View From the Dome: Latest BEA Projection is $775M in One-Time Surplus Revenue

Friday, Sept. 4, 2020

The Senate returned to session Wednesday to address voting laws and began committee hearings on the state budget.

The Attorney General announced the single largest lawsuit settlement in South Carolina history.

The Board of Economic Advisors met and gave its final budget estimate before the special legislative session. Several House ad hoc committees met to discuss criminal justice reform.

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TAX

The House Ways and Means Property Tax Subcommittee will meet Friday afternoon at 2 p.m. on S.545 (Senator Alexander) relating to assessing property of businesses and other entities. The bill relates to business personal property and requires filing through the Department of Revenue. The bill, which passed the Senate in March, requires all counties to use the DOR approved PT-100 form for filing business personal property assessments. If approved by the subcommittee, the bill will advance to the full House Ways and Means Committee for consideration.

DEPARTMENT OF REVENUE

The SCDOR released Information Letter 20-25 on Friday, concerning the rate of interest to be applied to underpayments and overpayments of taxes from July 1, 2020 through Dec. 31, 2020.

BOARD OF ECONOMIC ADVISORS

The State Board of Economic Advisors met on Monday and lowered the General Fund revenue estimate for FY 2020-21 by $52 million to $9.5 billion. The BEA also lowered the projected revenue growth from 3.5% to 2.5%. The BEA had previously reduced the new recurring General Fund estimate by $701 million.

Legislators will now have $86 million in new recurring funds to appropriate when they meet beginning Sept. 15. The BEA projects $775 million in one-time surplus revenue. This projection includes $350 million in surplus funds from FY 2019-20 that was certified by the Comptroller General last week. It was noted there remains a tremendous amount of uncertainty due to the pandemic, and the BEA wanted to act with caution and prudence looking to the future.

The BEA is statutorily charged to provide the General Assembly with the official revenue estimate for lawmakers to draft the annual state budget. They will meet in November to revise the estimate prior to the General Assembly returning in January.

Handouts from the meeting can be found here.

BUDGET

The Senate Finance Committee met via Zoom on Tuesday and received an update from the Revenue and Fiscal Affairs Office and the Executive Budget Office on state revenue estimates and CARES Act funding.

RFA Director Frank Rainwater reported to the committee of the BEA’s recent action on the General Fund budget estimate and noted the $775 million in one-time surplus revenue does not include the $525 million from the recently announced settlement from the SRS lawsuit.

The committee also heard budget requests from the Department of Education, Department of Corrections, Department of Transportation and the Department of Parks, Recreation and Tourism.

Senate Finance Committee Chairman Hugh Leatherman (R-Florence) told the committee he would like to send up to $600 million in surplus revenue to the Unemployment Insurance Trust Fund to ensure struggling businesses do not see a tax increase and suggested another $500 million be set aside in the event of an economic downturn.

The committee met again on Thursday via Zoom and heard a presentation from Dr. Tim Hardee, President of the SC Technical College System. Dr. Hardee gave an overview of the technical college system and noted average enrollment is down. The 16 technical colleges are operating with 45% online, 30% using a hybrid format and 25% face-to-face instruction. He stressed the need of state funding to the success of the colleges and its core mission. There was a brief discussion about the effects of budget cuts to the colleges in the event that becomes necessary.

The committee also heard from the SC Commission on Higher Education, the SC Department of Employment and Workforce, the Office of Regulatory Staff, DHEC and MUSC Health. The committee will meet again next week and hopes to adopt a strike and insert amendment to the previously passed House budget H.5201.

The General Assembly will return on Sept. 15 for a two-week session to either amend the Continuing Resolution currently in place for the operation of state government or adopt a new state budget.

CORONAVIRUS

Gov. Henry McMaster announced on Monday that long-term care facilities in South Carolina will soon allow visits with patients in outdoor settings. DHEC issued extensive guidelines for nursing homes and assisted living facilities to do this safely amid continuing concerns about the COVID-19 pandemic. Two visitors will be allowed per patient at one time, and visits will be limited to 15 minutes. To read more about the guidelines, click here.

To view all of the governor’s previous Executive Orders, click here.

For more information from DHEC on the virus, click here.

The DHEC Care Line is available to provide general information about COVID-19 by calling 1-855-472-3432 from 8 a.m.-6 p.m., seven days a week.

COVID-19 Screening & Testing Sites

ELECTION REFORM

The Senate unanimously adopted H.5305 on Wednesday, which would expand absentee voting eligibility to everyone because of the COVID-19 pandemic. Anyone voting by absentee ballot would have to go into an election office to turn in their ballot under the bill. A similar bill was signed into law for the recent June primaries. Efforts to amend the bill further, including allowing curbside voting or requesting an absentee ballot via the internet, failed. The bill was ordered to receive third reading Thursday and now goes to the House for consideration.

