Watch the General Assembly long enough and you’re sure to hear the popular complaint about how South Carolina lawmakers are underpaid. Rep. Bruce Bannister (R-Greenville) recently proposed an amendment to a budget bill to provide a substantial pay increase to officials in all three branches of state government. To support his amendment, Rep. Bannister cited a 2013 study that found South Carolina lawmakers earned less than the regional or national average for lawmakers, although the study omitted some forms of payment that would actually push South Carolina legislators above the regional average. In an unsurprising twist, The Nerve found last year that this study was actually commissioned by lawmakers and paid for with public money.
But even if lawmakers were forced to concede this study’s failings, lawmakers would no doubt keep complaining that they are underpaid. That’s because – as lawmakers frequently remind us – they are salaried as “part-time” lawmakers but the job itself is full-time.
There are several problems with this argument. First, the compensation received by lawmakers is not inconsistent with that received by many full-time employees. Second, to the extent that lawmakers are full-time and not part-time employees, the problem is entirely of their own making. Legislators have pushed bills increasing their responsibilities, ignored other bills and laws that would streamline their work, and wasted countless time on empty gestures, all of which have had the effect of lengthening the time they spend on “state business.” As with most issues debated at the State House, considering a pay raise because the legislature has gone from part-time to supposedly full-time over the years ignores the underlying problem – that lawmakers have created the problem in the first place.
Every year lawmakers begin session by ignoring the law requiring the Senate Finance Committee and House Ways and Means Committee sit in joint open meetings to consider the governor’s budget. Instead of following the law, lawmakers largely ignore the governor’s spending plan and begin a long painstaking process of crafting a different budget in each chamber (beginning with the Ways and Means and Finance Committees) which must then be reconciled in a conference committee and passed by both chambers again.
Simply following the law would not only make the process more transparent for citizens; it could vastly reduce the amount of time spent crafting separate budgets and then debating their differences. This time reduction would be achieved by making each chamber’s priorities clear to the other at the outset, and by eliminating the needlessly duplicative process of having representatives of state agencies testify separately to each committee (and even subcommittees) about their budget needs. Following the open budget hearings (which could include agency testimony), the amended governor’s budget could be introduced in the House where it would already be far ahead of where it would be at the same time under the current budget process.
The current extra-legal process has made it all but impossible to finish he budget within a reasonable time frame, sometimes even necessitating continued budget meetings long after the end of the formal session and even after the end of the fiscal year.
The 2015 legislative year is now in its second week of extended session, and we can expect at least one more week for the legislature to address the governor’s vetoes.
But what exactly have lawmakers done to make their jobs nearly full-time?
South Carolina state government is dominated by its state government. This is manifest in the involvement of the legislature in the other branches of government.
On the executive side, members of the legislature make more than more than 420 appointments to executive branch boards and commissions. Some lawmakers also serve on commissions with executive functions. Two of the most significant are the Budget and Control Board (now the State Fiscal Accountability Authority) – run by a five-member board that includes two legislators – and the State Transportation Infrastructure Bank (STIB), which provides loans to local governments for transportation projects (members include the Senate President Pro Tem). Lawmakers have even passed laws that specifically exempt them from the constitution’s prohibitions on dual office holding in order to allow lawmakers to continue performing executive functions and serving on state boards.
Lawmakers recently made this executive meddling problem far worse, and at the same time vastly expanded their own responsibilities. The much-lauded Department of Administration/restructuring bill ( Act 121), which reshuffled agencies rather than genuinely reestablishing separation of powers, increased legislative oversight of the executive branch by requiring House and Senate Committees to conduct oversight studies and investigations into every executive body within their jurisdiction every seven years. In other words, lawmakers were so keen on preserving their own power that they inadvertently created responsibilities for themselves that they were totally incapable of fulfilling.
On the judicial side, South Carolina is one of only two states where members of the legislature both screen and elect judges. This system, in addition to taking up long hours of legislative time, increases the possibility of biased judges who may be inclined to favor the legislators who elected them.
