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ISSUE 11.37
Sep. 14, 2012

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

Index

News :
Showdown set over tax policy
Legislative Agenda :
On tap next week
Radar Screen :
Smoldering debate
Palmetto Politics :
Loftis hits the road
Commentary :
Voters will be year’s biggest losers
Spotlight :
S.C. Association of Counties
My Turn :
Take the pledge -- no text is worth dying for
Feedback :
State DOT needs overhaul
Scorecard :
Up for JetBlue, down for Beaufort
Stegelin :
Thanks for the memories
Megaphone :
Glad to do our part
Tally Sheet :
Find legislative bills
Encyclopedia :
Tuberculosis

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EDITOR'S NOTE

Carolina Business Review

Publisher Andy Brack and other pundits appeared Sept. 14 on WTVI's Carolina Business Review for a discussion of  national and state politics.  Mark your calendars to view:
  • 8:30 p.m., Sept. 14 -- WTVI Charlotte
  • 9:30 p.m., Sept. 27, ETV-SCC
  • 5 p.m., Oct. 3, ETV World
  • 6 p.m., Oct. 5, ETV World

NUMBER OF THE WEEK

2,137

The number of how many state employees earn more than $100,000 a year. More.

MEGAPHONE

Glad to do our part

“When it’s finished, I’ll feel like I’m a part of it. All of Owen Steel and everyone I work with will be a part of it.”

-- T.J. Jordan, 76, a 38-year employee at Columbia-based Owen Steel, which is manufacturing steel beams that will be used in the construction of the third tower of the new World Trade Center in New York City. More.

TALLY SHEET

Find legislative bills

This year's legislative session may be over, but you can still find information about bills and new laws online through the links below.

ENCYCLOPEDIA

Tuberculosis

In any historic survey of tuberculosis (TB) in the South, two things stand out. First, until about the 1920s, it was one of the region’s leading causes of death, mostly brought on by slow destruction of the lungs. Second, it killed—and was allowed to kill—African Americans three times more often than whites. In 1900 in South Carolina, it claimed the lives of 219 blacks per every 100,000 of population, while the white rate was just above 70.

While its immediate cause was the germ Mycobacterium tuberculosis, contributing factors were multiple and generally the same for both races, though all affected blacks much more severely. Malnutrition was one, for the long absence of key vitamins lessened the body’s ability to resist infection. But infection’s greatest spur was overcrowding: in close quarters one active case could infect many.

The culprit, epidemiologists would discover, was the dried remains of bacteria-laden droplets called “droplet nuclei.” Sprayed into the air as a fine mist by cough or sneeze, droplet nuclei could hang in the air for long periods—even after the infected source had departed—and were small enough to be inhaled into terminal air passages where TB could begin. The one predisposing cause unique to blacks was their lack of historic experience with TB. Exposed to it on first encountering whites, usually in New World slave societies, blacks as late as the twentieth century had not had time to acquire whites’ immunity level.

A final factor, bearing on both races but putting blacks at special disadvantage during segregation, was insufficient medical care and treatment. Until chemotherapy emerged in the late 1940s, the one fairly sure—if slow—cure for TB was the sanatorium, which offered not medicine but bed rest on open-air porches. Blacks, however, had no access to them until the 1920s, many years after white care began; and even when sanatoriums were built for blacks, they were woefully inadequate. South Carolina was typical: the white facility opened in 1916; blacks had none until 1921, and they had to raise much of its funding themselves. Moreover, the state’s blacks had only a fraction of needed beds. The standard was one for every TB death. In 1934, 844 blacks died, but their sanatorium accommodated only 148 patients. The hospital for whites met the standard.

Although TB continued to be a problem for blacks until the 1960s, increased federal funding after 1945 for added beds and TB control (which searched out victims and got them into treatment) helped blacks disproportionately. Then in the 1950s improved chemotherapy offered a sure and speedy cure without hospitalization.

Once black pressure and civil rights law ended medical segregation in the 1960s, blacks gained equal access to such therapy. By 1970 all those factors, plus rising income, finally brought blacks’ TB under control. In 1945 their mortality in South Carolina was 56 cases per 100,000; twenty years later it was just over 6. Though that was still three times the rate for whites, in the interval blacks’ progress had slightly surpassed whites’, and their long struggle against TB was over.

