By Lindsay Street, Statehouse correspondent | South Carolina’s population is growing and aging faster than the rest of the nation — and that means a further erosion of the income tax base. Why? More retirees who pay a lower amount of income taxes. That was part of the message given to the Senate Finance Taxation System Review and Reform subcommittee Wednesday in a presentation from the Palmetto Promise Institute and economist Rebecca Gunnlaugsson.
Gunnlaugsson said the fairness of the state’s income tax and sales tax are issues that need to be tackled and can be tackled quickly.
“The number of people who pay income tax has been declining,” she said. She added that only 35 percent of sales are taxable in the state, a number that continues to decline. “As the tax base erodes, what we end up with is higher tax rates.”
Comprehensive tax reform has been listed as one of the priorities for this new session, and it is one of this publication’s Palmetto Priorities, (see below for more these priority updates).
In other news:
Governor’s spending plan. Gov. Henry McMaster issued a proposed state spending plan, which identified education as a top priority, aligning with what the legislature has indicated. The plan included a populist measure of a $200 million rebate to S.C. taxpayers and elimination of income tax for military, veterans, public safety officers and law enforcement in the state. Furthermore, the governor proposed a $2.2 billion-dollar tax cut across all personal income
brackets resulting in an average 15 percent rate reduction. The spending plan also includes a 5 percent teacher raise. In the plan, funding streams for the measures are not specifically identified. The executive budget is largely ceremonial as the state budget always originates in the House, with its final stop being the governor’s desk after a long legislative process.
Child marriages. The Senate Judiciary subcommittee got some international attention Jan. 17 when it considered a bill that would change a 1962 law that allows pregnant, underage girls to marry older men. One analysis tabulated that, over the last two decades, about 7,000 underage girls — as young as 12 — have married older men in South Carolina (Read more). A House subcommittee will address a similar bill on Jan. 24, according to a tweet from S.C. Rep. Beth Bernstein, the House version’s primary sponsor.
Gubernatorial appointments. Gov. Henry McMaster announced this week that Department of Revenue Director Hartley Powell will continue to serve in that position. Powell was installed in the post by then-Gov. Nikki Haley in November 2016.
McMaster also announced this week Maj. Gen. R. Van McCarty will replace retiring Adjutant General, Maj. Gen. Robert E. Livingston Jr. McCarty will become the first Adjutant General appointed by a governor since the constitutional amendment giving him that authority was approved by South Carolina voters in 2014. He currently serves as the Deputy Adjutant General of the South Carolina Military Department under Livingston.
Shutdown in S.C. The partial federal government shutdown has begun affecting South Carolina, from furloughed workers to stymied federal funding streams. Some of the big stories impacting South Carolina this week included early food stamp payments, struggling TSA workers, secured funding for reduced or free school lunches, and a state bill that would offer property tax penalty relief for furloughed workers. Read more about Charleston Democratic Rep. Leon Stavrinakis’ bill here.
Weekly update on Palmetto Priorities
Throughout the legislative session, we’ll provide you relevant updates related to our list of Palmetto Priorities, 10 big policy areas where major progress is needed for South Carolina to escape the bottom of lots of lists. Over the last week:
Politics/elections. House budget writers heard Tuesday from the state Election Commission about its request to replace its antiquated electronic voting machines. The cost to replace the 13,000-plus touchscreen machines tallies up to $60 million.
On Wednesday, the American Civil Liberties Union South Carolina took to the Statehouse steps to push for a new voting system. Executive Director Shaundra Young Scott said the organization is backing legislation sponsored by Democratic S.C. Rep. Terry Alexander of Florence.
His bill, H. 3304, would further restrict the type of voting machines the state could use. The bill says the voting system shall be “nonproprietary, publicly owned paper-based system that uses the paper ballot as the ballot of record.” The bill is now in the House Committee on Judiciary.
Scott said the bill and the commission’s effort to buy new voting machines is vital to the state.
“So people can feel their vote counts,” she told Statehouse Report.
- Related: A judge mulls federal intervention on state’s election system.
- Related: New report shows issues with state’s voting system.
Corrections. South Carolina has adopted a program called Restoring Promise that uses mentors and classes to help prevent recidivism in its state prisons. The program was outlined to a Senate committee this week. Corrections officials said the program could also curtail inmate violence and help with retention of prison guards.
Education. House Speaker Jay Lucas, Senate President Harvey Peeler, and Gov. Henry McMaster have asked the director of Revenue and Fiscal Affairs to compile a report on addressing the state’s education funding formula.
“Reforming the education funding formula is a necessary step to ensure more equitable distribution of dollars to South Carolina’s school districts,” McMaster wrote in the letter dated Jan. 17.
The report is due no later than May 9 and must evaluate ways to make funding more efficient.
Looking ahead
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