Historically, whenever every member of the General Assembly is up for reelection, not a tremendous amount gets done. While several important issues were resolved this legislative year, election year politics once again played a role at the statehouse. Here's a brief overview of what happened to impact Upstate businesses:
Elections: Turnout for the June primaries in Greenville County was less than 10%. Statewide turnout was less than 12%. Many blame the confusion of nearly 200 candidates being kicked off the ballots as a reason for the dismal turnout. In Greenville County, we will see at least three of seven Senate seats change hands. Statewide, the Senate will look much different next year. The House will see changes, but with the GOP holding 75 out of 124 seats, not much should change in terms of power.
Budget: After a month-long stalemate over a small business tax cut proposal, the legislature finally passed a $6.7 billion budget on June 28th.
Bill Wylie Entrepreneurship Act: 26 states, including North Carolina and Georgia, currently have angel investment programs to help provide necessary capital to startups within their states. This bill would have provided a tax credit to accredited SC investors investing in qualified SC startup companies. It stalled in the Senate and time ran out before it was given third reading. It will be reintroduced early in 2013.
Comprehensive Tax Reform: Seven pieces of legislation were drafted from the recommendations of the House GOP Caucus Tax Study Committee (chaired by Rep. Tommy Stringer of Greer). Three of the seven bills passed the House, but none made it through the Senate. It is likely that comprehensive tax reform will be revisited in 2013.
Data Center Incentives: More than 25 data centers located to North Carolina over the past few years, creating high-paying jobs and large capital investments. This bill was approved to provide sales tax exemptions on electricity, computer equipment and software, enabling us to better compete with both North Carolina and Georgia.
Department of Administration: Proposed legislation would have eliminated the SC Budget and Control Board and created a new Department of Administration. The bill did not make it through the Senate in time and will be revisited again next year.
Pollution Control Act: This initiative was one of the top business priorities of the legislative session. As a result of a 2011 SC Supreme Court ruling (Smith Land Case), any emission or discharge into the environment would require a permit, even if one did not exist. The ruling also created a private right of action for any citizen or group of citizens to file suit against anyone deemed in "violation" of the Pollution Control Act. Advocates for the business community worked together to find a solution to protect our businesses from frivolous lawsuits as a result of this ruling by allowing environmental groups to petition SCDHEC rather than allowing private right of action. Governor Haley has signed the legislation.
Port Funding: Sending the message that deepening the Port of Charleston is our state's top economic development priority, both the House and Senate agreed to put $300 million in the 2012-13 budget for the creation of a Harbor Deepening Reserve Fund. This exceeds the state's share of the project cost, and if the federal government stalls in paying its portion, SC is will still be prepared to move forward quickly.
Right to Work Act 2012: This legislation clarifies language in SC's existing Right to Work Act. The bill prohibits state and local governments from requiring or prohibiting contractual union worker quotas when awarding government contracts, incentives or tax credits, ensuring a level playing field.
Small Business Tax Relief: This tax cut agreement gives $20 million in tax relief each year until the 2014-15 fiscal year, reaching the $60 million that the House wanted. Small business owners who report their earnings as personal income will see their tax rate reduced from five to three percent.
State Retirement System Reform: Because SC's current system has over $13 billion in unfunded liabilities, the General Assembly passed reform legislation this year that will require state workers to pay more for their retirement benefits, and work more years before claiming them.
State Unemployment Tax (SUTA): There is currently $77 million allocated in the budget for SUTA relief to all SC businesses. The General Assembly has now provided $223 million in tax relief to employers over the last two fiscal years to help pay down the federal debt that nearly reached $1 billion in 2010.
Unemployment Benefits: Almost $50 million was paid to workers who were fired for misconduct in 2011. New legislation passed will eliminate state unemployment benefits if a worker is fired for misconduct.
For more information on these issues or the 2012 legislative session, please contact Mark Cothran or Elizabeth Edwards at 864-242-1050.
