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ISSUE 10.44
Nov. 03, 2011

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

Index

News :
Golden years dulled
Legislative Agenda :
Elections, money meetings on tap
Radar Screen :
Green Co.?
Palmetto Politics :
DOT gone to p-o-t?
Commentary :
State is in immigration pickle
Spotlight :
Electric Cooperatives of South Carolina
My Turn :
A plan for zero property taxes
Feedback :
Struck a nerve with comment
Scorecard :
Haley, Haley, DOT, Education
Stegelin :
Rhymes with "almost last place"
Megaphone :
Pushing and bullying
Encyclopedia :
Beaufort's Marshlands may have roots in Barbados
In our other publications :
Learn more about Charleston, SC

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NUMBER OF THE WEEK

136,000

That’s how many recipients of the state’s retirement system could see their pension checks cut because of a vote this week by the Budget and Control Board. That vote, on the surface, simply reduced the expected rate of return on retiree investments from 8 percent to 7.5 percent. But a new state law requires that when returns are below 8 percent, half of the state’s 2 percent Cost of Living Adjustment for the majority of retirees is slashed in half, and the rest of recipients, like cops, will lose their entire COLA.

MEGAPHONE

Pushing and bullying

“Pushing undocumented immigrants out of one state and into another is not a solution to our immigration challenges.”

-- U.S. Assistant Attorney General Tony West this week, explaining why the federal government has filed suit to block implementation of the state’s new illegal immigration law, which are stricter than federal statutes. More.

"Yes, I actually was (bullied) when I was in elementary school and middle school. I was bullied, and I was bullied because no one knew whether I was black or white. I am Indian. All I knew was I was brown.”

-- Gov. Nikki Haley, speaking this week to a Daniel Island classroom on the negative effects of bullying. She likened the voices she heard as a child to those who criticize her in the General Assembly.
More.

ENCYCLOPEDIA

Beaufort's Marshlands may have roots in Barbados

Located on Federal Street in Beaufort's National Historic Landmark District, Marshlands was completed in 1814 by James Robert Verdier, a physician noted for his successful treatment of yellow fever. Listed individually as a National Historic Landmark in 1975, it is recognized for both its architectural and its historical distinctions. Before twentieth-century modification, the original structure exemplified a popular house type often designated as the Beaufort style.

A raised two-story central block is organized about a central hall that projects north to create a stair tower. Single-story wings enclosed by shed roofs formerly flanked the stair hall on the right and left. The two wings project east and west to create a T-shaped plan. A single-story porch raised on brick, arcaded arches wraps around the house on three sides. The principal facade, on the south, is topped by a pediment masking hipped roof construction enclosing the central block. Entrance is through this south porch. The interior is rich in Federal detailing, with Adamesque mantels, reeded woodwork, interior fanlights, and a graceful spiraling staircase illuminated by a Palladian window.

In an attempt to determine the origins of Beaufort's early domestic buildings, architectural historians have labeled Marshlands as Barbadian or West Indian. Others have described its T-shaped, raised plan and porches wrapping three sides as a pure expression of the Beaufort style. However, there is evidence of similar Federal period structures in rural North Carolina. Whatever the architectural roots of the score of similar buildings found throughout Beaufort's historic district, two factors contributed to the popularity of this style. First, the formula was adaptable, allowing for variation in size, material, style, and cost. Second, the T-shaped houses maximized cross-ventilation without sacrificing architectural distinction.

During the Civil War, Marshlands served as headquarters of the U.S. Sanitary Commission. In her 1939 novel A Sea Island Lady, Francis Griswold imagined the house as the home of its heroine. For most of the twentieth century and at the beginning of the twenty-first century, the house was in the family of William Brantley Harvey, Jr., lieutenant governor of South Carolina from 1975 to 1978.

-- Excerpted from the entry by Maxine Lutz. 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.)