Over the course of this year’s regular legislative session lawmakers passed 124 bills and/or joint resolutions. Over the same period they passed 830 resolutions of congratulations, honor, sympathy, and memorialization. Nor is this the first year when lawmakers have introduced and passed an inordinate number of mostly meaningless resolutions. Introducing a plethora of resolutions has become common practice for the legislature. The Nerve reported on this trend in 2012 and 2013.
Most resolutions are not only frivolous but include introductions or speeches about the subject that waste legislative time and thus taxpayer money. These resolutions and accompanying introductions are one reason why South Carolina has the fourteenth longest legislative session in the country.
All of the issues listed above contribute to increased responsibilities and/or time spent by lawmakers at the capitol. Yet lawmakers have shown little desire for actual reform.
Rather than attempting to legally reduce the oversight of the legislature over the executive branch the Senate attempted this year to push the legislative oversight required by the restructuring bill into the hands of the Senate Clerk’s Office. Senators want authority over executive bodies, but not the work that comes with it.
As for the judiciary, the 2015 legislative year saw bills introduced in both the House and Senate that would give the governor authority to nominate judges. Most lawmakers apparently had little interest in such legislation; the bills never even left committee.
The House and Senate also both introduced bills that would legally mandate a shorter legislative session (another component of SCPC’s reform agenda). The House bill crossed over to the Senate before faltering, but the Senate bills never even made it past committee.
If lawmakers believe they aren’t being properly compensated for the amount of work they do, they can and should reduce their workload. Reducing the amount of time members of the legislature spend on executive or outright unnecessary matters would free up time for lawmakers to use on private ventures. Doing so would also save taxpayer money and, even more importantly, help to restore transparency and the proper separation of powers.
Like this analysis? Sign up for our weekly
e-bulletin and get all material sent to your in-box.
H.4330 – Parental Right to Refuse Assessments Act – would give parents the power to excuse their children from the many K-12 standardized tests administered in this state. The bill explicitly states that parents “have the fundamental right to control the education of their children.” Presently, the public education system forces taxpayers to pay for a product that is mediocre and simply unreflective of parents’ wishes for their children.
The bill would allow parents to make education decisions independent of the state’s wishes without penalty. The bill would require local schools to adopt written policies to include alternatives for meeting graduation requirements and grade promotion requirements in lieu of testing.]]>
The Quality Hospice Programs Act, introduced in H.4327 as only a slight deviation from the Hospice Licensure Act, expresses limitations and regulations with regards to ‘multiple location’ hospice facilities. A multiple location hospice facility is defined as an additional site from which a parent hospice organization operates. The bill would require an additional license provided by DHEC in order to operate multiple locations. Any additional facility would need to be located in a county adjacent to the county in which the parent organization is located. The reasoning for this geographical restriction is to ensure that the parent organization is capable of distributing high quality administration, supervision, and service to its secondary facilities.
The problem here is that private companies, including hospice care facilities, should not be bound by law to operate in select locations for reasons that lawmakers feel are necessary. Artificial restrictions on the expansion of on organizations who have already proven themselves capable of delivering care may have the effect of denying access to hospice care to those in need. One of the underlying flaws in our economy is that it is not guided by free-market policies. Take some time to read our 8-point reform agenda for solutions to this problem.]]>
The House passed a supplemental appropriations bill on Wednesday determining what to do with a surplus of $400 million divided between recurring and non-recurring revenue. Some of the $415 million was pre-committed to education, but lawmakers have discretion over roughly $300 million of the surplus.
Some notable expenditures in the House supplemental appropriations bill include:
The Senate Finance Committee approved a different version of the bill Wednesday, which the full Senate approved on Thursday. The Senate version of the legislation increases the share of the surplus going to CTCs to $216 million. The Senate achieved this increase by cutting other proposed expenditures, including child support enforcement at the Department of Social Services, medical assistance payment case services at the Department of Health and Human Services, appropriations to the homestead exemption fund, and indigent defense.
The bill will be debated over the next several days in a conference committee alongside other budget bills.
On road funding, bear in mind: putting more money into the same unaccountable and wasteful transportation governance system without reform is unlikely to yield any significant or lasting improvements to South Carolina roads.