-- Excerpted from the entry by Ed Beardsley.  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

Showdown set over tax policy

Bad news: Sales tax base is shrinking

By Bill Davis, senior editor

SEPT. 14, 2012 – A large number of state Republican legislators backing a “FairTax” bill in January may find something pushing back equally hard when the General Assembly reconvenes – economic reality.

Fair Tax proponents hold that the best way to levy taxes and raise funds for state government is to eliminate most forms of taxation in favor of consumption and sales taxes.

The idea, in a nutshell, is to avoid taxing assets and give taxpayers the ability chose what taxes they pay through expenditures, according to supporters like state Sens. Chip Campsen (R-Isle of Palms) and Larry Grooms (R-Bonneau).

Grooms has promised to again pre-file a Fair Tax bill before the session begins. He did so last year, but the bill didn’t make it out of committee.

A twist to consider

Recently updated figures from the state Department of Revenue has further emboldened and entrenched critics of this approach to taxation. Those figures may show that major change toward a Fair Tax scenario may not be sustainable or prudent, according to sources.

In Fiscal Year 2000, the gross amount of sales in South Carolina was close to $94 billion. Of that amount, roughly $45 billion was taxable. That translates into a net taxable base from sales being 47.9 percent of what was sold in the state. (Why the difference? For one, the state leaves billions of dollars on the table every year in sales tax exemptions.)

In FY 2012, gross sales grew to $156 billion, a $62 billion increase over 2000, but the net taxable sales amount grew to $54 billion -- only $9 billion above the base from 12 years earlier. As a result, only 34.8 percent of goods sold are subject to sales tax.

Simply put, the sales tax bases in shrinking. Sales went up two thirds in 12 years, but the percentage of what was taxed dropped from just under half to just over one-third. In harder numbers, sales increased 4.3 percent annually, whereas net taxables only went up 1.5 percent annually over the same dozen fiscal years.

There was even a noticeable drop between FY 2011 and FY 2012, according to Revenue’s statistics, which show that net taxables went from 36.5 percent to 34.8 percent in a single fiscal year. And while gross sales rose 9.8 percent – a good thing coming out of a recession – taxes only increased 4.7 percent.

What’s causing the shrinkage?

There are four major reasons behind the apparent shrinking tax base, according to a host of sources.

One, the state, as its economy matures from its manufacturing-heavy past, is experiencing a lot of growth in its services sector – which is largely untaxed, thanks to state tax codes.

Two, the quality of reporting retail sales has suffered as more and more items are purchase online, making it harder for the state to collect sales taxes.

Three, consumers are more apt of late thanks to the Great Recession, to purchase items at discount stores, like Wal-Mart. And if prices at the Wal-Marts of the world are 10 percent cheaper, then the state is looking at only 90 percent of its previous retail tax base.

And four, policy. Thanks to state sales tax exemptions, roughly $3.1 billion goes uncollected every year. And that number has grown substantially since FY 2000.

According to numbers from the state Board of Economic Advisors, the legislature has added more than 20 new sales tax exemptions over the past 12 years, with the 400-pound gorilla of the list -- groceries -- bringing most of the new exemptions to an additional half a billion dollars uncollected.

Public critic No. 1

Sen. John Land (D-Manning), the most senior member of the Senate and one of the most vocal critics of the Fair Tax crowd, said a shift to its “value-added” model of taxation would result in a very unfair situation for the working and lower classes.

“It should be called the ‘very unfair, unwise that makes no sense whatsoever tax,’” said Land, who is retiring from the legislature at the end of the calendar year.

Land said so-called fair taxes would once again expose state government to dramatic fluctuations in funding – the bane of the budget-writing process for the past four years in the Statehouse – as consumption tax collections would likely plummet.

He pointed to problems caused by Act 388 – the politically popular but fiscally dubious bill that shifted public K-12 education in the state from property taxes on primary homes to an enhanced statewide sales tax – as harbingers of fiscal problems that fair, or flat, taxation could cause.

Land held that a “fairer” tax system would continue to resemble the current three-legged stool model, with money flowing into state coffers via sales, income and property taxes, thereby mitigating the negative, or regressive, effects of taxation on any economic class.

The counter argument

Like Land, Campsen said sticky issue of the sales tax exemptions would have to be dealt with before a shift to his preferred Fair Tax bill could further gain traction in the General Assembly.

Critics and observers have claimed that with the state’s sales tax exemptions still in place, consumption taxes would have to be in the 20-percent range to raise enough taxes to cover state government’s bills.