IN OUR OTHER PUBLICATIONS

Learn more about Charleston, SC

If you want to read some good news and views involving Charleston, take a look at CharlestonCurrents.com, our sister publication.  In the most recent issue, you'll find information about a new maritime app developed in Charleston that's helping to clean waterways, fossils, the consequences of too much Halloween candy, how a law school gives back and more.  Subscribe for free.

If you want to get the latest daily news about South Carolina, consider SCClips.com.

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

Golden years dulled

State pension fund to cut COLAs

By Bill Davis, senior editor

NOV. 4, 2011 -- Age is supposed to bring wisdom, but retirees enrolled in the state’s retirement system got a dollop of uncertainty this week.

On Thursday, the five-member Budget and Control Board met and voted overwhelmingly to reduce the expected rate of return on the billions invested through the state’s pension fund.

That vote could mean a significant drop in future monthly pension checks. Observers had been saying for months that something had to be done, as the retirement system is facing a shortfall as large as $13 billion.

For the past couple of years, that expected rate of return had been 8 percent, with South Carolina being one of the last states to sign off on that amount. It had been at 7.5 percent, but a charging stock market, poised for a major fall, emboldened the state’s decision.

Board members voted this week 4-1 to return that rate to 7.25 percent, despite the pension fund having earned a gaudy 18.59-percent return on investments in the fiscal quarter ending on June 30 of this year.

But the state retirement systems five-year return, sunk in part by the Great Recession, was only 3.95 percent ending June 30. According to the board, it was 5.02 percent over the past 10 years.

Treasurer Curtis Lofts told his staff that he voted against the decrease, but only on procedural grounds, as he wanted to see the matter tabled and returned later as two different votes.

Four members of the budget board -- Gov. Nikki Haley and Senate Finance Chair Hugh Leatherman (R-Florence), House Ways and Means Chair Bryan White (R-Anderson), and Comptroller Richard Eckstrom (R-Columbia) -- voted to reduce the returns rate.

But because of state law that was passed this year, that vote also means state government employees could see their annual cost of living adjustments (COLAs) reduced from 2 percent to 1 percent.

According to the board, that would result in less than a $16 monthly reduction for the “average” pensioner.

Additionally, other employees enrolled in the system who don’t work directly for the state, like police, will see their COLAs eradicated altogether.

And that left Wayne Bell, president of the State Retirees Association of South Carolina, in a “state of shock.”

“It looked like Gov. Nikki Haley went out and shopped for an actuarial firm ready and willing to give her the numbers to justify this vote,” Bell said, referring to the hiring of a new firm to help forecast the state’s investment future.

Bell, who attended the public meeting of the board, said he was “flabbergasted” when Bob Borden, the chief investment officer in charge of investing the pension fund, reversed his position from a year ago and joined with those supporting 7.5 percent.

Last year, Borden stood tall in the face of then-Gov. Mark Sanford, who harshly criticized Borden’s own rosier forecasts, and defended the 8-percent return level.

Bell said that the reduction in cost of living adjustments would mean as much as a one-third reduction in retirees’ spending power if they were lucky enough to live 20 years past retirement.

Fueling the decision to reduce the rate were ongoing fiscal problems in Europe and flatter than expected inflation rate projections, said one source.

Bell said his experiences flew in the face of that “logic,” saying that a recent trip to the grocery story netted him a $4.11 gallon of milk. “Don’t tell me there’s no price increases. Don’t tell me there’s no inflation,” he said.

The board effectively moved up the timetable on the legislature tackling the retirement system’s makeup.  The House and Senate each have a special subcommittee that is meeting during the legislative off-season to look into the situation.

Sen. Thomas Alexander (R-Walhalla) is the co-chair of the special subcommittee in his chamber. He said after the board meeting Thursday that he anticipated his subcommittee continuing to address the COLA issue, as well as the entire retirement system.

When asked if he welcomed the board’s vote, Alexander said it was a “necessary move,” and that it will be part of a self-correcting model his committee will end up recommending creating a new retirement system that is “solvent, stable and self-sustaining.”

