Statehouse Update February 10-12

Update: Adjustments were made to this summary to reflect developments that occurred during the week.

Reform is the word of the week at the Statehouse. Judicial reform is on the House floor, tax reform is on the floor in both chambers, and various committees and subcommittees will hear bills on regulatory reform, education reform, and reforming the Department of Transportation.

Taxes

Income tax H.4216 – Establishes two new tax brackets (1.99% up to $30,000 and 5.39% for anything above), eliminates all standard and itemized deductions, and adds a graduated deduction of up to $30,000 for those earning under $110,000. Also conditionally lowers the top marginal tax rate until it reaches 1.99%, then lowers the total tax rate until it reaches 0%. This bill is on the Senate floor.
Homestead exemption S.768 – Raises the homestead exemption to $150,000 and adds a five-year state residency requirement. Taxpayers currently exempt will be grandfathered in. This bill is on the Senate floor.
Small business tax cuts H.5006 – Provides tax exemptions on the first $10,000 of net depreciated value of business personal property owned by a small business. This bill also allows SC-based corporations to exclude up to $50 million in equity contributions from license tax calculations under specific conditions. This bill is on the House floor. Update: This bill has passed the House.
Unemployment tax code S.688 – Increases the period for calculating an employer’s unemployment insurance rate from 12 month to 20 months by 2028. This bill also increases funding to state unemployment insurance by creating a new “solvency surcharge” tax and removing the caps on several insurance penalties. A Senate Labor, Commerce, and Industry subcommittee is scheduled to hear this bill on Thursday, Feb. 12 at 9am. Update: This bill has advanced to the full Senate LCI Committee.
Boat tax exemption S.317 – Provides a simple property tax exemption on 50% of a boat’s fair market value. A Senate Finance subcommittee is scheduled to hear this bill on Thursday, Feb. 12 immediately after Senate adjourns.
Boat tax package H.3858 – Exempts 42.8571% of the fair market value of a boat from property tax, which effectively lowers the current 10.5% assessment ratio to 6%. This bill also removes the requirement to title an outboard boat motor, raises the boat title fee from $10 to $20, and allows an auditor to combine a boat and outboard motor on a property tax notice. A Senate Finance subcommittee is scheduled to hear this bill on Thursday, Feb. 12 immediately after Senate adjourns. Update: This bill has advanced to the full Senate Finance Committee as amended.

Judicial reform

Judicial selection reform H.4755 – Authorizes the Governor to appoint all 12 members of the Judicial Merit Selection Commission (JMSC), eight of which must be members of the SC Bar in good standing, and no more than four can be law enforcement professionals. This bill also prohibits current lawmakers from serving on the JMSC, and former lawmakers must wait two years after leaving office. This bill is on the House floor. Update: This bill has passed the House.
Magistrate reform H.3530 – Requires the JMSC to review magistrate candidates. Also expands magistrate jurisdiction to civil cases up to $25,000 and criminal offenses punishable by up to $25,000 in fines or one year of imprisonment, and all future magistrate appointees must be attorneys in good standing with the South Carolina Bar. Finally, this bill imposes a 14-day limit on magistrate holdover service before the Governor must appoint a temporary replacement. Last week, the House Judiciary Committee advanced this bill to the House floor.

Education

Grading floors ban H.5073 – Prevents schools from assigning a student a minimum grade that exceeds his or her actual achieved score. Also establishes a task force of education officials to evaluate and propose changes to the Uniform Grading Policy. A House Education and Public Works subcommittee is scheduled to hear this bill on Tuesday, Feb. 10 at 11am. Update: This bill has advanced to the full House Education and Public Works Committee.
School board ethics S.70 – Requires local school boards to adopt a code of ethics and training programs created by the State Board of Education. The full Senate Education Committee is scheduled to hear this bill on Wednesday, Feb. 11 at 10am. Update: This bill has advanced to the Senate floor.
Private providers in school H.3974 – Parents can request authorization for a private medical provider to perform necessary services for their child at a public school during school hours. Local school districts are required to consider requests on a case-by-case basis. The State Board of Education will develop parameters for private providers that are approved to operate during the school day. The Senate Education Committee is scheduled to hear this bill on Wednesday, Feb. 11 at 10am. Update: This bill has advanced to the Senate floor.

