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ISSUE 10.37
Sep. 16, 2011

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

Index

News :
SC faces huge infrastructure gap
Legislative Agenda :
From education to economics
Radar Screen :
New poll to be out Tuesday
Commentary :
SC income, poverty data paint grim picture
Spotlight :
Moore & Van Allen
My Turn :
The sky is not falling on pension system
Feedback :
If you campaign on transparency, be transparent
Scorecard :
From #1 to lots with problems
Stegelin :
Let them eat ...
Megaphone :
To the point
Encyclopedia :
SC’s transportation network

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NUMBER OF THE WEEK

7

The state's average SAT scores dropped 7 points to 1,436 combined on tests of reading, math and writing, according to news reports this week. State Superintendent of Education Mick Zais said the scores weren't a measure of school effectiveness, but added that scores pointed to a troubling trend: how critical reading skills in the state are lagging. More.

MEGAPHONE

To the point

“No, it's not crucial at all.”

-- GOP presidential candidate Jon Huntsman on what he thought by news that S.C. Gov. Nikki Haley wouldn’t support his candidacy. More.

ENCYCLOPEDIA

SC’s transportation network

Perhaps the most visible element in South Carolina’s early twenty-first-century transportation network is its highway system. As of 2004, South Carolina had the fourth-largest state-maintained highway system in the United States, with more than 41,000 miles of state highway (sixty-five percent of the state’s total road mileage), over 8,250 bridges, 35 rest areas and welcome centers, 500,000 traffic signs, and a multitude of driveways, ditches, and guardrails managed and maintained by the South Carolina Department of Transportation. While federal funding provided 80 percent of the original cost of building the roads, all maintenance, as well as construction of required safety structures, is the state’s responsibility.

Water trans- portation has also witnessed a trans- formation. Where once rivers flowed freely, there are now more than 50,000 dams throughout the state, including 34 federally regulated dams and more than 2,250 state-regulated dams. River transportation is more for recreational purposes than for economic reasons, although the service industries for recreation are thriving. Ocean transportation is still funneled primarily through Charleston. Robert M. Figg Jr.’s 1941 report calling for State Ports Authority (SPA) resulted in legislation creating the South Carolina State Ports Authority in 1942. The SPA spent millions on improving and upgrading the port’s facilities. The Atlantic Intracoastal Waterway was established by four federal bills during the 1930s and is the water highway from Maine to the Florida Keys.

The latest transportation revolution witnessed the decline of one major transportation link and the creation of a new one. In 1924 South Carolina rail mileage was about 3,800 miles, most of which was externally owned and operated. Despite rail’s pivotal role in winning World War II and the introduction of diesel locomotives to improve rail transportation, highways became the preferred mode of travel for Americans by midcentury. Except for two Amtrak train routes through the state, passenger traffic on trains has almost disappeared. By 2000 track mileage had dwindled to less than 2,600 miles. Freight traffic remained an important segment of rail profitability, and the introduction of container cargo carriers assisted rail’s continued significance to the state.

The advent of air transportation led to the establishment of the South Carolina Aeronautics Commission in 1935. Pioneers such as Paul R. Redfern, Caroline Hembel and Jimmie L. Hamilton helped to popularize aviation in the state, which eventually came to be the home of six commercial airports and fifty-four general aviation airports. Charleston International is the busiest passenger airport, and Columbia Metropolitan Airport is the busiest cargo airport. All in all, South Carolina is an integral part of a global transportation network that connects South Carolinians to the world.

-- Excerpted from an entry by William S. Brockington Jr.  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

SC faces huge infrastructure gap

By Andy Brack, editor and publisher

SEPT. 16, 2011 -- South Carolina is facing a massive infrastructure gap that could paralyze its ability to compete in the global economy.

From roads and bridges to schools and water systems, the state has billions of dollars of needs, but limited financial resources. Many say, however, that just when more money is needed just to keep up with other states, the state’s current political environment is fueled by a zeal for lower taxes.  In turn, that potentially means fewer dollars to do what’s needed to deal with large gaps.

As an example, look to the state’s highway infrastructure, which has been in the limelight in recent weeks after the state had to get an advance on federal grant monies to have enough to pay contractors for their summer work. Transportation officials have said the same situation might happen again unless something is done.

Pete Poore, spokesman for the S.C. Department of Transportation (SCDOT), told Statehouse Report that the agency was “20 years and $2 billion behind on the maintenance of the state highway system,” which happens to be the fourth largest in the country.

“That means we are behind schedule for the normal resurfacing of roads, repairing of replacing bridges due to a lack of funding. The schedules have to be extended. That’s why roads that have cracks and potholes are ‘patched’ rather than resurfaced as they should be.”

According to the Report Card for America’s Infrastructure by the American Society of Civil Engineers, the infrastructure gap is significant:

  • The state’s drinking water infrastructure needs $1.25 billion in investment over the next 20 years.

