The Palmetto Insider

As we predicted last year, the unemployment tax credit has been revived this year, as legislators look for ways to bolster their claims that they are doing something to address South Carolina’s among-the-worst-in-the-nation unemployment rate.

The credit has been added as an amendment to H 4478 – an omnibus economic development bill that is the brainchild of House Speaker Bobby Harrell and the following team of high-powered consultants: 

• April Allen – O’Neal Inc.
• Lewis Gossett – South Carolina Manufacturers Alliance
• Nick Kremydas – South Carolina Association of REALTORS
• Burnie Maybank – Nexsen Pruet, LLC; Former Director of the Department of Revenue
• Otis Rawl – South Carolina Chamber of Commerce
• George Wolfe – Nelson Mullins – Chairman, Economic Development Practice Group

H 4478 passed the Senate today on third reading. It seems likely the House will concur with the Senate version – which rejected the House’s proposal to eliminate the corporate income tax. So instead of broad-based tax reform, we are again left with targeted tax cuts and special interest subsidies.

So far, more than $1.5 billion in state-driven economic development policies have done nothing to bring prosperity to South Carolina. According to the latest numbers, South Carolina’s unemployment rate is 11.6 percent – 6^th highest in the nation.

Granted, there was a large decrease (0.6 percent) in the unemployment rate for April. But it’s not clear whether this is because of new job creation or because of discouraged workers dropping off of the rolls. South Carolina is tied with Michigan as being the worst state in which to find a job – with the average job search taking 19.4 weeks in 2009.

Last year, the credit appeared as standalone legislation: S 690. As we noted in our Best/Worst 2009:

This bill is a bad idea for two reasons: First, the bill arbitrarily provides an estimated $300 million tax cut to certain businesses (firms ready to hire for one reason or another) and workers over others. Second, the credit won’t work. It is too narrow (only applies to those actually collecting unemployment and excludes many small businesses) and too temporary (24 months).

But let’s get to the heart of the issue. If lawmakers really believe a targeted, temporary tax credit is going to create jobs, then wouldn’t a permanent, across-the-board tax cut do even more to stimulate the economy? Likewise, wouldn’t cutting South Carolina’s highest-in-the-nation manufacturing property tax be a better policy than the smattering of targeted tax credits laid out in H 4478?

The difference here is not one of philosophy. Everyone agrees tax cuts create jobs and grow the economy. But cutting taxes for everyone would give lawmakers less control over the political game of picking winners and losers. In the end, this is about power.

The power of the legislative leadership to raise money from lobbyists versus the power of the people and the free market. Power vs. Freedom. That’s what’s at stake here.

Elections reform is a commonly studied item at the federal and state level.

What’s on the agenda in Columbia? Check out the Policy Council report released today on elections legislation during the 2009-2010 session.

Susette Kelo, a homeowner in Connecticut, lost the now infamous Kelo v. New London court case in 2002 — where the city seized her house through eminent domain.

Typically, eminent domain is reserved for public use — building a public road for example. But New London was handing Kelo’s property (among others) to a private company, Pfizer, under the premise of a “public use.”

The city sold-out its citizens to appease one special interest group. But now, it seems the story has come to an unfortunate close.

Pfizer announced in November that it is pulling out of New London — all that remains on Kelo’s property is some grass and dirt.

Check out the Policy Council’s update on property rights legislation here in South Carolina.

The Department of Health and Environmental Control (DHEC) met in a private session last week to discuss legislation that could drastically change the agency. According to The State, many in observers are questioning why the meeting was held behind closed doors and wondered why DHEC is operating behind a veil of secrecy.

Such meetings point to the need for more transparency in state government. The Policy Council profiled transparency legislation likely to come up in the 2010 session in the The Best & Worst to Come: A Review of Transparency Policy for 2009-2010. While there are many worthwhile transparency initiatives likely to come up in 2010, what is most needed is consistent roll call voting.

Donuts, bottled water and laundry are just a few of the items U.S. House members from South Carolina spent taxpayer dollars on last quarter.

House Majority Whip James Clyburn expended more than $400 on laundry services and another $250 at a Virginia donut shop between the beginning of July and the end of September.

Also during the three-month period, Rep. Bob Inglis rang up $635 on bottled water and Rep. Joe Wilson paid out more than $14,000 for technology-related services.

These expenditures – culled from thousands of line items released by the Chief Administrative Officer of the House – represent a small portion of the $300 million spent last quarter by House offices.

But while most congressional office spending goes to salaries and routine office expenses, some items offer a window into the priorities of each congressional office, according to a report by Politico.com.

The line-by-line expenditures used to come only in bound green books, but at the request of House Speaker Nancy Pelosi the reports were also put online this quarter for the first time. Nearly 3,400 digitized pages were released last week.

Politico.com reported that lawmakers appear to have great flexibility on what qualifies as an office expense. Money is spent on everything from security services for district offices to thousands in mileage reimbursements for individuals’ cars, with taxpayers even footing the bill for leasing cars for some members, the publication reported.

Highlights from the S.C. congressional delegation:

• James Clyburn (D-Columbia), the House majority whip, spent a total of $18,004.95 on food and beverages during the quarter. By comparison, House minority whip Eric Cantor of Virginia spent nearly $23,000 on food and beverages during the same period. Clyburn listed expenses of $400,818.49 as majority whip and another $323,726.37 as a South Carolina representative.
• Bob Inglis (R-Greenville) listed $24,342.94 under travel, compared to $13,689.70 for Wilson, $11,065.81 for Rep. Henry Brown and $10,024.66 for Rep. John Spratt. Inglis’ total expenses for the quarter were $382,073.34.
• John Spratt (D-York) had the highest personnel costs of the six S.C. representatives at $265,657.42. Clyburn was next at $252,766.61 while Rep. Gresham Barrett spent the least on personnel during the three months at $188,036.93. In all, Spratt listed $321,777.72 in total expenses during the quarter.
• Joe Wilson (R-Lexington) listed $7,400 on web hosting and development. By comparison, Inglis spent $11,248 in that area; Barrett, $2,550; and Clyburn, $1,750. Brown and Spratt, meanwhile, reported having spent no money on web hosting and development. Wilson’s total expenditures for the period between July 1 and Sept. 30 were $306,093.24.
• Henry Brown (R-Hanahan) listed $14,400 in publications and reference material costs while Barrett’s outlay for the same was $282.73 and Inglis’ $49.95. Brown’s total expenses were $273,771.79.
• Gresham Barrett (R-Westminster) proved the most frugal of the S.C. delegation, ringing up $246,352.42 in total expenses during the three-month period. Included was $20,242.79 in travel costs during the quarter and nearly $1,600 in lodging costs.

In all, the six U.S. House members from South Carolina listed more than $2.3 million in expenses during the three-month period.

The South Carolina General Assembly recorded its votes on 532 out of 2,116 bills considered during the 2009 legislative session, according to the final vote count tracked by the Policy Council.  This total excludes votes on congratulatory resolutions that did not impact actual legislation.

74.9 percent of votes held by the General Assembly were taken via anonymous voice votes despite new rules adopted by the legislature in January requiring more accountability. The House recorded votes 31.2 percent of the time in 2009. The Senate recorded votes 15.6 percent of the time.

Both legislative bodies held more votes on the record this year than in 2008, but even with this improvement the South Carolina legislature remains among the nation’s worst with just 1 out of every 4 votes being recorded.