Campsen said that the current tax system is unfair, since the percentage of South Carolinians who pay nothing in state income taxes is climbing closer to 50 percent. Campsen said that without any “skin in the game,” voters will naturally seek to get as much of a free ride as possible.

With a more equitable distribution of taxes, Campsen claimed citizens would be more invested in making sure government stayed small, didn’t squander what it raised from the citizenry, and would not become oppressive toward business or “capital formation, investments, economic growth and appreciation.”

Campsen rejected Land’s worries over funding fluctuations, saying the public sector needed to be governed by the same economic realities governing the private sector. And, Campsen added, to get around potential “draconian” cuts in state government, there needed to be not an expansion of the tax base, but a better job of forecasting and economic planning by the legislature when writing its annual budget.

Crystal ball: Obviously, this argument isn’t over and there will be several legislators to fight for Land’s positions when the General Assembly returns in January. But there remains to be answered what will be the guiding principle behind future state tax policy.

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

Legislative Agenda

On tap next week

  • DDSN. The Commission of the S.C. Department of Disabilities and Special Needs will hold its next regular meeting on Thursday, Sept. 20 at 10 a.m. Earlier that day, its finance and audit committee will meet at 9:30 a.m.
Radar Screen

Smoldering debate

Reading between the lines of what’s coming out of the Statehouse and echoing across the state, rhetorically, we could expect serious debate about increasing the state gas tax in light of the serious problems facing maintenance of state roads, bridges and infrastructure. There’s also some talk about raising the cigarette tax – but ignore it. That battle was too hard fought and too recent for legislators to fight over that again so soon.

Palmetto Politics

Loftis hits the road

After a week in Alaska on "official state business," State Treasurer Curtis Loftis will hold four forums in the coming week across South Carolina to inform people about how to protect themselves against financial fraud and identity theft.
 
"Technology is an efficient tool for financial transactions but it is vital we understand how to keep our information and accounts secure," said Loftis, who will join co-sponsors AARP and MasterCard.
  • Monday:  9 am., Sun City Carolina Lakes, Fort Mill; 4 p.m., USC Moore School of Business, Columbia.

  • Tuesday:  8:30 a.m., Sun City Hilton Head, Bluffton; 12:30 a.m., Wells Fargo Auditorium at the College of Charleston, Charleston.  More.
Commentary

Voters will be year’s biggest losers

By Andy Brack, editor and publisher

SEPT. 14, 2014 -- It’s already clear who the biggest loser will be in the state’s November elections for the General Assembly: You, the taxpayer and voter.

Thanks to a two-headed hydra of election law confusion, it’s unlikely most voters for state House and Senate candidates will hear much about real issues that could impact their lives. Why? Because they’re either trying to figure out who to vote for or they have few real choices to express increasing frustration with the Statehouse that is found in all corners of the state.

Quite frankly, it’s a pitiful set of circumstances. With real leadership, all of this could have been avoided.

Over the last few years as Republicans have consolidated power at the Statehouse, those in the backrooms of influence developed political strategies intentionally designed to confuse the electorate and depress election day turnout. 

  • Case One: Photo voter identification. Republicans at a national level dreamed up a ploy to convince state lawmakers to introduce legislation to require photo identification from voters at the polls. Never mind that South Carolina has no case of voter identification fraud. Don’t let the facts get in the way. Instead, lawmakers whined and preened that such a law was absolutely vital to protect the sanctity of the voting booth. The real motivator? Trying to find a way to reduce turnout of people who don’t have photo identification because the GOP knows they tend to be older or black or tend to vote for Democrats.
  • Case Two: Election law laziness. More than 250 candidates were thrown off state and local ballots in South Carolina this year because state legislators didn’t properly update a law on how candidates file for office. With all of the lawyers and savvy politicos at the Statehouse, it seems remarkably convenient that no one figured out to update the law to allow electronic filing of paperwork as well as paper versions. Either everyone was asleep at the wheel or there was a terrible sin of intentional omission designed to throw the election process into a tizzy this year.

So what’s the impact? First of all, there are far less choices at the polls. While legislative elections are heavily weighted to protect incumbents through how they draw the lines of the districts they represent, having all of those candidates removed this year from the ballot should just be known as the Incumbent Protection Ruling.

Next, many voters are confused about who is running in the districts in which they live, or, as in the case of a Charleston Senate district, they don’t even know who all of the candidates are yet (another primary will be held Tuesday). 