Crystal ball: The Budget and Control Board also executed a very smart move in its vote Thursday. Its changes wouldn’t go into effect until next summer. That means the legislature will get six months to come up with its own solution. And it better be a good one, because in the coming election year when every seat in the House and Senate are up for grabs, the state could be evenly split between protecting its fiscal sanity and angry pensioners who can get out the vote.

Bill Davis is editor of Statehouse Report.  He can be reached at:  bill@statehousereport.com.

RECENT NEWS
Legislative Agenda

Elections, money meetings on tap

A raft of local and county elections will be held Tuesday. Here’s a link to the state’s Election Commission Web site where you can find out when your neck of the woods is voting. More.
  • Money. The Senate Judiciary Committee will hold a series of public hearings on “fiscal fitness” throughout the state beginning next week. The next one will be held 6:30 p.m. Monday at Greenville County Council Chambers, 301 University Ridge. More.

  • Finance. A Senate subcommittee looking into the state retirement system will meet 5 p.m. Tuesday in the College Center of Trident Technical College, 7000 Rivers Ave., North Charleston. More.

  • Finance. The health and human services subcommittee of the Senate Finance Committee will meet Wednesday at 10 a.m. in 209 Gressette, where members will to presentations from leaders from two agencies, Mental Health and DHEC. More.
Radar Screen

Green Co.?

With the retirement announcements of the heads of the state departments of Natural Resources, and Health and Environmental Control within a few weeks of each other, and pro-business replacements for both of them expected from the Haley administration, it might soon seem like the only green thing being protected in South Carolina will be dollars.

Palmetto Politics

DOT gone to p-o-t?

The shakeup has already begun at the beleaguered state Department of Transportation, fresh on the heels of recent revelation that money problems have been plaguing the agency for three years. Part of that shakeup was the replacement of the agency’s top financial officer.

This summer, the DOT caught the state’s eye when it was running months behind on paying contractors for roadwork that had already been completed. To catch up most of the bills, the state applied for and received an expedited reimbursement payment of $52 million from the federal. Then, last month, the agency informed the public that it was looking at a shortfall of nearly $30 billion over the next 20 years. More shoes may drop.

7th -- heaven or hell?

Federal government approval of South Carolina’s newest U.S. Congressional district, the 7th, centered in Horry County, is receiving raves and raving complaints. State Democratic Party Chairman Dick Harpootlian has promised to sue because how it affects majority-minority districts, like the one represented by Congressman Jim Clyburn (D-S.C.), and seems to dilute their elective powers in larger white majority districts. In related news, the feds have also approved House redistricting, but are yet to make a decision on redrawn state Senate lines.

Commentary

State is in immigration pickle

By Andy Brack, editor and publisher

NOV. 4, 2011 -- South Carolina is in an immigration pickle.

Conservative legislative leaders pushed through a measure earlier this year to make it tougher for illegal aliens to stay in the state. 

“We’re frustrated beyond belief that the federal government continues to ignore this problem,” said state Sen. Larry Martin, the Pickens County Republican who shepherded the immigration measure through the Senate.   “The mere presence of an unlawful alien in this country is not on their priority list. I take exception with that.”

The new law, slated to go into effect on Jan. 1, would make it illegal for anyone to transport illegals, for them to have fake identification and for anyone to make fake IDs, among other things. It also would give wide latitude to law enforcement authorities here to detain anyone to ascertain their immigration status.

Not so fast, says the federal government. This week, the U.S. Department of Justice filed a 26-page lawsuit against the state to block the new law. In general, it says the federal government, not states, have the “preeminent authority” in the Constitution to deal with immigration matters. States can assist, but can’t create their own immigration policies.

“It is understandable that communities remain frustrated with the broken immigration system, but a patchwork of state laws is not the solution and will only create problems,” U.S. Attorney General Eric Holder said in a press release. 