  • It has $698 million in wastewater infrastructure needs.

  • South Carolina has 153 high hazard dams, which means failure of any of them would cause significant property damage and loss of life.

  • Some 23 percent of state bridges are “structurally deficient or functionally obsolete.”

  • While traffic has increased more than 40 percent since 1990, at least 28 percent of the state’s major roads are in poor or mediocre condition.

State Sen. Larry Grooms, the Berkeley County Republican who chairs the Senate Transportation Committee, believes more reforms need to happen to deal with the funding mess at SCDOT.


“The lifeblood of this state’s economy is our primary and interstate road network and when it becomes clogged,  it impairs commerce,” he said. “It’s more than just an inconvenience of being stuck in traffic, but it puts our economy further behind.”

Grooms said roads and bridges were one of the most immediate ways that government impacted people’s lives daily. Every time they get in vehicles, they’re soon on a state-funded and -maintained highway. 

As such, he said he hoped people would have a “grand debate” about the state’s transportation infrastructure needs.

Among possible solutions:

  • Increasing the state’s 16-per-gallon gasoline tax, the eighth lowest in the nation.

  • Shifting sales taxes on vehicles from the state’s General Fund to the DOT as a dedicated revenue stream. Such an action, however, would cause a cut in the General Fund to the tune of about $60 million, which would decrease other agencies or have to be replaced by another source to keep the General Fund the same.

  • Developing other revenue streams so the DOT could get sufficient bonding authority to borrow a big amount -- $1 billion or so -- to pay for maintenance and needed road projects. (This alternative, however, would create debt, which many current lawmakers are also opposed to.)

Grooms, who said he’d have a DOT reform plan for the legislature next year, said he was urging a shift of the vehicle tax because the environment in the legislature wasn’t ripe for any tax increases.

  • 9/9:  State panel to look at lagging reading scores
  • 8/26:  State working hard to get port right
  • 8/19: Long road ahead for state DOT
  • 8/12: State government losing experience
  • Legislative Agenda

    From education to economics

    • EIA. The EIA and Improvement Mechanisms subcommittee of the Education Oversight Committee will meet 10 a.m. Monday in 201 Blatt Building at the Statehouse complex to discuss the coming year budget process and various programs. More.

    • Children. The Joint Citizens and Legislative Committee on Children will hold two public hearings to identify important issues and recommendations for children in the state. At 4 p.m. Tuesday, the group will meet in 308 Gressette Building at the Statehouse complex. At 5:30 p.m. Thursday, they’ll meet in Greenville County Council Chambers. More.

    • BEA.  The State Board of Economic Advisors will meet 2 p.m. Wednesday in room 417 of the Rembert Dennis Building at the Statehouse complex. No agenda was available at press time, but click here to check for the latest information.
    Radar Screen

    New poll to be out Tuesday

    The latest installment of the Winthrop Poll will be released Tuesday and will provide a lot of information from Republicans and likely 2012 SC GOP primary voters about the economy, President Obama, Gov. Nikki Haley, presidential candidates and more. Take a look at the poll Tuesday at: http://www.winthrop.edu/winthroppoll/

    Commentary

    SC income, poverty data paint grim picture

    By Andy Brack, editor and publisher

    SEPT. 16, 2011 -- Ever feel like you’re running in place, but getting further behind? Welcome to South Carolina.

    New data from the 2010 Census shows the state has almost exactly the same poverty rate as it did 30 years ago. Furthermore, half of South Carolina households now earn about the same as they did 27 years ago, indicating little wealth creation over decades.

    The numbers:

    • Poverty: The 1980 Census found 534,000 South Carolinians lived at or below the poverty level in a state that had 3.2 million people. The poverty rate was 16.8 percent, just two-tenths of a point lower than the 17 percent rate it had in 2010. Census officials say the state had 4.5 million people last year, including 767,000 living at or below the poverty. Bottom line: There are 230,000 more South Carolinians living in poverty today, a rate of growth that’s almost equal to the general growth in the state’s population.

    • Income. The median household income for the state in 2010 was $41,709. That means half of South Carolina households earned less than $41,709. In 1984, the actual median household income was $20,309, but adjusted for inflation that is the equivalent today to $40,593. In other words, half of South Carolina’s households had just $1,116 more in income in 2010 than the comparable income from 27 years earlier.

    So it’s a pretty grim picture. 

    Sue Berkowitz, director of the S.C. Appleseed Legal Justice Center, said she was a little surprised the poverty rate wasn’t higher because of the crushing impact the Great Recession was having on working families in South Carolina.

    A better indicator of how people are hurting, she said, is to look at families who live at twice the poverty rate or less, which is about half of South Carolina households. People, she noted, are getting further and further behind.