ENERGY

State Attorney General Alan Wilson announced on Monday that the state of South Carolina and the United States government have reached a $600 million settlement to end six years of litigation related to the remaining 9.5 metric tons of weapons-grade plutonium relocated to the Savannah River Site (SRS) in the early 2000s. It is the single largest settlement in South Carolina’s history.

Under the terms of the settlement, according to a news release from Wilson’s office, the United States will pay South Carolina $600 million immediately, and the Department of Energy remains obligated to remove the plutonium by 2037. South Carolina will allow the Department of Energy 16.5 years to remove the remaining plutonium from SRS or monetary penalties will be re-instated and the Department will be subject to additional litigation. The settlement, negotiated by Attorney General Wilson, ends a highly contentious battle that involved multiple federal and state administrations and threatened to paralyze the country’s industrial complex and pit the state against the federal government for decades.

The General Assembly will determine how to appropriate the one-time revenue. Gov. McMaster criticized the settlement, calling the $75 million in attorney’s fees “grossly excessive.”

You can read the settlement agreement here.

HOUSE WAYS AND MEANS CARES ACT SUBCOMMITTEE

The House Ways and Means CARES Act Ad Hoc Subcommittee held its second meeting on Wednesday. The committee received an update from State Superintendent of Education Molly Spearman on school openings and funding. Spearman reported 16 school districts have five-day face-to-face study in classrooms. Fifty school districts have a hybrid blend and 13 school districts are virtual-only. All districts have a virtual-only option if requested by parents. She told the committee the Department of Education does not need any additional CARES Act funding, but they would like the authority to re-purpose some of the remaining funds. The committee also received an update from the Commission on Higher Education and DHEC.

Following those presentations, the subcommittee heard requests for funding from several nonprofit organizations. Under the previous authorization adopted by the General Assembly, only public sector entities and hospitals were eligible for reimbursement. The committee was formed by House Ways and Means Chairman Murrell Smith (R-Sumter) to assist the committee in determining how to allocate Phase II of the CARES Act funding. The committee will meet again next Wednesday.

Committee handouts can be found here.

INTRODUCTION OF INTEREST

S.1259 (Senators Massey, Turner, Grooms, Alexander, Peeler and others) – Joint Resolution to provide liability protections for a limited time period for health care providers and businesses in response to the Coronavirus. Referred to the Committee on Judiciary.

HOUSE EQUITABLE JUSTICE SYSTEM AND LAW ENFORCEMENT REFORM COMMITTEE

The Civil Asset Forfeiture Reform Subcommittee of the Equitable Justice System and Law Enforcement Reform Committee met on Monday. The committee, chaired by Speaker Pro Tem Tommy Pope (R-York) heard presentations from Mr. Lee McGrath, Senior Legislative Counsel for the Institute for Justice, as well as hearing from solicitors and public defenders. It was noted the legislature has been discussing civil asset forfeiture for several years, including H.3307 and H.3968, which were introduced last year. Open issues include: the two bills already introduced; strike and insert language to H.3968; minimum seizures for cash or vehicles; interaction with the federal government on adoptions and joint task forces.

The committee was formed by House Speaker Jay Lucas (R-Hartsville) to address the urgent issues gripping our nation and state. The committee represents a bipartisan, diverse group of lawmakers, which aims to bring to the entire House substantial reforms to improve our state’s justice system and law enforcement policies.

JUVENILE JUSTICE

The Senate Select Committee on Raise the Age met Tuesday and heard a presentation and update from the Department of Juvenile Justice. Director Freddie Pough told the committee that 50 staff and 35 children have tested positive for COVID-19. Pough noted the biggest challenge facing the agency is funding and, in particular, staff. The agency has historically struggled with finding not only additional qualified staff, but staff they can retain.

Following the presentation, the committee reviewed a draft of the amended version of S.1018 that enacts the “South Carolina Juvenile Justice Reform Act of 2020.” This special committee has held multiple meetings since June 2019 to develop a comprehensive plan to address challenges in the juvenile justice system. The committee intends to introduce the amended version of S.1018 when the General Assembly returns in January.

SINE DIE RESOLUTION

The General Assembly adopted Sine Die Resolution S.1194, which allows them to continue past the mandatory May 14 Sine Die deadline to complete unfinished business.

Each House will stand adjourned to meet at the call of the President Pro Tem of the Senate and the Speaker of the House of Representatives. The resolution further authorizes the General Assembly to meet again in statewide session on Tuesday, Sept. 15 at noon and continue in statewide session until Sept. 24 for the consideration of specific matters, including the annual General Appropriations Act.

Unless the session is otherwise adjourned Sine Die at an earlier date, the 2020 session of the General Assembly shall stand adjourned Sine Die not later than 11:59 p.m. on Sunday, Nov. 8, 2020.