The federal government, according to the Justice Department’s lawsuit, has to balance a lot of competing priorities when dealing with illegal immigrants. It prioritizes for “arrest, detention, prosecution and removal those aliens who pose a danger to national security or a risk to public safety,” including terrorists, criminals, felons, gang members and others. 

If states come up with their own “patchwork” of immigration laws, that would turn the federal government’s immigration balancing act on end. Furthermore, if a state like South Carolina notified the feds of every illegal immigrant in the state, the federales wouldn’t have time to deal with the real bad guys who are here illegally. 

The feds also complain that giving broad leeway to local police to detain people to verify immigration status could pose serious threats to freedoms of legal residents. The new law “creates a significant risk of harassment of lawfully present aliens and even U.S. citizens,” the complaint says. In other words, people who don’t look like most people in South Carolina could get stopped and detained repeatedly, which might become old-fashioned harassment (with which we’ve got lots of experience).

The feds do say, by the way, that they work in coordination with state and local law enforcement on immigration issues. But Martin said that it’s not enough.

“It’s an absolute charade on the American people that we’ve got ever how many folks undocumented and the federal government is not lifting a finger to do anything about it unless there is a breach. Otherwise [they say] don’t call us. Have a nice day.”

What’s really interesting about the debate over the state’s new illegal immigration law is a discussion of whether it is really needed in South Carolina, a state with no foreign boundaries, or whether it is political firewater to stir up voters. According to the Pew Hispanic Center, the Palmetto State is home to an estimated 55,000 undocumented workers, just over 1 percent of the state’s population. That’s low, compared to 6 percent in Arizona, which was the first state to have tough state immigration laws.

Quite frankly, there doesn’t seem to be a big wail among the teeming masses about undocumented workers taking away jobs from South Carolinians. If anything, illegals are doing the jobs that no one else wants. And for Republicans, who tend to believe in the sanctity of the marketplace, it could be argued that the market is being satisfied in the real world through undocumented workers.

But that doesn’t make it right. What’s needed is not for this state or any state to come up with its own scheme to deal with immigration policy. What’s needed is for Congress to get off its bottom to do real immigration reform  so that the Justice Department doesn’t have to waste time on lawsuits to block states’ reactions to failed policy.

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

Spotlight

Electric Cooperatives of South Carolina

The public spiritedness of our underwriters allows us to bring Statehouse Report to you at no cost. This week's spotlighted underwriter is the Electric Cooperatives of South Carolina. More South Carolinians use power from electric cooperatives than from any other power source. South Carolina’s 20 independent, consumer-owned cooperatives deliver electricity in all 46 counties to more than 1.5 million citizens. As member-owned organizations, cooperatives recognize their responsibility to provide power that is affordable, reliably delivered and responsibly produced. More at www.ecsc.org or www.livinginsc.coop.
My Turn

A plan for zero property taxes

By David Whetsell
Special to Statehouse Report

NOV. 4, 2011 -- After the Civil War and reconstruction, land was the primary remaining asset, because the Yankees and carpetbaggers couldn’t dig it up and take it home with them. Prior to the 1970s, the property tax system had operated informally, or one might say illegally, as a classified system, with the highest assessments imposed on industry, the lightest ones on homeowners and landowners and farmers.

Most property in South Carolina is assessed at one of three rates: 4 percent, 6 percent or 10.5 percent of market value due to Act 208, which was an emergency response to a court decision. Two other important changes took place during the same period that were also important for the property tax. One was the establishment of home rule county governments. The other was the state assuming more responsibility for education funding.

 
The General Assembly passed the Home Rule Act in 1975. It took effect on July 1, 1976. The act made much more dramatic changes in the powers of counties than of municipalities. All local governments and some school districts were given total fiscal independence to approve their own budgets and set their own millage rates. School districts and counties then started uncontrollable spending. They were increasing their budgets 8 percent to 12 percent a year. They knew the people had to pay the increasing taxes. If they did not the governing bodies had a saying, “If you do not or cannot pay it, we will kick you out of your home and sell it to someone who is willing to pay us our money.”

