Roads, records, retirement

​New laws bring changes

The South Carolina General Assembly addressed several bills in the 2017 legislative session that will have a significant impact on cities and towns. New laws and pending bills pertain to business licensing, open records, road funding, the state pension system and other areas.

Business licensing
Business licensing legislation took center stage in the 2017 legislative session, following two years of conversations between business leaders and municipal officials interested in standardizing and streamlining business license practices across cities and towns. The dynamics of the debate changed when House members introduced two bills that moved the focus from standardization to drastically cutting city revenues and creating tax inequities for small businesses due to special tax exemptions.

City officials were key in communicating the importance of standardizing the business license process without decreasing local revenues. These bills were recommitted to the House Labor, Commerce and Industry Committee on March 1 for further work.

The S.C. Freedom of Information Act
Gov. Henry McMaster signed a bill in May that makes substantial changes to the Freedom of Information Act, benefiting the public and open government.

A public body now has 10 days, rather than the previous 15, to determine if it can respond to a FOIA request for records less than 24 months old. However, the new law extends the number of days from 15 to 20 that public bodies have to make this determination for records that are more than 24 months old.

A public body must now produce requested records within 30 days following its final determination about the availability of the records when they are less than two years old. They have 35 days to produce records older than two years. The requesting party and public body can agree in writing to further timeline extensions.

Public bodies can now deny a FOIA request that they believe is overly broad, unduly burdensome, vague, repetitive or otherwise improper. These and any other disputed requests would go to a circuit court for an order.

Road funding
The new road funding bill that passed in May raises the gas tax by a total of 12 cents by 2022 to generate more than $350 million in new money for repair and maintenance of state roads.

The new law also increases funding for the C Fund by about half over the next six years, eventually reaching approximately $115 million. The C Fund is a partnership between all counties and the state Department of Transportation to fund improvements. This means cities and towns will have $40 million in new money they can tap from their County Transportation Committees for projects on state roads within their boundaries.

The General Assembly also created a menu of new tax credits to help state residents offset the additional tax they will pay at the pump. The tax policy change that impacts cities and towns is the reduction in the property tax assessment ratio for manufacturers. The manufacturing property tax assessment ratio will drop from 10.5 percent to 9 percent, but the General Assembly has set aside up to $85 million to offset the potential decrease in property tax revenue to cities, counties and schools. 

The Revenue and Fiscal Affairs Office estimates it will take at least 10 years before the offset reaches $85 million. And if it does, a circuit breaker provision in the law will not allow the potential loss of property tax revenue to exceed $85 million. Once the total reduction in manufacturing property tax reaches $85 million, then the percentage of the reduction to property owners is proportionately decreased.

Pension system
The debate over fixing the state pension system bled into the state budget debate when House and Senate members disagreed about how to distribute state funding to cover some of the cost of the increase in employer contributions to the pension fund.

The pension reform bill pays down the unfunded liability of the state retirement system and reduces the assumed annual rate of return from 7.5 percent to 7.25 percent. The new law also increases the employer contribution rate for the S.C. Retirement System and Police Officers Retirement System by 2 percent effective July 1, 2017. The employer contribution rate increases another 1 percent each year from 2018 through 2023, ultimately producing an employer rate of 18.56 percent for SCRS and 21.24 percent for PORS. It caps the employee contribution rate at 9 percent, effective July 1.

The state budget funds 1 percent of the 2 percent increase in the SCRS and PORS employer contribution rates. This recurring appropriation goes directly to the Public Employee Benefit Authority, and the 1 percent is credited toward the employer's liability owed. The funding reduces the employer contribution rate for SCRS from 13.56 percent to 12.56 percent and PORS from 16.24 percent to 15.24 percent.

Municipal elections
H3150 removes the authority to declare a winner without conducting a special or general municipal election when only one candidate registers to run for office. This change is effective for filing periods on or after January 1, 2018. The filing period changes from 10 days to eight for partisan special elections to fill a vacant seat. The date for these special elections moves from the 18th Tuesday following the vacancy to the 20th Tuesday following the vacancy. These changes are effective for filing periods on or after May 4, 2017.

Read the year-end legislative report to get details on all of the bills passed in 2017.