As the 2019-20 legislative session resumes this month, S.C. legislators have several pressing and influential issues to address, including education and tax reform and the future of state-owned utility Santee Cooper.
Legislators, who reconvened at the Statehouse Jan. 14, have several options on Santee Cooper: Do nothing and keep the utility under state operation; sell it; or keep it under state ownership and hire a company to operate it.
Santee Cooper carries nearly $7.64 billion in debt, half from the abandoned construction of reactors at the V.C. Summer nuclear station. Santee Cooper’s partner in the reactor construction, S.C. Electric & Gas, was acquired by Dominion Energy in 2018.
S.C. Sen. Dick Harpootlian, D-Columbia, said Dominion’s acquisition of SCE&G should be considered by his legislative colleagues who want to sell Santee Cooper. He expressed concerns about also ceding control of the state-owned utility to a private company.
“It’s going to be a hard sell for me to turn over the ratepayers of the Santee Cooper utility to the whim and whimsy of some private utility,” he said.
Florida-based NextEra Energy Resources, North Carolina-based Duke Energy and Greenville investment firm Pacolet Milliken have expressed interest in purchasing the utility. Dominion Energy has offered to manage Santee Cooper while it remains state-owned.
S.C. Gov. Henry McMaster has expressed frustration with Santee Cooper’s management in shopping it to outside suitors. In 2019, legislators approved a joint resolution signed by McMaster that ordered the state Department of Administration to establish a plan to conduct a competitive bidding process for the utility’s sale or management. Legislators would have to approve a sale.
Adding to the complexity of the issue are personnel changes facing the S.C. Public Service Commission, which oversees the regulation of utilities and public services operating in the state. The four-year terms of four of the body’s seven commissioners, elected by the General Assembly, expire in June.
Harpootlian said newly elected commissioners will have to regain the trust of the public and of lawmakers. The PSC approved nine rate increases requested by previous SCE&G parent company SCANA in the decades-long and ultimately futile construction of the reactors.
“They are not generating the trust of elected officials like me,” he said. “They seem to be at the beck and call of Dominion and other big utilities. The Public Service Commission should be protecting the ratepayer, not billionaire corporations.”
Despite having undergone massive revisions and amendments during the first part of the 2019-20 session, a proposed education reform bill may face more changes before legislators take a final vote. The Senate is expected to take action on the bill and return it to the House early in the second part of the session.
In the $9.3 billion state budget passed in 2019, legislators approved a 4% raise for teachers.
S.C. Rep. Marvin Pendarvis, D-North Charleston, said that as the bill currently stands, it needs more work, including funding for additional literacy programs and positions.
The bill would eliminate several statewide standardized exams, though an amendment to limit class sizes did not make it into the bill’s current version.
“This year there will be more that is put on the table, and we’ll vet that as it comes through,” Pendarvis said.
A bill reforming the state’s business license taxes is currently in the House Labor Commerce and Industry Committee. South Carolina’s income taxes are higher than North Carolina’s and Georgia’s, and the state’s business property tax rates are the highest in the nation, according to the S.C. Chamber of Commerce. which has made updating the state tax code part of its 2020 competitiveness agenda.
“We’ve got to figure out how we not only give relief to taxpayers, but also make sure that our code is a lot clearer, and (that) people understand what it means and what it does,” Pendarvis said.
A poll conducted by the chamber in September revealed that more than two out of three S.C. residents support comprehensive tax reform.
“It’s time for lawmakers to move beyond talk and pass a comprehensive reform bill this legislative session,” S.C. Chamber President and CEO Ted Pitts said when the poll was released.
Legislators acknowledge that income and sales taxes need reforming, but Michael Anzelmo, former chief of staff and legal counsel to House Speaker Jay Lucas, said it’s too late in the session to begin discussing such reform.
In 2019, the Senate passed a bill that would extend the maximum amount of damages allowed under the Tort Claims Act from $300,000 to $500,000 for individuals and from $600,000 to $1 million for groups of plaintiffs. The bill currently is in the House.
Harpootlian, an attorney, said the amount proposed in the bill is not enough to deal with situations that significantly change a plaintiff’s life, but it’s a start.
Harpootlian said legislators threw their support behind increasing the limit after a deadly amusement ride crash in Spartanburg in 2011. A 6-year-old boy was killed and 28 people were injured.
The Associated Press reported the victims split a $1.6 million settlement, with the boy’s family receiving $275,000.
Although the state addressed pension reform in 2017, some legislators say changes made to the financing of the system and the way it’s governed didn’t go far enough. At the time, the legislation was referred to as the first of two phases of pension reform.
The 2017 bill addressed the pension fund shortfall by reducing the assumed rate of return on investments and established protections that would oversee changes in future rates.
Pendarvis said he believes additional legislative action is necessary to continue the reforms established in 2017, including the way the state retirement system is structured for employees.
“We did take a big stab at it one year, but it didn’t solve all of the problems with the pension system,” he said.
After the controversial election of Robert Caslen as the University of South Carolina’s next president, Harpootlian co-sponsored a bill to change the process for legislative appointments of trustees. The bill would reduce the number of trustees on the board, require them to be selected from their legislative districts and remove McMaster and the S.C. superintendent of education as ex officio board members.
Because the university’s main campus is in Harpootlian’s district, he has been outspoken regarding the process. Harpootlian said the change was intended to remove politics from the board.
“The University of South Carolina board has shown horrible judgment, not just on the process they used to pick President Caslen, but how they handle everything,” he said. “It needs reformation. Dramatic reformation. Fewer of them (members), and more insulation from the political considerations.”
Among other issues, Pendarvis has introduced legislation to establish a state component to federal “opportunity zones.” The proposal would provide a state income tax credit for certain companies that invest in opportunity zones.
Pendarvis said that he’s gotten bipartisan support for the bill he filed in November and that several Southern states have passed similar legislation.
“I feel optimistic about its potential,” he said. “States that are situated similar to South Carolina have been able to pass it — Alabama, Maryland, Virginia — and so we’ve been able to see states that have taken the courage and passed it because they recognize the importance. It’s here; why not look at the advantages that we can take and how we can truly improve our communities?”
Pendarvis also expects the Legislature will address vaping. In December, the S.C. Department of Health and Environmental Control reported the state’s first death attributed to an illness related to vaping.
With so many urgent issues requiring deliberation, the one certainty is that a packed session awaits legislators, who must also pass a state budget.
“In a typical legislative session, one thing like tax reform or education reform or Santee Cooper issues would be it,” Anzelmo said. “They have an ambitious agenda, trying to do several of those things in the last year of a two-year session. … I think both chambers have done an excellent job getting the ball rolling on these critical issues, and folks should be happy that those things are moving forward.”>