The Palmetto Insider

On Tuesday, Richland County joined the growing list (19 so far) of city and county governments that have put their check registers on line. Nice job Richland County!

We wondered in our Tuesday blog when the City of Columbia’s long awaited promise to post its check registers would be fulfilled. That day, interestingly enough, is today. Coincidence?  The immense power of our blog post? Sure, why not?

Welcome, Columbia, to the ranks of more-transparent governments.

Yet much more needs to be done. The state still has not enacted several important transparency reforms, including the Truth in Spending Act, which would require every state agency and local government to post their check registries online.

South Carolina has been doling out incentives at a rapid rate – more than $1 billion over the past 10 years.

But what do we have to show for it? It’s hard to say, given the lack of transparency and accountability that overshadows such deals.

As indicated by a new SCPC report, Three Steps Toward Transparency, “Economic development legislation should be crafted in a deliberative manner subject to full public review and debate.”

Among the white paper’s recommendations is the creation of a unified economic development report, released annually by the Department of Revenue. The report would detail all state and local expenditures for economic development, including targeted tax credits; and list all uncollected state and local tax revenues resulting from any tax credit or exemption provided by state or local governments.

While transparency opponents are likely to balk at releasing such information, several states have already created economic incentives transparency websites. According to a report by the Washington, D.C.-based organization Good Jobs First, Illinois, Iowa, Minnesota and Pennsylvania have the best disclosure websites.

As for South Carolina … we scored an “F.” When it comes to incentives transparency, the Palmetto State is the 4^th worst state; only Alabama, West Virginia and Wyoming score worse than South Carolina.

Some of the Good Jobs First report’s findings and recommendations:

“Many of the states disclose only projected costs but not actual benefits. That is, they provide information about deals as they have been awarded, but they do not report outcomes of the deals over time (such as jobs actually created).

“In addition to moving toward full transparency about the subsidies awarded, states should do more to monitor the performance of subsidy recipients—the outcomes of the deals— and disclose those results to the public.

“Given how much easier it has become to post information on the Web, we also recommend that state disclosure data be updated quarterly, instead of annually.”

Many of those similar proposals are outlined in the Policy Council white paper. But they are ideas you won’t find in the massive economic development bill, H 4478.

The question, though, is why not? If state-driven economic development is such a good idea, then our political leaders should have no qualms showing the public just how well their money is being spent. Transparency is a win-win, Unless, of course, the powers that be already know that economic incentives are not working – except to benefit themselves and their friends.

It seems the South Carolina General Assembly has had no problem thinking up wacky ideas this week.

First is a proposal “that would mandate that gold and silver coins replace federal currency as legal tender in this state.”

First talked about in the SC blogosphere, this idea made its way into the national news and surely provided many folks across the country with some good laughs.

Next is a bill that would ban alcohol sales on Christmas and Thanksgiving Day.

This idea will likely anger eggnog drinkers and those who enjoy spirits on these two holidays. But it’s a good complement to another proposal that confirms that while it should be illegal to sell alcohol on Sundays, paying a fee to sell alcohol on Sundays makes it OK.

And just yesterday, the House of Representatives passed a bill that would ban secret compartments in cars. That’s right, no compartments or fuel tanks other than those installed by the car manufacturer.  This bill was introduced last session, as noted in our Best/Worst review of property rights legislation. The intent of the bill is obviously to discourage drug smugglers, but the act of creating a secret compartment in itself should not be illegal.

These three ideas kicked around by the General Assembly this week may be humorous, but there is nothing funny about lawmakers playing around with our personal freedoms. To read more, click here.

From South Carolinians for Responsible Government:

“The annual list of South Carolina’s most persistently failing public schools has been released and is now online:

http://www.voiceforschoolchoice.com/2010/02/03/south-carolinas-worst-public-schools-2009-10-edition/

In late January, it was announced that hundreds of local public schools failed to meet minimal improvement goals set by state and federal officials, known as Adequate Yearly Progress (or “AYP”).

This list of the most persistently failing schools details those schools which have consistently failed to meet their annual goals, some for up to six years in a row.”

The Legislative Audit Council, which conducts performance-based reviews for the South Carolina General Assembly, this morning issued a scathing investigation detailing mismanagement by the Employment Security Commission.

The Nerve was the first news organization in the state to release a full report on the Legislative Audit Council’s report. For the complete story, visit The Nerve.

The council report charges the commission with a decade of mismanagement, including a failure to run the unemployment fund according to state and federal laws and regulations. While commissioners were squandering reserve funds, the state continued to pay unemployment benefits to ineligible beneficiaries, the report found. Consider the following examples:

• “An employee made unauthorized charges on his company’s credit card, which included motel rooms, hardware and Internet dating charges. He was terminated by the company, but ESC still allowed him to collect $3,586 in unemployment benefits.”
• “An employee was discharged for absenteeism due to his incarceration. The commission allowed him to collect $5,868 in unemployment benefits.”
• “An employee made a job-related threat and alluded to a weapon in his car. Police found a loaded firearm in the employee’s car. He was terminated for cause, but still collected $2,440 in unemployment benefits.”

