S.C. Statehouse Report
Sunday, Jan. 16, 2005
VIEW: http://www.statehousereport.com/columns/05.0116.jobsbill.htm

COMMENTARY
House jobs bill seeks to help small businesses
By Andy Brack
SC Statehouse Report

JAN. 16, 2005 - - For years, state politicians on the stump have spouted rhetoric about the importance of small businesses as the backbone of the state's economy. But when they returned Columbia, they returned to old models of chasing large industries and smokestacks.

Now, the House GOP leadership has gotten the good message that it's time to do something for small businesses, which make up about 95 percent of the state's employers.

The House next week will consider the 2005 Jobs Creation Act, a five-part bill that focuses on providing incentives to some investors and job creators.

"I'm not looking at this being the cure-all, but I am looking at it making some headway," said Michael Fields, state director for the National Federation of Independent Businesses. "It's a start at leveling the playing field for economic incentives. We're starting to understand that everything we're doing for large companies is well and good, but it is high time that we start recognizing the role small business plays in this state."

One of the key provisions of the bill will allow companies that create at least five jobs in a year to receive an existing state jobs tax credit. In counties of high unemployment, such as Marion (17.7 percent) or Orangeburg (15.8 percent), employers would be able to get an $8,000 credit. In less distressed counties, employers who created at least five new jobs would be able to get a credit that ranges from $1,500 to $4,500 based on the county's economic health.

The bottom line for this provision of the bill is that it lowers the threshold for companies to get the credit for creating jobs. Currently, companies have to create 10 jobs to get the tax credit - - a provision that almost exclusively helps larger businesses.

This lower threshold isn't going to help all small businesses get access to incentives. The state Chamber of Commerce and other groups want the state to consider giving companies the jobs tax credit based on percentages instead of hard numbers. For example, if a company created at least 10 percent more in new jobs, it should be eligible for a credit, the Chamber says.

But advocates of the proposed measure say that's too much for the state to absorb right now.

"Five is better than 10" jobs for employers to get the tax credit, said House Speaker David Wilkins, the Greenville Republican who is the key sponsor of the bill. "The problem is we've got to start somewhere."

If the lower threshold passes, the state expects to lose about $26 million in tax revenue by 2007-08 to pay for the small business incentive, said State Revenue Department Director Burnet Maybank III.

With the state moving out of an economic downturn, the number of small businesses that could take advantage of the incentive is unclear. According to Maybank, small business employers in 2002-03 created 10,361 jobs that would have qualified. But that was when the state's growth was down because of the economy.

Fields pointed out that if lawmakers approved the incentive measure, they'll be able to review it in two years to see if it was working.

The incentives bill also includes provisions to encourage investors to support new small businesses, particularly high-tech start-ups, small manufacturers, suppliers and the like. These tax credits to small business investors, which are worth 25 percent, don't apply to retailers and most small businesses, but instead are targeted at new small businesses that otherwise might not occur if the incentive were not available, Maybank said.

Other provisions of the bill call for a $2.5 million fund to be established to provide security for banks that give debt-equity financing to start-ups, and a measure that would make South Carolina more attractive for companies that operate distribution facilities in the state.

Lawmakers should be encouraged to approve these incentives for small businesses but they shouldn't read their own press releases too much. As Fields said, the measure is a good first step, but most businesses won't be able to take advantage of what lawmakers might approve.

RECENT COMMENTARY

• 1/9: Peek behind the spin of the new executive budget
• 1/2: Find other ways to honor public servants
• 12/26: 2005 legislative session will be defining
• 12/19: Shifting priorities cause state to rebuild what it had
• 12/12: Dems looking for gubernatorial candidate to challenge Sanford
• 12/5: When "taking a walk" gets a new meaning
• Have a comment? feedback@statehousereport.com
  
  

McLEMORE'S WORLD
1/14: Skiing into trouble

The latest from cartoonist Bill McLemore:

• To send a message to cartoonist Bill McLemore, write info@statehousereport.com
  

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FEEDBACK
1/10: Don't be fooled by simplistic approaches

To the editor:

Thank you for your column on Gov. Sanford's budget (Commentary, 1/9), which I read in the Morning News. Too many people are fooled by simplistic approaches promising to reduce govt. spending. Anyone who read your column would have the information needed to think more deeply about the issue.

-- Tom Truitt, Florence, S.C.

1/9: Don't cut the power of the people

To the editor:

I enjoyed your summation of Sanford's Budget program. Yes, I agree, his approach to funding government appears to be a Libertarian approach. Cut spending for government as much as possible and it eventually results in cutting government power.

The problem with that approach, as I see it, is that in cutting government power, he is also cutting the power of the people. Government after all exists FOR people, ALL the people not just a special few.

Your article about Sanford's budget noted and example of selectivity in funding state highways. Rather than keeping up with state highways needed within communities, the money is cut out or reduced in favor of using Interstate Highways, which fail to serve the needs desired in many instances. The end result of this leadership attitude, is that it passes the buck to the local communities needing those strategically placed state roads. Consequently, either Local Government winds up spending local funds to maintain the roads the state should be responsible for or the state assesses just local residents fees needed to do the job as is the case of the DOT proposal to increase owners of vehicles with a South Carolina registration a fee, in addition to their Registration Fee, to pay for state roads within our communities.

This approach to funding community state highway needs is wrong headed and places the burden on only local residents within the state. There is a better way to garner needed funds to do this job...A State Gas Tax increase which assures that all users of the South Carolina highway system, be they residents of nonresidents, pay their fair share and that local residents are not stuck with the complete cost.

South Carolina's State Highway System has been sick for years because, in my view, it is one of the stingiest taxers of gas in the USA. It is time for a change and not the type of change that DOT is contemplating. Our Registration Fee and Property Tax on vehicles is enough, it is time to consider an increase in State Gas Tax.

-- Bob Logan, President, We The People Of Horry County, Little River, SC

1/9: Diehard believer supports Sanford

To the editor:

From your column -- "More than anything, it seems like a cynical attempt to figure out more ways to cut government spending."

I don't care how you look at it, or what you call it. If the governor can cut the size and scope of government, more power to him--and it's about time. Go Sanford!

-- Doug Kendall, Columbia, SC

SOUTH CAROLINA SCORECARD

Here's a "thumbs up" and "thumbs down" related to various political events from the past week:

Thumbs up

Smith, Saleeby. Congrats to Sen. Verne Smith, R-Greer, who celebrated his 80th birthday. And hats off to the memory of the late Sen. Ed Saleeby, a Darlington County Democrat whose portrait was unveiled this week.

Hinson. Congratulations to Rep. Shirley Hinson, R-Berkeley, who was named chief majority whip this week.

Mixed reviews

Sanford. The governor's tax cut proposal passed through committee but he had a number of other problems as lawmakers overrode some of his vetos, a charter school bill was delayed by a fellow Republican and he was off at reserve training.

Thumbs down

State Senate. GOP lawmakers might be slapping themselves on the back for gutting the filibuster rule, but in the long run it is detrimental to the system to run over the rights of people who have positions that oppose the majority, regardless of the issue.


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