    “We have more and more people who, despite doing everything they possibly can, can’t pay for the things they need,” Berkowitz said. “They can’t pay for health care for their kids. They don’t have savings so that if a rainy day comes, they can’t pay for emergency expenses. And they get forced into borrowing from payday lenders.”

    Baron Holmes, project director of Kids Count for the S.C. Budget and Control Board, said the poverty level for seniors has gone down over time because of Social Security. And many kids are eating better because schools provide free and reduced-price lunches.

    But interestingly, wages haven’t gone up as much as predicted. Years ago, forecasters thought wages would rise as baby boomers moved out of the work force and there was more demand for workers. But three things got in the way: the flood of foreign goods produced cheaply in countries like China, automation in the remaining U.S. factories that cut the need for as many domestic workers, and foreign workers -- some illegally in the country -- kept wages low here because the pay is better than in their home country.

    “We’re not seeing people gaining ground at all and if we don’t think about the way we govern in this state, I don’t see how we can have changes,” Berkowitz said. “It goes to the lack of focus and insight that our state has provided into how we increase our per capita wages and how we help people to be able to afford the basics they need for a basic quality of life.”

    Solutions to reduce poverty and increase wealth aren’t rocket science, but will take a commitment by state lawmakers to reform South Carolina’s antiquated tax structure and make it more balanced. Success will require investments in education to grow a more-skilled workforce, and in transportation to allow people who want to work get there when they can’t afford a car. And, Berkowitz will tell you, there needs to be more affordable housing so the working poor rest safely to be ready on the job to be good workers.

    For poverty to go down and wealth to go up, South Carolina lawmakers need to invest in the state.   But in an age of feel-good political Pablum that often passes as policy, many can’t see the forest for the trees.

    Andy Brack is publisher of Statehouse Report.  He can be reached at: brack@statehousereport.com
    Spotlight

    Moore & Van Allen

    The public spiritedness of our underwriters allows us to bring Statehouse Report to you at no cost. This week's spotlighted underwriter is Moore & Van Allen. With over 300 professionals, a long history of civic service, and noted national, regional and local clients, Moore & Van Allen ranks among the Southeast's preeminent and fastest growing full-service law firms. "At Moore & Van Allen we provide creative solutions to complex legal challenges and high quality legal services in a multitude of practice areas....Our guiding objective is to add value to our clients, not only by meeting their goals and deadlines, but also by bringing our experience and energy to bear on their matters." Learn more: Moore & Van Allen.
    My Turn

    The sky is not falling on pension system

    By Jackie B. Hicks, Carlton Washington and Sam Griswold
    Special to Statehouse Report

    SEPT. 16, 2011 -- State Sen. Greg Ryberg’s recent column [The State, 8/31] regarding teachers’ and state employees’ retirement plan tried to terrify readers into believing that the South Carolina Retirement System (SCRS) is so underfunded taxpayers may soon have to turn over their paychecks to keep the system afloat.

    "The Unfunded Accrued Liability is not a Black Hole into which taxpayer money disappears without a trace. Every pension system in the world has an Unfunded Accrued Liability at times. That liability is eliminated by paying it off over time. The SCRS actuaries have set up a funding schedule that will pay off the Unfunded Accrued Liability over the next 30 years."
    The “unfunded liability” in the SCRS, which the senator describes as a “Black Hole,” is not the monster Sen. Ryberg describes. It is an accounting measure applied to retirement plans and does not prevent districts from hiring hundreds of teachers.

    This topic is a big one, and too much information is needed to set the record straight for one newspaper article. Here are some highlights:

    • FACT: The fund is not bestowed by the state. Employees help pay for the operation on the SCRS along with the employers and the return on retirement investments.

    • FACT: The average rate-of-return on investments over the last 30 years has been well above the 8 percent that the senator said the fund could not achieve. The return on investments for FY2010 was a whopping 14.6 percent, and as of June 30, 2011, the investment return was 18.4 percent. Investment returns have provided approximately 48 percent of the fund’s assets over the last 20 years.
    • FACT: The Unfunded Accrued Liability is not a Black Hole into which taxpayer money disappears without a trace. Every pension system in the world has an Unfunded Accrued Liability at times. That liability is eliminated by paying it off over time. The SCRS actuaries have set up a funding schedule that will pay off the Unfunded Accrued Liability over the next 30 years.

    • FACT: The previous auditing firm of Cavanaugh MacDonald Consulting, L.L.C., was the official actuary of the SCRS. They have a legal responsibility to portray the condition of a client retirement system as accurately as they are able. As Cavanaugh MacDonald states in the preface to the 2010 actuarial valuation report for the SCRS: “The System’s current assets together with the scheduled contributions are expected to fully fund the System’s liabilities within 30 years. In our opinion, SCRS continues to operate on an actuarially sound basis.”

