The regulation comes from an International Code Council (ICC) vote in 2008 that would take effect in 2011.  The ICC publishes the International Residential Code – a document used by 46 states to regulate new home construction.

Many state legislatures have been taking up the issue. California passed a mandate echoing the ICC last week.

Given all the controversy surrounding airplanes, golf tournaments, and cigarettes during this year’s South Carolina legislative session, you might not expect something like sprinkler systems to raise much of a fuss.

Yesterday, the Senate sent H 4663 – which would prohibit the enforcement of building codes like the one in California – back to the House with amendments. The Senate version restricts the enforcement of fire sprinkler mandates until at least 2014. By contrast, the House bill would have set no end date.

Part of the Senate amendments include the creation of a study committee tasked with increasing participation in a tax credit program to offset the costs of fire sprinkler system installations. This study committee would include 6 members – 4 of whom are representatives from:

• The South Carolina Fire Sprinkler Association
• The South Carolina Home Builders Association
• The South Carolina Association of Counties
• The Municipal Association of South Carolina

This committee appears to be the legislature’s attempt at mediating the battle between home builders (who oppose the mandate) and fire sprinkler manufacturers (who support it). The Cato Institute recently pointed out that the fire sprinkler industry has been a driving force behind this legislation – more sprinkler systems means more business for them.  

For the ordinary citizen, the debate is simple: Should the government mandate new homes be built with fire sprinkler systems (at a cost of thousands to home owners)? Or should givernment continue to allow individuals to decide for themselves to have such systems installed?

A recent story in the Sun News quoted a state employee insinuating that the increase in costs to home production shouldn’t matter because there are “other ways to reduce the cost.” Is the official suggesting people should forgo installing other amenities – e.g., hardwood floors or tiles or a deck – so that they can install a sprinkler system? But since when does the government have the right to tell people what amenities they should have in their homes? And make no mistake about it – a sprinkler system is an amenity – and a very expensive one at that.

This is just another example of the state trying to protect people from themselves. If a homeowner does not want to install sprinklers – which, admittedly, carries some risk – then they should have the right to do so.

But to mandate that all homes have a sprinkler system is like requiring everyone to buy a car with anti-lock brakes. Sure, it may be safer, but it should be up to the individual to decide what risks they take in their own lives.

Individual responsibility is a key part of a capitalism. The more government acts like an all-knowing, omniscient parent, and the more people give up ownership over their lives, the worse for freedom, creativity and prosperity.

At the same time, the Economic Development Competitiveness Act, quietly giving the General Assembly a free ride to …

1. Pass out more taxpayer money to buy political power.
2. Line the pockets of special interests.
3. Perpetuate a failed policy of state-driven economic development.
4. All of the above.

… passed the Senate Finance Committee.

Then we learned that our state government, due to an accounting error, is nearly $60 million further in the hole than they thought. That means more budget cuts in the last quarter of this fiscal year and in next year’s budget as well. More motivation to enact all manner of tax increases and new fees and fines.

At least we can look back as how our lawmakers voted … just kidding.  Only 14 percent of House and Senate votes have been recorded this session. So forget trying to find out how your elected representatives stand on these issues.

To recap:

• More taxes
• More Lost Jobs
• More Government Control Over the Economy
• More Fuzzy Accounting
• Less Transparency

A banner day for the Big Government powerbrokers running our state.

In fact, Other Funds revenue, which is derived from fines and fees, is the fastest growing revenue source in the proposed FY10-2011 House budget.

Check out these spending increases in the new budget:

$21.10 billion: proposed FY10-2011 budget

$400 million: increase in previous year’s total budget

$450 million: increase in Federal Funds

$600 million: increase in Other Funds

All in all, the total budget has increased by 1 percent since the beginning of the current recession, fueled by a 17 percent increase in Federal Funds and an 11 percent increase in Other Funds. By comparison, per capita income in South Carolina has declined by 2.1 percent, going from $32,495 to $31,799 in 2009.

But if you think that’s bad, wait until next year.