An amended version of the capital reserve fund passed the House on Wednesday. The most recent version of the legislation passed by the House appropriated $127 million, in contrast to the $84 million appropriated by the most recent Senate version of the bill.
Each version of the legislation appropriates a large amount of funds to higher education, but the House version focuses on this area to a greater degree than the Senate. The House legislation restores financing to a number of higher education projects for which the Senate only appropriated $1, including:
Despite the constant claims of poverty by state institutions of higher education, South Carolina’s principal state universities are doing just fine financially. Nor does increasing university funding seem to improve educational outcomes. In any case, many lawmakers seem determined to give the universities all or most of what their lobbyists ask for.
With different versions having passed both chambers, the CRF bill is now in conference committee.
Also on Wednesday, the House passed a new sine die resolution which would permit the General Assembly to debate H.3579 during the additional session days. The House and Senate were already operating under a separate sine die resolution that restricted the matters lawmakers could debate.
The Senate adjourned Thursday under the terms of the original sine die resolution, with Senate leaders expressing little interest in considering the House resolution or debating the gas tax prior to final passage of all budget bills. However, there is no guarantee senators won’t return to this resolution or the gas tax when they return to approve conference committee reports on the multiple appropriations bills and others. Leaders in the Senate alluded to a return to Columbia next week, assuming all goes according to plan in conference committee.
It would be irresponsible of the legislature to extend session even further – increasing the taxpayer cost of the already too-lengthy session – to debate what is sure to be the largest tax increase in state history. Since the Senate has already voted put the gas tax bill on special order, the bill will be among the first debates the chamber takes up in 2016. That should settle it until next year.
The House approved the conference version of the Uber legislation by a vote of 96 to 2, and the Senate approved the conference report by a vote of 39 to 0.
The most recent version of the Uber legislation (the conference report) has been made available on the State House website; it combines almost all the negative provisions from the bill’s previous versions.
In general, the bill is a sad missed opportunity. Rather than deregulating the entire passenger carrying motor vehicle industry (including ride-sharing companies and their competitors, traditional taxis) legislators have opted to impose numerous burdensome regulations on ride-sharing companies, too, leaving them just slightly less regulated than taxis. The conference report on the Uber legislation continues this approach.
More detailed analysis by the Policy Council on the ridesharing issue and its appropriate policy solution can be found here.
Subscribe to the Policy Council’s weekly e-bulletin by clicking here.]]>
According to companion bills H.4326 and S.868, pipelines for transporting petroleum products are “vital to the welfare of the people of this State” and, thus, the companies that own and operate them should be granted the power of eminent domain. For an analysis of our government’s abuse of eminent domain power, read our research here.
These bills define a pipeline as a common carrier in interstate or intrastate commerce for the transportation of products in or through this State. It is critical to note that Article 1, Section 13 of the South Carolina Constitution states that private property must not be condemned by eminent domain for the purpose or benefit of economic development, unless the condemnation is for public use. Is it reasonable to believe that allowing private pipeline companies to take your land is all for public good?]]>
S.861 would require pawnbrokers seeking a Certificate of Authority to conduct national criminal background checks for all owners, partners, members, officers, directors, and future employees. Current law requires only the certificate applicant to submit a background check. The applicant would be responsible for carrying out the background checks and paying the costs for each. Additionally, a Certificate of Authority would be issued only after a SLED administrator determines that the applicant and his or her employees “command the confidence of the community and warrant the belief that the business may be operated honestly.” The bill goes on to place specific restrictions on the hiring of convicted felons.
Protecting individual freedoms means thwarting these laws designed to promote “safety.” State officials have neither the right to know everything about you nor the right to steer any industry.]]>
H.4304 and H.4305 would impose statewide property taxes on all taxable property, and personal motor vehicles respectively. The General Assembly would determine the millage rate (tax rate) for the statewide property tax each year during the budget process. Each of the bills would prohibit political subdivisions (counties, cities, etc.) from imposing property tax on property subject to property tax on the state level. All of the money raise by the proposed state property tax would be dedicated to K-12 education.
These bills represent yet another attempt to equalize K-12 funding levels across all South Carolina school districts, in the belief that this will equalize educational outcomes. They may have been drafted in response to a recent state Supreme Court decision that found the state was failing to meets its obligation to provide a “minimally adequate education” to students.
