area hospital. More.

Institutional knowledge. A week after replacing the entire ETV board and ousting Darla Moore from the USC board, Gov. Nikki Haley has moved to replace all but one member of the DHEC board. More.

Stegelin

Ard vs. Haley


Also from Stegelin: 3/18 |  3/11 | 3/4 | 2/25 | 2/18
credits

Statehouse Report

Editor and Publisher: Andy Brack
Senior Editor: Bill Davis
Contributing Photographer: Michael Kaynard

Phone: 843.670.3996

© 2002 - 2018 , Statehouse Report LLC. Statehouse Report is published every Friday by Statehouse Report LLC, PO Box 22261, Charleston, SC 29413.
Excerpts from The South Carolina Encyclopedia are published with permission and copyrighted 2006 by the Humanities Council SC. Excerpts were edited by Walter Edgar and published by the University of South Carolina Press. Statehouse Report has partnered with USC Press to provide readers with this interesting weekly historical excerpt about the state. Republication is not allowed. For additional information about Statehouse Report, including information on underwriting, go to http://www.statehousereport.com/.