So here’s something of note for South Carolina. The Palmetto State is home to the single biggest recipient contract awarded thus far under the stimulus program—drum roll, please—from the Department of Energy, in the amount of $1,407,839,884, as of March 24, awarded to our own Savannah River Nuclear Solutions. The Department of Energy owns the Savannah River nuclear site; Savannah River Nuclear Solutions is under contract to run it for the feds.

They’re decommissioning a couple of reactors down on the river—not a cheap project. In addition to shutting down two reactors and other facilities, they have to deal with 474 acres of contaminated soil, remove extremely toxic plutonium-238 and 16,000 drums of depleted uranium oxide, and dispose of nearly 125,000 cubic yards of contaminated soil and other waste material and three million gallons of contaminated water.

Still, the federal stimulus money is supposed to be stimulating the economy, and producing jobs.

So let’s take a look: Total jobs “created or saved” for $1,407,839,884?

800.3, according to recovery.gov.

Talk about your high-paying jobs! Those taxpayer dollars are stimulating our economy down in Aiken at a cost of one million seven hundred fifty nine thousand, one hundred forty dollars and ten cents—per job. Compare this to South Carolina’s per capita income: $18,795.

The folks at Savannah River Nuclear Solutions must be glowing with pride.

As the Policy Council continues its budget analysis, we want to highlight another instance of raiding state funds to pay for General Fund and other spending. This time it’s transportation dollars.

The proviso in question is 90.17, and it transfers $10 million from the Non-Federal Aid Highways Fund to the General Fund.

What is the purpose of the Non-Federal Aid Highways Fund? Maintenance of roads not eligible for federal grants.  That is about half of the roads in South Carolina.

What will happen if this fund (typically around $39 million) is depleted by $10 million – or 25 percent? Fewer roads will be maintained.

The transfer raises some interesting questions about the potential ramifications of a new bill (4033) recently passed by the House. The proposal would authorize the creation of public-private partnerships (PPPs) to build and maintain roads in South Carolina. The Policy Council explains the pros and cons of the bill in a new legislative fact sheet.

In short, PPPs offer an opportunity to leverage private capital while reducing costs for taxpayers. More than half the states have implemented PPPs, which have functioned as a tool to fund roads that typically go unfunded and unbuilt.

First, under a PPP approach to building and maintaining roads, maintenance will become more of a priority.

The current approach – which seems to de-emphasize maintenance in order to obtain short-term savings – has proven costly to taxpayers.

Private investors, however, see things differently. Private entities that have a lengthy lease on a road – and a profit motive behind the project – will be incentivized to ensure the road is kept in great condition. This maximizes users and tolls.

Second, privatizing the road building process will cost taxpayers less.  But what to do with all that “excess” revenue?

If this year’s House budget is any indication, lawmakers will spend it by using highway dollars to fill budget gaps. But this is not the purpose of PPPs. And it is not the purpose of the Non-Federal Aid Highways Fund.

The Non-Federal Aid Highways Fund is essentially made up of revenue from the gas tax and various fees and licenses. By transferring $10 million out of this fund the General Assembly is assuming the fund can already cover such repairs and other needs. Which means the fund is … well, overfunded.

Put more simply:

The Non-Federal Aid Highway Fund is partially funded through taxes and penalties collected by the DOT. This money is supposed to be used for road maintenance. But if the money is not being used for this purpose, then shouldn’t these taxes and fees be reduced?

Likewise, if the state moves forward with transportation reforms that reduce the cost of building roads, shouldn’t the savings be refunded back to taxpayers?

Whose money is it anyway?

Yet, the budget that passed early this morning includes a cigarette tax increase of 30 cents per pack. To learn more, check out the Policy Council’s take on this tax increase.

The Policy Council will provide further analysis of the budget soon and keep you updated as the budget process moves along. Be sure to check out www.scpolicycouncil.com and www.thenerve.org for updates on the budget, as well as our ongoing twitter updates.

If there had been a real debate on health care, we would have heard how free market reforms could lower the price of health care for everyone.