But as the Policy Council has demonstrated before (and highlighted work with the same findings), simply increasing funding does not guarantee better educational outcomes. A far better policy for improving educational outcomes would be a program of universal school choice through either vouchers or tax credit scholarships. Unlike increasing the subsidies to government run schools, school choice programs have been shown to improve educational achievement and save taxpayer money.
South Carolina educational outcomes can be improved without increasing taxes on citizens (which a statewide property tax would no doubt do for many) and without sending more revenue to a bloated state government. A statewide property tax for education would be all pain for no gain.]]>
H.4325 would require the Public Service Commission (PSC) to adopt regulations that enable and encourage utilities to negotiate with and enter into “provisional and conditional power purchase agreements” with offshore wind energy developers. The PSC would also be required to hold biennial open progress reporting meetings on offshore wind energy development in South Carolina, for 2 years after this bill becomes law.
As the Policy Council wrote of a similar bill (S.1011) last year, “the state already subsidizes non-renewable energy sources such as nuclear energy through advanced cost recovery, and to a lesser degree, subsidizes renewable energy through tax favors and grants to research facilities. Unsurprisingly, neither of these policies has generated very favorable results for taxpayers or South Carolina’s economy.” Lawmakers should be looking to lessen the state’s detrimental involvement in the energy market, not increase it.]]>
Lawmakers have introduced a number of bills this session designed to clear up the legality of ride-sharing services in South Carolina, and all of them have accepted the premise that the industry needs state regulation rather than freedom from it. Rather than getting rid of existing and demonstrably counterproductive regulations, lawmakers have created new ones. For those who don’t know, ride-sharing services are somewhat similar to a taxi service, except ride-sharing drivers are summoned via a smartphone app instead of a street hail (waving down a cab) or call to a central dispatcher. Some of the largest ride-sharing companies include: Uber, Lyft, and Sidecar.
The ride-sharing company Uber has proven popular with consumers in South Carolina owing to its ease of use (summoning and paying drivers via a smartphone app) and quality of service. That drivers and riders can rate each other using the smartphone app has also contributed to the company’s popularity.
But while consumers may love it, state regulators and existing taxi companies don’t. Both take issue with the fact that Uber began operating in South Carolina without receiving or even applying for the state certification required for all taxi companies to legally operate.
Under current law “motor vehicle carriers” who wish to transport passengers for profit must comply with both basic safety standards and apply for and receive a state certificate of either “public convenience or necessity” or a certificate of “fit willing and able.” Taxi companies – and as critics contend ride-sharing companies – must receive a class C certificate of public convenience and necessity in order to legally operate.
Application for a class C certificate must be made to the Public Service Commission (PSC) and entails submitting the proposed area of service for the motor vehicle carrier, as well as the proposed rates the carrier will charge. Individuals or business likely to be affected by the issuance of the certificate (existing cab companies) are free to make objections to the PSC concerning the application. The PSC can reject the application on the basis of either failure to meet legal requirements, or simply by determining that the public is already being served in the new company’s proposed area of service. In the event that an application is approved, the certificate will be issued by the Office of Regulatory Staff (ORS).
Once certified, a motor vehicle carrier must pay regular assessments to support the regulatory activities of the PSC and ORS. The carrier must also get rates/fares approved by the PSC.
Certification laws serve no useful purpose. Why? Because it’s impossible for a government agency to determine the appropriate level of production/service in a private industry. The free market – that is, a marketplace of paying consumers – is alone capable of determining how many competitors an industry can bear, and what price levels are feasible. In fact, as the Policy Council has highlighted elsewhere, economic research finding that occupational licensing laws do little to improve quality of service, and they often result in increased prices (see page 17 of the PDF) in licensed industries.
Certification laws do, however, serve one interest group: already certified businesses. Certified companies enjoy state protection from competition, which allows them to behave like monopolists by charging higher prices while providing services at lower levels of quality.
