Budget, Tax Cuts and . . . no Reform

The House adjourned sine die (without days) this week, blessedly ending a long session.

It also reminds House members that we were in session on the final Thursday of June when the real sine die is supposed to be the first Thursday in June. But, as has happened nine times over the past decade, the Senate killed efforts to shorten the legislative session. But I digress.

The biggest news of the week was that the House and Senate budget conferees reached compromise on a state budget this week. This avoided a July 1 government shutdown and brought to an end weeks of bluster and delay while the House worked for tax relief and the Senate worked to spend every last tax dollar on special pet projects.

There was quick agreement on most of the major issues, but the sticking point was one issue – using some of the $700 million in new money to provide tax relief to small businesses and the self employed hit hard by the recession. The House wants to use $60 million to cut small business income taxes from 5 percent to 3 percent and $77 million to relieve businesses of new, higher unemployment insurance rates. The Senate resisted the small business cut.

After intense pressure from you, the Senate agreed to make the small business tax cut permanent law, and Governor Haley signed the legislation ensuring the tax cut on Thursday.

We found common ground on other key issues such as fully funding the deepening of the Port of Charleston’s harbor, providing teachers and law enforcement officers pay raises, and coming in below the House’s proposed spending cap.  We believe that with South Carolina’s unemployment rate climbing back over 9 percent, it was not too much to ask that we devote some of this new revenue to tax relief to relieve some of the burdens on our state’s smallest businesses.

As the final weeks of the session ticked away, the latest casualty in the Senate’s decades-long war on government reform was the Department of Administration bill. The House approved a House-Senate compromise to create a Department of Administration – legislation the House has approved four times in five years. This is the closest this legislation has ever gotten to passage.

While the House version of the bill was significantly stronger, the House believed it was important to move forward and get what we could out of this legislation. We have worked for a long time to ensure the executive branch actually runs the administration of the state. The highlights of the Department of Administration bill included:

  • Completely eliminating the Budget and Control Board,
  • Cutting the size of government by slashing approximately 10 percent of the full-time equivalent positions (FTEs) at the old Budget and Control Board, and
  • Giving the Governor’s Office more executive authority by transferring approximately 90 percent of the current Board budget and 82 percent of the current FTEs into the new Department of Administration.

 One end-of-session victory was the passage of retirement system reform. Making our state retirement system solvent is one of the biggest issues we have before us this year. 

We made a promise to state employees and many of them understand we must make major changes to the system to keep it solvent. The House’s goal is to save the retirement system so we can keep the promise and so the system doesn’t fleece the taxpayers in the future. This is a plan that allows the state to fulfill promises to current employees and ensure a retirement system for the future. Employees are going to have to pay more, and new employees won’t have some of the same retirement options, but everybody needs to sacrifice to shore up the system.

We’re not pleased with the final version of the Retirement System reform, but this will be a major step toward ensuring the system remains solvent.

The Retirement System reform and the Department of Administration were two of the biggest Republican agenda items for 2012. While we are not happy the Department of Administration died yet again this year, we will bring it up again in 2013. You can always track our major accomplishments at http://www.schousegop.com/record.

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