The single most important reform South Carolina could enact would be lifting insurance coverage mandates and allowing the purchase of out-of-state policies. We have written about that in detail in our Best & Worst legislative guide.

Unfortunately, the S.C. General Assembly seems intent on expanding, rather than lifting, coverage mandates.

But what about Governor Sanford? The governor has consistently advocated free market health care reform, especially in relation to Medicaid.

And if federal health care legislation has all but made state-based Medicaid reform impossible for now, the governor could take a cue from his neighbor to the south – Gov. Sonny Perdue of Georgia.

Georgia Public Policy Foundation Senior Fellow Ronald Bachman commends Perdue for taking the lead in trying to create a voluntary multi-state market for health insurance consumers.

Writes Bachman:

The cross-state concept has been accepted by Republicans and Democrats as a good starting point for national bipartisan reform. Studies have shown that up to 12 million Americans would become insured with effective national legislation for cross-state selling. While Congress debates, however, Governor Perdue innovates.  His push for free-market insurance reform is embodied in bills making their way through Georgia’s House and Senate. The slight differences will likely be ironed out when the two bills are merged.

Georgia’s legislation has two major components. First, it promotes a unilateral acceptance of comprehensive individual health policies from other states. As a show of good faith, Georgia would accept individual health policies approved in other selected states without the requirement that they accept policies approved here. There are, of course, minimum standards and consumer protections governing the acceptance of such policies.

Second, the real power and value of the cross-state selling concept is to establish a coalition of states with a combined large consumer base that will encourage insurers to develop and bring new, low-cost and affordable plans to Georgia. Currently, the 50 state-specific state filing processes take insurers years and millions of dollars in development costs, administrative mandates, filing requirements and fees.

Clearly, South Carolina could further Georgia’s efforts by also recognizing health policies approved in that state. Whether this could be done by executive order alone is unlikely, but the governor could at least become part of the dialogue by working with the Legislature and the Department of Insurance to replicate the reforms being pursued in Georgia.

Continues the article: “Boeing didn’t pick South Carolina for expansion last year because of Washington’s tax rates or regulatory system. Nor was it a question of chasing low wages. ‘The overriding factor was not the business climate. And it was not the wages we are paying today. It was that we can’t afford to have a work stoppage every three years. And we can’t afford to continue the rate of escalation of wages.’”

In other words, Albaugh is admitting that the tax incentive package the company received from South Carolina is not what really convinced Boeing to expand in North Charleston. But this is what SCPC has been saying from the very beginning.

Thus we wrote in October 2009:

“What lawmakers in South Carolina have not told us is that Boeing was thinking of expanding its current operation in Charleston anyway. This past summer, Boeing purchased a 787 components plant that already employs 900 workers. The cost: $1 billion. Boeing also owns half of a neighboring plant that employs 1,600 workers. In addition, talks between Boeing and union representatives at its Everett plant in Washington state have stalled. A 52-day strike last summer cost the company billions, with analysts projecting the cost of the work stoppage at $100 million a day or $5.2 billion in deferred revenue. Meanwhile, employees in Charleston voted in early September of this year to disband their union.

“Thus when we describe this incentives package as a bailout what we really mean is not so much a financial one, as a bailout from Boeing’s union commitments in Washington state. Add to this that Boeing has long wanted to expand its operations on the east coast and it becomes clear the company was already very interested in building a second assembly line in South Carolina.”

Do the math. If strikes are costing Boeing $100 million a day, they are going to be looking to relocate to a non-union state. Add the fact that Boeing was already in Charleston and wanted to expand its east coast presence, and you see why Boeing came to South Carolina.

Note that Boeing admits that tax rates had little to do with its decision. But that also means the General Assembly’s multimillion dollar tax break for Boeing had little to do with the decision. To paraphrase Senators Glenn McConnell and Hugh Leatherman, the reason Boeing actually came to South Carolina can be quickly and decisively dismissed in a single elegant phrase – “right to work.”

This is to say, of course, that reforming general business conditions – especially as they relate to fundamental free market principles, such as the right to work – are far more important to growing South Carolina’s economy than are targeted tax breaks and backroom deals.