The solution to the ride-sharing issue in South Carolina is therefore obvious. Legislators simply need to cut the Gordian Knot of regulation and end certification requirements for passenger transporting motor vehicle carriers. Removing certification requirements would benefit both consumers, by increasing levels of service and lowering prices, and entrepreneurs, by making it easier for them to compete. Doing away with class C certificates of public convenience and necessity would also create a level playing field for competition between taxis and ride-sharing services.
Instead, lawmakers have attempted to address the ride-sharing issue by creating an entirely new class of regulation for ride-sharing companies, which they now term “transportation network companies,” or TNCs. These proposed regulations would force ride-sharing companies to receive from the ORS a certificate specific to them. The proposed regulations also impose a number of other costly mandates on ride-sharing companies: requiring them to maintain trip records for years (for the benefit of regulators), requiring them to offer fare estimates and electronic receipts, and so on. The most recent version of the legislation would also require TNCs to pay annual fees to finance their regulators, and to pay local assessment fees to counties and municipalities based on where all of their ride-sharing trips originated.
And, of course, lawmakers have not considered reforming the convoluted and unaccountable system – the PSC and ORS – that imposes onerous and counterproductive regulations on the industry. Like virtually every other public body that has any significant power in South Carolina, these bodies are controlled by a few legislative leaders. While the Director of the ORS is appointed by the governor, members of the PSC are elected by the legislature; and before any individual is eligible to serve as a PSC member or ORS Director, that person must first be nominated by an entity known as the Public Utilities Review Committee (PURC). Of the ten PURC members, nine owe their positions to either the House Speaker or Senate Judiciary Chairman. Allowing this degree of control by the legislature in general, and to two lawmakers in particular, prevents accountability while fostering favoritism, cronyism, and outright corruption.
The solutions lawmakers have proposed to the ride-sharing dilemma amount to the worst of both worlds. Rather than removing unhelpful restrictions from taxi companies and reforming the bodies that produce harmful regulatory policies in the first place, the legislature would impose these same restrictions on ride-sharing firms and subject them to the same regulatory bodies. The only notable regulatory differences between the two industries would be an easier certification application process for ride-sharing firms and more freedom to determine their fares. In short, legislators wish to impose most of the same regulations that stifle the taxi industry on the ride-sharing industry, too, while excluding just enough of those regulations to give a slight advantage to ride-sharing companies over traditional taxi companies.
The only benefit to the bills proposed by the legislature so far, then, is that they legalize ride-sharing in South Carolina. That’s hardly a triumph for economic freedom. But they accomplish even that lowly goal by forcing ride-sharing companies to comply with outdated and detrimental regulations.
A legislative conference committee is expected to meet shortly to iron out the differences between the House and Senate versions of ride-sharing legislation, but the opportunity has been missed already. State policymakers will only unleash the beneficial forces of competition for consumers and entrepreneurs – while still providing for basic safety standards in the taxi and ride-sharing industries – when they undertake to deregulate the market. Until then, politicians and bureaucrats will continue to decide who merits government-backed advantages and who doesn’t.
For a more detailed analysis of the ride-sharing issue, including the benefits of competition and specific laws that need to be reformed, click here.
And to sign up for our weekly e-bulletin, which will bring you all our updates and analyses, click here.]]>
S.849 seeks to regulate the duties of pharmacy benefit managers (PBMs). PBMs are defined as entities who contract with pharmacies on behalf of insurers, third party administrators or the South Carolina Public Employee Benefit Authority to: process claims for prescription drugs, pay pharmacies for prescription drugs, or negotiate rebates with manufacturers for drugs.
PBMs would be required to maintain a maximum allowable cost (a list which gives the maximum amount they will reimburse a pharmacist for a generic drug) and make that list and the sources that determine its makeup available to every pharmacist who is in the network of the entity on whose behalf the benefit manager is negotiating. PBMs would also have to establish a process by which contracted pharmacies can appeal a provider’s reimbursement rate for a drug.
This is another unwarranted regulatory intrusion into the healthcare market. If individual pharmacies wish to only work with PBMs who behave in the ways outlined in this bill they are currently free to do so. But legally requiring PBMs to make available information and appeals processes to pharmacies is an attempt to shift the balance of power between PBMs and pharmacies by government fiat. The state should not be favoring either industry.]]>