Legislative score card

While the South Carolina Legislature might or might not go back into session this week (but for sure next week), the legislative agenda of The South Carolina Small Business Chamber of Commerce is done for this session. But remember that this was the first year of a two year session. So what didn’t get done in 2011 might still have life in 2012.

Here’s our state legislative score card.

S.36—Passed—Good and bad news here. We supported this bill for two reasons. It would prevent the S.C. Department of Revenue from going rogue like it did last year when it told numerous businesses that the service contracts they sold to others should have included sales tax. But these businesses had no idea about this new Revenue interpretation of a law and faced owing tens of thousands of dollars to the state—sales tax they had never collected. Fortunately the bad publicity that we helped generate resulted in Revenue backing off and giving the Legislature time to correct the situation.

This bill also would gradually phase out sales tax on durable medical equipment purchased with Medicare and Medicaid funding from South Carolina retailers by January 1, 2013. Because federal law prohibits these durable medical equipment vendors from charging sales tax on Medicare and Medicaid purchases, requiring them to pay sales tax out of their small profits was unfair. We have supported the elimination of sales tax collection in these situations since 2007 and were instrumental in passing a law that year that should have addressed the problem. But then the economy went south and the phase out stopped. Now the problem is solved.

Now the bad news. This was the bill that the Amazon.com supporters successfully attached an amendment to exempt the retail giant from collecting sales tax on in-state sales for five years. You know the story from here. Our opposition helped force Amazon to increase their offer of new jobs by 60%, expand its investment by 39% and agree to notify its South Carolina customers that they might owe sales tax to the state. But in the end, Amazon won the battle against all the other retailers in the state and will have an unfair competitive advantage over them.

H.3111—Passed the House and is in the Senate Banking and Insurance Committee—Good news. We support this legislation that will require workers’ compensation insurance companies to use the most recently approved Loss Costs and Loss Cost Multiplier. I won’t make your eyes glaze over with an explanation but take my word for it; this would be a good thing for small businesses.

H.3346—Passed House and is in the Senate Banking and Insurance Committee—Good news. This bill has the potential of creating a vibrant, job creating solar industry by providing tax credits for commercial building solar installation.

S.461—Passed Senate and is in the House Agriculture Committee—Not good news here. While we support recycling and the recycling industry, this bill would mandate restaurants and bars to recycle glass, aluminum and cardboard. We oppose requiring small businesses to incur costs that will help all of us in general and provide free resources to some recycling businesses at the expense of other businesses. Either the restaurants and bars should be given tax credits for their required efforts or the users of the recyclable materials should cover the costs of the mandated activity. The proponents of this bill have made some changes to lessen the cost to restaurants and bars but there is still work to do as the bill goes to the House.

H.3473—Lots of discussion but no movement. Still in Labor, Commerce and Industry subcommittee—Not good news. We support this bill that will prohibit the sale of HVAC equipment of more than 3 tons to unlicensed heating and air conditioning contractors. The S.C. Association of Heating and Air Conditioning Contractors believes that H.3473 is needed to protect the public and promote professionalism in the industry.

H.3738—Lots and lots of discussion. Still in House Ways and Means Committee—Good and bad news. First the bad. We support this bill that will establish an insurance exchange for South Carolina and be run by the state. The Affordable Care Act requires each state to have an exchange by 2014. The exchange will be the place (internet based) where individuals and employees of small businesses can go to obtain health insurance. With the failure of this controversial bill getting passed by the House this session, the prospect are not good for it being passed by the Legislature next year.

Now the good news. The federal government will set up and run an insurance exchange for the state if we fail to do so ourselves. In this case, South Carolina might end up with an exchange that is more transparent and easier to use. A federal exchange might also actively promote more insurance company competition and engage insurance companies in making sure consumers get the lowest premiums possible.

S.316—No action. Still in Senate Banking and Insurance Committee—This is very bad. In spite of guarantees that this important bill would be given a subcommittee hearing, the legislation did not move. We support it because it would prohibit a health insurance carrier from forcing a healthcare provider to contractually give the carrier a “most favored nation” status—the provider could not negotiate a lower or even the same reimbursement rate with a different health insurance carrier. The “most favored nation” clause in contracts is one of the important reasons that there is no real competition between carriers resulting in ever-increasing insurance premiums.

S.124—No action. Still in Senate Committee—This is very good. The primary sponsor of the bill has decided not to push for a subcommittee hearing on this legislation we oppose. The bill would require wage garnishment of an employee by the present employer to pay back a commercial debt of the employee. We do not believe that small businesses should be in the debt collection business for other businesses.

S.31—No action. Still in Senate Banking and Insurance Committee—This is also very bad. Again, in spite of promises to hold a subcommittee hearing on this bill that we support, no subcommittee was ever given. The legislation would guarantee that the State Consumer Advocate could ask for a public hearing before a Judge to contest proposed changes, up or down, in workers’ compensation rates. Now only increases in rates allows the Consumer Advocate to make a court challenge but our experience is that proposed reduced rates should be examined because they might not be enough of a reduction.

S.214—No action. Still in Senate Banking and Insurance Committee—We agreed to drop our request for legislative action on this workers’ compensation insurance issue to allow the S.C. Department of Insurance to address the problem administratively. The problem is that there are businesses that have not had their workers’ compensation insurance experience modification rate adjusted downward when it should have been in Second Injury Fund cases. As a result of the insurance carriers not obeying the law, these businesses might be due a premium refund. Unfortunately, the present law and regulation sets up an arbitrary time limit to correct the problem. We want this time limit removed.

We fully expect that in addition to the above bills there will be more legislation that will find its way onto our agenda in 2012.

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