Because people have fewer choices and are confused, they’re paying little attention to issues like reforming the state’s broken tax structure, improving education or ethics reform.

Sure, candidates are mentioning soundbites as they knock on doors. But, as one House candidate admitted this week, “frustration trumps issues.” So instead of serious debates about whether vouchers will work or school funding formulas should change, candidates are spending time introducing themselves or reminding voters who they are in hopes they’ll even turn out in November.

“People are still confused,” one Charleston candidate said. “They’ve been sidetracked and have lost the focus of what the real issues are. Hopefully, they will focus on them for the general election.”

A Democratic political insider remarked that because of all of this election season’s mess, candidates were still raising money and getting grassroots together -- far later than in the past. “With campaign budgets limited on both sides, it’s going to be a brief campaign communication season.”

A GOP counterpart said state issues were taking the back seat this year to the federal election. 

“Things are dull because there aren’t nearly as many races as there typically are. It’s pretty ridiculous when our elections are being decided in courtrooms instead of campaign trails.”

All of this rigmarole has fueled people’s frustration because they don’t feel like any elected leaders are standing up for them.  Hmmm. Hard to figure? Not when you consider how legislators have been messing with election laws.

Andy Brack is publisher of Statehouse Report.  You can reach Brack at: brack@statehousereport.com.

Spotlight

S.C. Association of Counties

The public spiritedness of our underwriters allows us to bring Statehouse Report to you at no cost. This week's featured underwriter is the South Carolina Association of Counties. The SCAC was chartered on June 22, 1967, and is the only organization dedicated to statewide representation of county government in South Carolina. Membership includes all 46 counties, which are represented by elected and appointed county officials who are dedicated to improving county government. SCAC is a nonpartisan, nonprofit organization that operates with a full-time staff in its Columbia offices. It is governed by a 29-member Board of Directors composed of county officials from across South Carolina. The Association strives to “Build Stronger Counties for Tomorrow” by working with member counties in the fields of research, information exchange, educational promotion and legislative reporting. More: http://www.sccounties.org.
My Turn

Take the pledge -- no text is worth dying for

By Pamela Lackey
President, AT&T South Carolina
Special to Statehouse Report

SEPT. 14, 2012 -- Cell phones have come a long way. No longer simple “mobile phones,” these devices provide services that enhance our lives in previously unimaginable ways.

But with these new capabilities come new responsibilities, particularly involving texting while driving.

 If you have not been in an accident involving a texting driver, you may well know someone who has. Nationwide, more than 100,000 crashes per year involve texting drivers. Perhaps this is not surprising because research has found that drivers who text or e-mail behind the wheel are 23 times more likely to be in a crash, according to the Virginia Tech Transportation Institute.

It would be convenient to blame the surge in crash-related injuries and fatalities specifically caused by texting on teens, who expect a reply to a text or email within five minutes or less.

The truth is that texting and driving is a dangerous habit with adults as well as teens. A recent national survey commissioned by AT&T found that while 43 percent of teens admit to texting while driving, 75 percent say it is common among friends. Even more – 77 percent - say adults text “all the time.”

The cold truth is texting-related accidents are preventable. By taking control of when and where we text, wireless users can help reduce the number of tragic accidents that result from texting while driving.

This is why AT&T has embarked on a national campaign to help put an end to this dangerous practice and make the roads safer for everyone.

On September 19, we are sponsoring a national “No Text on Board Pledge Day,” in which we are asking people to vow to never text and drive again. My family and I have already signed this pledge and are holding each other accountable. I invite all South Carolinians to join us.

The website, ItCanWait.com, provides an opportunity to take the don’t text and drive pledge. It also offers a wealth of educational resources and safety tips, including a documentary entitled “The Last Text,” which has been viewed more than 3 millions times and features families who have been directly impacted by texting and driving accidents.

The next time you get behind the wheel, keep in mind that it’s up to you to be responsible and put your phone down – no text is worth dying for.

Pamela Lackey is president of AT&T South Carolina.

