SC Legislative Update – Jan. 16th

State of Haley

Governor Nikki Haley delivered her final State of the State address last week in the chamber of the House of Representatives.  Her address was shorter, more reflective and more positive than in the past few years.  She is due to leave the Governor’s Mansion to become the Ambassador to the United Nations, upon her confirmation from the United States Senate.  Her ambassadorship comes at just the right time.

Haley never received the affection and loyalty from legislators that former governors Campbell or Riley received.  She used more of the Sanford model of attacking (even though the governor and the legislature are both Republican) rather than working with the legislature.  Last summer, Haley interjected herself in a few Republican primary races trying to defeat incumbent members.   For the most part, it did not work and those members that were not defeated, were laying in wait.  Many vowed to make certain that her initiatives and legislative interests would fall flat.  For her, it could have been a very long two years to remain as governor.

Still, the Governor leaves on a high note.  When Haley took office in 2011, at the height of the recession, unemployment was at 11.1%.  Unemployment is now at 4.4%.  New job opportunities have been brought to all 46 counties.  South Carolina’s agencies are all operating with balanced budgets and the state overall is in better fiscal shape.  We wish the best of luck to Governor Haley in her new role.  She is sure to make South Carolina proud!

This Week

Even though Governor Haley gave her last State of the State Address, the focus this week is about the “new” governor and what his position on various issues will be. There are high hopes the legislature will work well with Lt. Governor Henry McMaster.  McMaster will have decisions that need to be made on day one.  The state’s roads continue to crumble and the funding shortfall on the state retirement system continues to increase.  Both Governor’s Sanford and Haley have “kicked the can” on these two to the point of crisis.  Soon to be Governor McMaster is going to have to step up.

There is truly only one way to pay for highway maintenance and improvements — a tax on fuels.  Forty seven other states have higher gasoline taxes.  Gas taxes in Georgia, Florida and North Carolina are double South Carolina’s tax.  Drive times from Charleston to Greenville and Florence to Savannah are increasing every year.  Governors that fly in King Air and ride in black Suburbans with blue lights on, don’t notice it.  And even if you can get from one place to the next you will need new shock absorbers when you arrive!

According the State Treasure, the state retirement plan is $24 billion in the whole.  There is no doubt that changes have to be made.  Either employees are going to have to contribute more (already one of the highest in the nation) or the the state general fund is going to have to contribute more.  Neither of these options is particularly politically attractive.  For more recent state employees, the defined pension plan may no longer be an option.

The incoming Governor will determine whether this is going to be a busy and fruitful session or whether the “can” will be kicked down an even bumpier road.