By Julian Barton, Government Affairs Director
Home Builders Association of South Carolina

On Thursday, the General Assembly completed its two week mini-session (Sine Die II). For the second year in a row, the General Assembly has taken an extra month to complete its work, and for a second year in a row the state budget has not been completed until the last week of June. This year the General Assembly did not complete the state budget until June 28, so there was not enough time for Governor Haley to review the budget and issue her vetoes. As a result, the General Assembly will have to come back (Sine Die III) at some point after July 1 to consider the Governor’s vetoes. What has historically been a five-month legislative session is now turning into a six month plus session!

While the state budget (2012-13) of $6.7 billion was late in passing due to a Senate versus House fight over how to structure tax cuts, it did contain some important provisions for the home building industry:

  1. Tax Cut for Small Business – Income tax rates for small businesses (LLC, S corporations, & sole proprietorships) would be reduced from 5% to 3% resulting in a $20 million annual savings and $60 million over three years. 
  2. Dredge Charleston Harbor – Allocated $300 million to cover federal funds that may not be appropriated by Congress and the state’s funding portion to deepen the Charleston port by 5 feet to accommodate larger ships. This sends a strong signal that South Carolina is serious about expanding it harbor’s capabilities! 
  3. Funding for Public Schools – The new budget added $153 million to public school funding, which raised the per-student allocation by $132 to $2,012. Good schools are important to the home building industry. 
  4. Economic Development – Add $25 million to the Department of Commerce budget to attract new businesses to South Carolina and in turn grow our economy. A growing economy is good for the home building industry! 

Key Issues for Builders
Unemployment Insurance – Premium Relief Set: In 2010 and 2011 the General Assembly passed legislation to reform the state’s unemployment insurance law. The General Assembly did a number of things, like cutting the weeks on unemployment, to make the fund less expensive moving forward. In addition, the repayment of almost $1 billion in federal loans for the bankrupt Unemployed Insurance Fund began. Late in the session, the General Assembly decided to use state money to ease the sticker shock of higher UI premiums.

This year General Assembly also considered a request for the state to again subsidize the UI Fund with state appropriations. UI premiums will be lower in 2012, but the federal repayment will push them slightly higher. Both the SC House and the SC Senate inserted $77 million in their budgets to again subsidize unemployment insurance premiums.

Update: This week the General Assembly included $77 million for premium relief in the 2012-13 state’s budget. This will help hold unemployment insurance premiums near the level we paid last year.

State Immigration Law – Impacted by US Supreme Court Decision: Last week the U.S Supreme Court handed down its decision on the Arizona state immigration law. Much of the law, but not all, was struck down. Much of the South Carolina immigration law was based on the Arizona law. The South Carolina law is now before the U.S. Circuit Court. Many will remember that LLR last year had to suspend some provisions of the law because South Carolina’s current law (passed in 2009 & updated in 2011) had provisions in it that the U.S. Supreme Court had ruled unconstitutional. We would anticipate more suspensions of the SC law when the U.S. Circuit Court hands down its decision. However, it is best to continue to abide by state law until we get direction from the federal courts.

The state law now requires mandatory e-verify screening of new employees, but an employer who was inspected and didn’t have his employees e-verified would have 72 hours to bring them into compliance. LLR has assisted the employer in the e-verify process. Employers were required to implement the new rules on January 1, 2012. However, the 6 month phase in period ends this month. Going forward LLR will no longer be required by law to help business owners verify their new employees by e-verify. Copper Bill – Governor Signs: Thieves and drug addicts in search of quick cash have been causing millions of dollars worth of damage ripping out copper from plumbing and air-conditioning units at homes and businesses. Last year a bill (H. 3660) was passed to stop the scourge of copper and metal theft in the state. The bill set up a permit system for people who want to sell copper to recyclers. Permits were issued by the local sheriff’s office. The good news is that the new law has significantly reduced copper theft, the bad news is that it has caused some implementation issues. Late in the session compromise language was added to the auto recyclers bill (S. 1031).

Update: The copper bill (S. 1031) was signed into law early in June by Governor Haley. The bill cleans up a number of implementation issues. Under the bill passed, the ability to pay cash for aluminum cans was maintained, and the home builder’s new exemption was added to the law.

State Housing Authority – Receives New Member: On the last day of the session to consider appointments, the Governor’s latest appointee to the State Housing Authority Board, Mary Sieck was approved by the SC Senate. Her confirmation was unanimously approved, and she was appointed to a fill an unexpired term. Mary is from Lake Wylie, has a realtor’s license, works with an employee search company, and is married to Curtis Sieck – a builder in York County. She is an excellent addition to the SC State Housing Authority board.

Community Land Trust – Governor Signs Bill: A community land trust (CLT) is a non-profit community housing development organization that acquires and holds land in trust primarily for the use of affordable housing. This is done under long term real estate leases that allow it to ensure that improvements located on the property remain affordable to low income families. CLT’s help develop public– private collaborations to create opportunities for communities with limited resources to develop workforce housing. They support facilities and preserve land while promoting homeownership, historic preservation, local control and neighborhood revitalization.

Update: The bill (H. 3676) that was introduced to create community land trust enabling legislation passed the General Assembly in late May. The bill was signed into law by Governor Haley in early June.