It got so bad that in 1995, the Legislature passed relief for the home owners and retired people. They agreed to reimburse homeowners through their local tax collectors for local school taxes on the first $100,000 market value of property and raised the $20,000 homeowners’ exemption for local property taxes for those 65 and older to $50,000. This lowered property taxes about 80 percent, but there were no caps on spending. With new and expanding industry and homeowners taken care of, doubtless the General Assembly thought that its work was done.

The schools and other local government then thought that if they kept raising taxes, the people would not care.  Therefore they increased their spending at a faster rate.  By the year 2000, the property taxes were back to [where they were] before the relief. The schools were spending more each year and raising taxes at a faster rate so that by 2005, they had doubled again. The economy was growing from the housing bubble so that the people (homeowners and retirees) in the fastest-growing counties were being reassessed and taxed out of their homes. They were crying again to the Legislature for relief.

In 2008, Act 388, which was a tax swap for school operating and limited increases by CPI plus growth. Also a state constitutional amendment was passed to cap property values at 15 percent every 5 years for taxable value. Property taxes today are not based on a person’s ability to pay but what an assessor thinks it is worth.

You never own your property. With property taxes you pay a yearly lease to the government to use it. There is no freedom of ownership and it is never paid for.  The only way to give the citizens of South Carolina total freedom is to totally eliminate the most evil tax ever put on us -- property tax. There is a way to do it if the Legislature is for the citizens of our great state, South Carolina.

We need a bill to remove all sales tax exemptions.  We take these funds, plus tier 1, 2 & 3 (state paid funds for tax relief), close all assessors’ offices  and add $30.00 per thousand to the deed stamp. These would totally offset all property taxes.  This would also save the taxpayers between $50 million and $100 million by doing away with assessors and their offices. This would be total freedom where the government cannot take your property because you cannot afford to pay the taxes. The deed stamp increase would be to keep newcomers from reaping the benefits of no taxes. It would be an impact fee to pay off the bonds and pay for new construction.  It would be a tax swap, not a tax increase. Local governments and school districts can only spend what they received from the state Legislature.

 
This would take care of eliminating the assessors’ offices, eliminate sales tax exemptions and have equal funding for all school districts like the legislature did many years ago. The legislature may also want to consolidate school districts to save on costs.

David Whetsell of Lexington is president of StopTax.org.
Sources from the graphic above:

(a)  http://www.bea.sc.gov/BCB/bea/exemptions.pdf
(b)  http://ed.sc.gov/agency/cfo/finance/documents/dstrev09.pdf (bottom of report sections 3825,3810,3820)
(c) author’s estimate
(d) author’s estimate
Feedback

Struck a nerve with comment

To Statehouse Report:

I don't always agree with you but do enjoy your writing. Something you wrote today ["Occupy, tea party movements show frustration," 10/21/11] struck a nerve - "It’s similar to the frustration that fueled the rise of the tea party after voters elected a black man president in 2008."

To me, the implication of your statement is that part of the problem that Tea Party members have with government is that it is led by a black man. And if that was not your intent, there was no reason to mention the president's race.
-- Greg Shore, North Charleston, SC
Want to vent a little?   Send us a letter.  Letters 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.
Scorecard

Haley, Haley, DOT, Education

Haley. It should be said again: Good work on The Heritage. More.

Haley. Our governor loves to fly and it shows. At least, she loves to fly on private, political-supporter-provided planes all over the state and country – at least 50 times. Better news, the state Ethics Commission is looking into her high-mile club. More.

DOT. Looks like the agency’s money problems started months, not years, after it was last finished being overhauled. More.

Education. State students’ scores still low on national educational progress testing. More.

Stegelin

Rhymes with "almost last place"


Also from Stegelin: 10/2810/2110/14 | 10/7
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Senior Editor: Bill Davis
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© 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/.