But, of course, that’s what we’ve also been saying from the very beginning as well.

Nothing, if film productions choose to come to South Carolina of their own accord. But when government gets into the business of incentivizing the film industry, there’s plenty not to like.

And it gets worse the deeper you dig.

From 2006 to 2007 $8 million in wages were paid to South Carolina residents for work in the film industry.

That sounds great … until you realize that the state paid these productions $8.4 million in rebates.

Bear in mind, too, that these are not simply incentives in the form of tax credits. This is cold, hard cash paid to the movie industry to film in our state.

As the Policy Council details in Unleashing Capitalism, film credits actually “generate a net loss in revenue equal to 81 percent of expenditures on rebates.” In addition, when government subsidizes a targeted industry, the relative tax burden to other individuals and businesses increases.

What about spending on goods and services? There, the state spent $7.3 million in rebates to generate $14.4 million in supplies and service sales for in-state vendors. Sounds like a productive activity – until you realize the state was subsidizing about half of the business expenses for these productions, a sweetheart deal that no one else in the private sector receives.

These videos from the Mackinac Center for Public Policy detail the perverse incentives that are common in Michigan – and reasons why South Carolina should avoid similar policies.

Now, let’s be clear about this story. The report by the LAC is news, and The Nerve was first to release a comprehensive story on the findings. But the fact that the ESC has managed to take a once solvent unemployment fund and run it into the ground is not news—at least not new news.

In 2000, the fund had a balance of $800 million. On Jan. 15, 2010, the fund was in debt to the U.S. Department of Labor in the amount of $723.7 million; on Jan. 26, the last time the Labor Department updated its web site, South Carolina’s debt had risen to $747,889,544.00.

Ten years and a swing, from being in the black to drowning in red ink, of more than $1.5 billion.

Eleven days, and another $24 million in the hole.

Thank goodness our legislature was here to alert us to this gargantuan failure.

But the timing could have been better. Perhaps a Tuesday in 2001 when the fund had fallen below its required reserves? How about a Tuesday in 2004 when the unemployment fund had fallen to about half of its required reserves? Or perhaps a Tuesday in 2008, when the recession caused an already tanking trust fund to really go into free fall.

Again, just to be clear, the Legislative Audit Council is a government watchdog working for the General Assembly, and the S.C. Employment Security Commission operates under the direction of – not the executive branch – but the General Assembly. So it should come as no surprise that the second bullet in the LAC’s condemnation of the ESC gives the legislature political cover.  Here’s what it says:

“ESC’s annual assessment reports to the General Assembly did not provide adequate information about the declining trust fund balance. Nor did ESC make recommendations to prevent the trust fund’s decline as required by … the S.C. Code of Laws.”

Our legislators are busy, what with all the hundreds of millions of dollars in taxpayer funded special interest giveaways they’re working on. So maybe it’s understandable that they didn’t see the problem in 2000. At that time the fund reserve was just a smidge under what’s required. Neither did the legislature act in 2003, when the fund reserves had fallen from more than $800 million to around $400 million, nor in 2008 when South Carolina first had to borrow from the Department of Labor.

This is precisely why the people who write the laws and control the purse strings aren’t supposed to be the same people who enforce the laws and write the checks. The General Assembly has taken upon itself the roles of both the legislative and executive branch, in this case and many others in South Carolina.

Yes, ESC deserves blame for mismanaging of the fund and, yes, the commission needs the top-to-bottom overhaul lawmakers say is going to happen. But the “top” of the ESC is the General Assembly, and it’s disingenuous for South Carolina lawmakers to pretend they don’t share responsibility or say they were given inadequate information.

To its credit, or perhaps because the General Assembly wants to distance itself from the whole mess, the LAC’s first recommendation is to make the ESC a cabinet agency. That’s a good first step, especially since the General Assembly hasn’t done its job in managing the commission. But the long-term solution is to allow free market reforms suggested in the Policy Council’s Fast Facts on ESC posted yesterday to reduce the staggering rate – and cost – of unemployment in South Carolina.