Last Thursday, The Nerve reported that South Carolina’s unemployment insurance system has been heading for financial disaster for the past decade. According to the story, the ESC has taken the fund from a surplus of $782.2 million in 2000 to a staggering $723.7 million in debt to the federal government. The report estimates the state could incur costs higher than $2 billion to clean up the mess. If the state fails to reimburse the federal government for the debt, South Carolina businesses will see an automatic tax increase. As estimated by state Board of Economic Advisors chairman John Rainey the annual tax increase per worker could run anywhere from $249 to $567.

In a story on Oklahoma’s Second Amendment Tax Holiday Proposal , the Tax Foundation cited the Policy Council’s opinion on South Carolina’s gun sales tax holiday.

The South Carolina Policy Council also criticized the holiday: “This is a symptom of a problem we have; there will always be pet projects that individuals support. If we allow lawmakers to tinker with the tax code for everything they support at the expense of those they do not, we’ll end up with what we have now, which is an absurdly complicated tax code.”

The Policy Council has advocated for comprehensive tax relief and spoken out against continuing to pass special tax breaks and exemptions.

During tough economic times, most families and businesses cut spending on unnecessary items and hold off on things like vacations and pay raises. These rules, though, rarely apply to government –at least not in the Kershaw County School District.

According to WIS News, the district approved $850,000 in pay raises in April of 2008, with more than half of those raises going to school administrators. Since those raises were approved, “the district cut 19 teachers, imposed furloughs, froze salaries, and eliminated non-teaching positions. “

“Our principals, assistant principals and a lot of key instructional positions are paid below the Midlands market even after this was implemented,” District Superintendent Frank Morgan told WIS. “That’s a key point I think the public should understand.”

Even if Morgan’s claims are true, it seems unfathomable that the district would have made such ill advised decisions. Consider what would happen if a CEO gave company executives pay raises then proceeded to fire and furlough workers.

The good folks of Florence County appear poised to get a second opportunity to give their hard-earned tax dollars to one of the world’s largest financial services companies.

Florence County Council is scheduled to hold a public hearing tonight regarding fee-in-lieu-of-tax agreements with JP Morgan Chase, a $2 trillion operation which received a $25 billion taxpayer bailout from the federal government last year.

JP Morgan is planning an undisclosed project that would be located in a multi-county park jointly operated by Florence and Williamsburg counties, according to Florence County documents, the Lake City News & Post reported.

The project would be a taxable investment of at least $2.5 million and create at least 250 new full-time jobs within five years, the documents state.

The fees would be determined by applying a 6-percent assessment ratio to the economic development property’s fair market value and using a fixed millage rate for 20 years.

Fee-in-lieu agreements allow companies to freeze their millage rates. With fee-in-lieu, applicable Florence County property tax assessment ratios can be negotiated down from 10.5 percent to 6 percent.

Of course, as the Policy Council has pointed out before, if South Carolina and its counties lowered taxes, incentives would not be needed. Real economic growth would take place naturally as companies gravitated toward low-tax areas.

And there is something particularly disturbing in the idea that some South Carolinians could, for the second time in a little more than year, see their tax dollars go to benefit a company with $2 trillion in assets and operations in 60 countries.

The U.S. Treasury Department transferred $25 billion to JP Morgan in October 2008 via the Troubled Asset Relief Program (TARP). In June 2009, JP Morgan repaid $10 billion of TARP money it had received.

JP Morgan came under fire this year for paying out large bonuses despite having to take bailout funds just a few months earlier.

In July, New York Attorney General Andrew Cuomo told the Wall Street Journal that, after having received its TARP bailout in late 2008, JP Morgan paid hundreds of millions of dollars in bonuses to more than 1,800 employees.

This included $1 million bonuses to each of more than 1,000 employees, and $3 million bonuses to each of more than 200 employees.

Tonight’s meeting will take place at the community building in Lynches River County Park, between Coward and Effingham.

H 3272 passed the House last session and will likely be passed by the Senate in 2010. The bill caps property tax increases at 15 percent for point-of-sale transactions. The original bill would have applied this cap retroactively to 2006, but the amended version likely to pass excludes homes purchased in 2007 and 2008, thus subjecting these homeowners alone to the higher tax rate. Making the cap retroactive, however, would require counties to pay back these taxpayers.

SCPC in the News

Policy Council study on the state budget cited in Post and Courier article on the state economy

State Government

Lt. Governor Andre Bauer needs your help finding the state’s oldest citizen

SC Colleges facing budget cuts

South Carolina ranks fourth nationally in the amount of tax breaks given to seniors

Local Government

Anderson Council member seeking to change home rule law

Lake Hartwell businesses want Army Corp of Engineers to keep tourism in mind

Federal Stimulus Watch

Bamberg, Calhoun and Orangeburg counties have seen $17.3 million in stimulus money

Horry County stimulus projects include airport renovations

State school districts are sharing $20.3 million in stimulus funds to improve energy efficiency

Charleston County applies for stimulus funds to install solar panels at the county jail