Regulation

Roadside market regulatory exemption H.5097 – Creates new regulatory exemptions around state inspections and permitting for farmers who sell their farm products directly to consumers at individual markets. These exemptions do not apply to famers markets. A House Agriculture, Natural Resources, and Environmental Affairs subcommittee is scheduled to hear this bill on Thursday, February 12 at 9am. Update: This bill has advanced to the full House Agriculture, Natural Resources, and Environmental Affairs Committee.
Small business regulatory freedom H.3021 – For every new regulation introduced, two existing regulations must be removed, aiming to reduce regulatory requirements by 25%, and changes the regulatory review process to prevent major regulations from persisting without legislative approval. Also ends the practice of judicial deference. Click here to read the Policy Council's full bill analysis.

Department of Transportation

H.5071 – Transfers DOT leadership from the seven-member Commission to the Transportation Secretary, who will be appointed by the Governor with Senate approval. The Commission is retained largely in an advisory capacity, but they still have some power over contracts and bond requests. Also creates a Coordinating Council for Transportation and Mobility to enhance planning, mandating the transfer of nonessential roads to local entities with a new System Realignment Fund, introducing advanced contracting methods like phased design-build, and authorizing public-private partnerships and reciprocal agreements. The bill boosts “C” funds for counties with updated committee oversight and bonding options, increases alternative fuel road use fees directed to the State Highway Fund, imposes a new tax on public electric vehicle charging, refines toll imposition conditions, and expands procurement exemptions. A House Ways and Means legislative subcommittee will hear this bill Wednesday, Feb. 11 at 9am.
S.831 – Creates a Coordinating Council for Transportation and Mobility, clarifies internal auditor qualifications, mandates DOT's long-range plan, and defines deputy secretaries' duties. It authorizes public-private partnerships, reciprocal toll agreements, conditional tolls, state immunity waivers, and municipal costs for delays. The bill transfers non-essential roads, imposes development congestion fees, adopts phased design-build and construction manager methods, and updates turnpike funding, studies, bonds (non-state debt), and issuance. Revenue includes higher EV/hydrogen fees to the Highway Fund, public charging taxes, enhanced county "C" funds oversight, procurement exemption for DOT information technology, and designating the Transportation Secretary to the Infrastructure Bank board. A Senate Transportation subcommittee is scheduled to hear this bill on Thursday, Feb. 12 at 9am.

Budget hearings

As budget subcommittees are wrapping up in the House, they are just getting started on the Senate side. Here are the House and Senate budget hearings coming up this week:

House of Representatives

Constitutional Subcommittee – Tuesday, Feb. 10 at 10am; hearing from the Governor’s Office and Department of Administration, followed by a general discussion on provisos.
Public Education and Special Schools Subcommittee – Tuesday, Feb. 10 one hour after the House adjourns; hearing from the Charter Institute at Erskine.
Provisos Subcommittee – Thursday, Feb. 12 immediately after the House adjourns; holding a hearing on budget provisos.

Senate

Natural Resources & Economic Development Subcommittee – Tuesday, Feb. 10 at 9:30am; hearing from the Department of Insurance and Jobs-Economic Development Authority.
Constitutional Subcommittee – Tuesday, Feb. 10 one hour after the Senate adjourns; hearing from the Secretary of State, State Ethics Commission, Revenue and Fiscal Affairs, and State Fiscal Accountability Authority.
Criminal Justice Subcommittee – Wednesday, Feb. 11 at 8:45am; hearing from SLED, the Department of Probation, Parole & Pardon Services, and Department of Juvenile Justice.
K-12 Education Subcommittee – Wednesday, Feb. 11 at 9am; hearing from SC School for the Deaf & Blind, State Museum, and Education Oversight Committee.
Transportation & Regulatory Subcommittee – Wednesday, Feb. 11 at 12pm; hearing from the Department of Transportation and Department of Employment and Workforce.
Higher Education Subcommittee – Thursday, Feb. 12 at 10am; hearing from SC State University and Lander University.
Natural Resources & Economic Development Subcommittee – Thursday, Feb. 12 immediately after Senate adjourns; hearing from the Department of Labor, Licensing & Regulation.