Feedback

State DOT needs overhaul

To Statehouse Report:

Your op-ed on the gas tax increase may be flawed.  Before the citizens of S.C. feel the state getting into our pockets even deeper, the state DOT needs a complete overhaul. Yes, more money will help, but not with the same system used by the DOT today. The citizens of S.C. deserve better from their state government. There is still far too much waste in the DOT.
-- David Luttrell, Cowpens, S.C.
Gas tax money needs to be dedicated to preservation

To Statehouse Report:

I absolutely agree that S.C. must generate additional funding to preserve our poor highway/bridge infrastructure.  However, unless the Legislature specifically sets aside the funding for preservation in a “Preservation Trust Fund” which I have proposed – the gas tax funds will continue to be subject to the political powers of a very powerful few and will not go to repair our roads and bridges. This has been the problem all along – the battle of political interests.

The recent articles about the State Infrastructure Bank and, of course the I-73 project as well as the Mark Clark Expressway Project, are but two big examples of this problem, and I can cite others where preservation funds were transferred in local projects. The Secretary of Transportation cannot stop the SCDOT Commission from using gas tax in a political way, except in limited areas. You see, it’s not “sexy”, from a political standpoint, to resurface bad roads and fix bad bridges – but it is “sexy” to build new roads and bridges.  It’s called “ribbon-cutting” votes.

I also have concerns about raising the gas tax, which so heavily impacts low-income employees trying to get to work in their older, less fuel-efficient cars. Plus the fact that S.C.’s 30 percent population growth over the past two decades has not made much change in the gas tax. Many people drive more fuel efficient cars, therefore the increase in fuel efficiency standards reduces the amount of money that is collected in fuel tax, yet our roads and bridges are being hammered exponentially by the population increase.

It is important for me to say that I understand the capacity needs of a system in a state with the population growth we have, and I am not saying those needs should be ignored. Rather, I am saying there must be an increased emphasis on preservation of the existing system to counteract decades of neglect, particularly in the secondary road system. The Interstate and U.S. routes are in fair shape, but the remaining roads and bridges are suffering. And, no road is any better than its worst bridge.

I have written papers discussing this, and believe, rather, that an increase in infrastructure preservation funds should be allocated from the General Revenues of the State, and that other, less critical and non-core government funding should be reduced.

Or, should some type of “user” fee be considered? Other infrastructure entities, i.e., telecommunications industry, and electric and water, have a base “user fee” in their bills. Even if you do not use a single kilowatt of electricity, you pay a base price for just have “access” to the electric grid. Same with water and telecomm.
 
The idea is that EVERYONE benefits from highway infrastructure whether they drive a car or not. This would spread the cost to ALL users.
-- Sarah Nuckles, Rock Hill, S.C.

NOTE:  Ms. Nuckles represented District 5 on the state Department of Transportation Commission until earlier this year when her term expired.

Apologies from the Northwest

To Statehouse Report:

What an embarrassment [8/31: Anti-South book]. My family and I lived in Charleston-Summerville for 12 happy and educational years. We are originally from the Pacific Northwest. My sons were both born in Portland.

Mr. Thompson is not atypical of the city-bred know-it-alls that plague the world. His parents obviously did not teach him manners--nor drag him into the wilderness or out on the open water for nature to remind him of his mortal puniness. (That is my personal favorite parenting technique.)

Please accept our humble apologies. Our time in South Carolina has educated most of our immediate family and many friends to the amiable and historic traditions of the South. One of my sons graduated from The Citadel. Both survived Parris Island. My daughter graduated from the Governor's School of Science and Math. All three are plotting their permanent return to "the better part of the country."
-- Teresa Fleener, Grapeview, Wash.

Drop us a line.  We love hearing from our readers and encourage you to share your opinions.  But you've got to provide us with contact information so we can verify your letters. 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

Up for JetBlue, down for Beaufort

Airlines. It’s good news for the consumer, the state’s tourist business, and the state’s aerospace profile to have another budget airline serving the Palmetto State. More.

Fate of Voter I.D. That the fate of the state’s much criticized and much supported bill requiring voters show photo identification before being allowed to cast a ballot is still in legal federal limbo is a good thing for two reasons. One, it means that the obviously racist act is not in place. Two, that it’s still not in place. More.

Education. State higher education options continue to make national marks, while flagship college, USC, slips in rankings. More.

Santee Cooper. The state utility had its requested 7 percent rate hike over two years approved, which is more money out residential pockets, but maybe not so much out of certain industrial customers’ bank accounts. Ahem. More.

Justice. The federal courthouse in Beaufort will be closed due to federal fiscal squabbles. More.

Stegelin

Thanks for the memories


Also from Stegelin: 9/7 | 8/31 8/24 8/17
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/.