Our weekly Top Five feature offers big stories or views from the past week with policy and legislative implications.
1. McMaster offers insights into state’s challenges, WSAV TV, Feb. 15, 2017
New Gov. Henry McMaster said economic growth and prosperity, not fixing crumbing roads, were the state’s biggest issue in his first sit-down interview a few weeks after taking the top job. An excerpt:
“The most important issue is economic growth and prosperity, because that will eliminate poverty and that’s where most of our problems come from,” he says. “So it’s a multi-faceted challenge and it’ll take a multi-faceted approach. But I’m confident we have the talent and the people here to get it done. I’m very optimistic on our future.”
He does agree that the condition of state roads is a major issue, though, and that’s why he sent a letter to President Trump requesting $5 billion in federal money for our roads. “That’s our money. We sent it up there to begin with so I want to get it back. And we need it. Our state’s growing. We’ve got to do something important with our infrastructure, with the roads, with the bridges,” he says.
2. How to fix sales taxes today, Scott Drenkard of the Tax Foundation, Feb. 10, 2017
In this post, Drenkard discusses why states generally don’t tax services, exempt consumer goods that should be taxed and tax business-to-business transactions that shouldn’t be taxed. In doing so, he offers fixes for a system that, ideally, should have a broad base but low rate. An excerpt:
If states were to fix these three problems, they would have not only a broad-based but a “right-sized” sales tax system that taxes each dollar of consumption once and only once. This would result in stable revenue, and would allow for a low rate that brings in ample funding for government services.
3. Hofferth outlines need for more higher ed support, funding, The Post and Courier, Feb. 14, 2017
Tim Hofferth, chairman of the S.C. Commission on Higher Education, offered an op-ed this week that outlined what the commission was doing to reform its mission internally because it needs to have the support of state leaders and resources to do its job. An excerpt:
If our state has learned anything from the S.C. State ordeal and from the failure of other schools across the country, it is imperative that the CHE receive both the funding and legislative support necessary to carry out our oversight function and protect the interests of our state.
Higher education in South Carolina is a more than $4.7 billion industry, and the state is a significant stakeholder. With hundreds of millions of taxpayer dollars at risk, our citizens deserve a high degree of accountability, and it is our job to monitor and protect the taxpayer investment in our colleges and universities. We have the authority, we have the responsibility, but we do not have the support or the resources.
4. Scoppe asks legitimate question on pension funding, The State, Feb. 11, 2017
With a potential unfunded liability of $20 billion for state pensioners, The State’s Cindi Ross Scoppe asks the ultra-practical question that everybody should be asking: Instead of paying smart consultants to invest the state pension monies, why not just put it in an index fund that does well – and thereby avoid all of the drama? An excerpt:
You know how responsible investment advisers say you shouldn’t try to time the market? Well, South Carolina’s investment geniuses have repeatedly timed the market to near perfection — in reverse: getting in just before the crash, getting out just before the boom. Hence (among other reasons) the $20 billion debt. … My own decidedly unsophisticated and unaggressive investment strategy relies heavily on stock index funds, which mimic the wider market performance. I’m not getting huge returns, but they’re a lot better than what South Carolina is getting.
A Legislative Audit Council report released in December 2015 noted that the Vanguard Balanced Index Fund outperformed the state’s pension plan in nine of the previous 10 years. And that was before the state pension fund actually lost money last year. On top of the better returns, the index fund has a 0.22 percent expense ratio, compared to the state’s 1.57 percent.
5. Local government urges state to continue beach renourishment, North Myrtle Beach Times, Feb. 16, 2017
Local officials, reliant on federal funding generally for beach renourishment to keep the tourism dollars flowing in, want to ensure the state continues to help with keeping beaches sandy. An excerpt:
North Myrtle Beach Mayor Marilyn Hatley joined with City Council members to encourage the state to continue to partner with coastal cities and the federal government in funding beach renourishment, emphasizing that continued state participation in the funding of beach renourishment is an investment that is critical to the continued economic success of South Carolina’s coastal cities and counties and the state as a whole.
The mayor and council members provided Senator Peeler and Director Parrish with information showing that a recent Coastal Carolina University study shows that the Grand Strand tourism industry alone annually generates about $7 billion of economic activity, accounts for 83,000 jobs and annually generates at least $485 million in state and local taxes. When one considers the amount that the state invests in beach renourishment, and the tax revenue that is returned directly to the state because of it, it is clear that the state’s investment in the cost of beach renourishment yields a significant return.
Editor’s Note: Thanks again to Dale M. Rhodes, a Virginia reader who used to work in South Carolina, for providing links to many of our Top Five stories you might have missed.
We Can Do Better, South Carolina!
Isn’t Ms Scoppe a decade or two late in drawing her conclusions on the poor investment policies of the Retirement System Investment Commission?