    Some suggest that the SCRS should be scrapped and replaced with a 401k type plan in which the responsibility for investment decisions falls on the employee. The typical private sector employer contributes to the 401k plan, commonly 5 or 6 percent of payroll. The SCRS would still have to pay off earned benefits even if the System is scrapped, so setting up a 401k plan with, for example, a 5 percent employer contribution instead of the current 3.5 percent employer Normal Cost contribution would cost employers more money. If the target is saving money, we would call that a miss.

    Notwithstanding all of the above, the South Carolina Education Association, The South Carolina Education Association – Retired, South Carolina State Employees Association and South Carolina Retired State Employees Association all recognize that retirement systems are dynamic entities that require modification from time to time as economic conditions evolve.

    We stand ready to discuss modifications that will save money without inflicting severe economic injury on loyal employees who have faithfully paid their assigned share for many years. In doing so, however, we would have one request. All South Carolina retirement systems, including the senator’s, should be subjected to the same level of scrutiny as the SCRS, with a goal of equitable benefits for all South Carolina retirement fund participants. Now that’s fair.

    Jackie B. Hicks is president of The South Carolina Education Association. Carlton Washington is executive director of the S.C. State Employees Association. Sam Griswold is president emeritus of the State Retirees Association.

    Feedback

    If you campaign on transparency, be transparent

    To Statehouse Report:

    I was just catching up on the 9/9 Statehouse Report and I wanted to say that I really appreciated your article and your point about the governor’s office. 

    Sure there are always questions as to whether or not a governor should spend funds on economic development trips like these, but it has always seemed to me that they were the type of questions that get asked and answered at the ballot box.  If her administration comes and goes without adding any investment from Europe, it may be safe to say that the trip was a failure, and as a result, she then hasn’t delivered the results she promised when running the first time.

    I also appreciate your honest comments when it comes to expenses.  It never ceases to amaze me when I hear people complain about government spending legitimate money in the execution of its duties and responsibilities.  It is especially worse when it comes from legitimate business people that understand that you have to invest if you want to be successful.  It is this type of story that doesn’t get published often enough.

    I understand that transparency is hard, but when as a candidate you run with it as a bedrock principle, it should be a matter of utmost urgency for her staff to appear to deliver it in every way.  She should answer these questions, she should be available to these questions, and she shouldn’t be allowed to duck them.  I understand the last one is hard for those trying to hold her accountable, but it is only when people make reasonable criticisms that maybe the point gets made.  I saw the article in the Post and Courier and it seemed like a cheap shot to me, but I guess it was a legitimate shot to take if you want to sell newspapers.

    -- T.J. Leavell, Mount Pleasant, SC

    Drop us a line.  We encourage you to share your opinions.  Letters to the editor are published weekly. We reserve the right to edit for length and clarity. We generally publish all comments about South Carolina politics or policy issues, unless they are libelous or unnecessarily inflammatory. One submission is allowed per month. Submission of a comment grants permission to us to reprint. Comments are limited to 250 words or less.  Please include your name and contact information.
    Scorecard

    From #1 to lots with problems

    Number one. The undergraduate program in international business at the Darla Moore School of Business at the University of South Carolina is number one in the country. Hats off! More.

    NLRB. The U.S. House this week spanked the National Labor Relations Board pretty strongly because, in large part, of a complaint about Boeing’s move to South Carolina. But more than likely, this is all window-dressing and blame-game politics as usual. The U.S. Senate probably won’t approve the House-backed measure. And then, the complaint probably will be thrown out anyway. 

    Retreat. It’s good to get away from the office every now and them for a good talk and think. But a Kiawah “retreat” by the Haley team in the governor’s office that lasted from a recent Friday afternoon to the next morning? Bet y’all got a lot of real work done. Hell, it almost took as much time to travel back and forth from Columbia than there was for meeting. More.

    Pension gap. A $17 billion pension gap? Really? While it may not be as bad as some are saying, it might be a good idea to look at stripping some recently-added retiree benefits and return to the more conservative policies found under, ahem, Democratic administrations.

    Poverty, income. After three decades, the state’s poverty rate and median household income remain about the same. Earth to legislature: Start focusing policy decisions on wealth creation for everyone, not just the rich folks.

    Mitchell. State Rep. Harold Mitchell, D-Spartanburg, faces four counts of tax evasion. Enough said. More.

    Ryan.  After just one term, Freshman GOP Rep. Kevin Ryan of Pawleys Island says he won’t run for reelection. Seems that it’s just too tough to be in the legislature and private sector at the same time. What’s bad for South Carolina is he knocked off a good, seasoned legislator (Democrat Vida Miller) and the Georgetown area lost that experience. But perhaps now, their short-sightedness will haunt them.

    Stegelin

    Let them eat ...


    Also from Stegelin: 9/9 | 9/2 8/268/19
    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/.