State Sen. Glenn McConnell (R-Charleston)

CORRECTION: An earlier version of this story reported that Charleston County “reclassified” homes as rental properties, attributing Sen. McConnell. The county says it does not do this, but tries to keep the 4 percent property tax in place as long as the home is actually a primary residence.

As always, we know the public depends on us for accurate information and we regret any errors.

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Homeowners along South Carolina’s coast are being unfairly charged higher taxes because they rent out their property for a few weeks each summer, according to Republicans in the state Senate. Those senators accuse coastal counties (specifically Charleston County) of broadly interpreting the state’s tax laws.

At issue is how state law allows counties to calculate property tax. After Act 388 passed in 2006, owner-occupied homes could not be taxed for school operating expenses while rental properties could. As a result, an owner-occupied property tax is limited to four percent while a rental’s is capped at six percent.

However, the law does not address the issue of a primary residence that the owner also rents out occasionally.

The issue recently cropped up in Charleston County, after some residents accused the local assessor’s office of reclassifying some homes as rental property if the owner rented it out for more than two weeks each year. Charleston County officials deny that. “We approve a 4 percent assessment ratio for those who rent for more than two weeks in a year as long as they are otherwise residents,” County Administrator Allen O’Neal said in an email.

That infuriated state Sen. Glenn McConnell (R-Charleston), the powerful President pro tempore who represents the area.

“They get a 50 percent increase in their property taxes for renting out their home for three weeks,” he told South Carolina Radio Network.

In response, McConnell sponsored S.40 last year. It cleared the Finance Committee on Tuesday and now heads to the full Senate. The bill would keep the four percent tax intact as long as the home is not rented for more than 90 days each year.

“If that’s where they live, if that’s where they’re registered to vote, they’re entitled to have it treated as their home,” he said.

However, Robert Croom of the South Carolina Association of Counties says county officials use two weeks because that’s the IRS limit on how much rent an owner can collect before it becomes taxable income.

“After that point, we get into a great deal of difficulty on whether the property was rented out or not,” Croom said. He said 90 days was too long and that there is no way for county officials to know if a home was being rented for 89 days or 91 days except to trust the owner.

McConnell was not buying that argument. “It’s a case of bureaucrats inventing the law and making it so they can get more money from the public,” he said before Tuesday’s meeting.

O’Neal said the county is not trying to take advantage of property owners, but that it is only trying to follow IRS tax regulations, “So far, every taxpayer has understood the position we are in and has expressed appreciation for the honesty and information,” he said.

Croom says the bill’s fiscal impact on local governments would be more than $1 million. He said that would exclusively impact local schools, since their operating costs make up the difference between owner-occupied and rental property rates.

U.S. Sen. Lindsey Graham

A prominent South Carolina senator says if Republicans are to be successful in the 2012 elections they must lay out an agenda for the nation, not simply rail against the Obama Administration.

U.S. Sen. Lindsey Graham (R-SC) was in Aiken Tuesday night for the opening of Congressman Joe Wilson’s new offices there.

In an interview with Greenwood affiliate WLMA, Graham said while he and fellow Republicans continue to challenge the constitutionality of the Healthcare Reform Law, they must also lay out an alternative plan to make health care more affordable for American citizens.

“I don’t want to just promise easy solutions to hard problems,” Graham said, “I want us, as a party, to lay out a vision.”

Graham said the two-month compromise extension to the payroll tax cut passed in December because it was what the market would bear. He says he is against how the cut is funded and calls for a simpler, fairer tax code that would eliminate a number of deductions.

AUDIO: Graham wants the GOP to map out a clear vision for the nation

Anne Eller of Greenwood affiliate WLMA contributed to this report.

Rep. Jim Clyburn

The congressional stalemate over extending the payroll tax cut is intensifying, as U.S. House Republicans continue to refuse to pass a two-month bipartisan compromise bill passed in the Senate earlier this week, insisting for a year-long version they approved last week. Sixth District Congressman Jim Clyburn says failure to pass the measure before the end of the year would raise taxes on average American workers including those in South Carolina.

Clyburn says passing the extension for two months would give Congress time to develop an agreeable bipartisan plan that would extend over the other 10 months of 2012.

Clyburn says refusing to pass a bipartisan measure that will insure that middle class Americans will not be subjected to a tax increase doesn’t make any sense, especially considering that a majority of GOP senators agreed on the measure. Clyburn says once again GOP House Speaker John Boehner has knuckled under the pressure of the Tea Party.

AUDIO: Clyburn blames the Tea Party for stalemate

A number of Senate Republicans are not happy with how House Republicans have handled the bipartisan Senate compromise. Some are worried that the standoff could hurt their chances of winning the upper chamber in the 2012 election.

Rep. Trey Gowdy (R-SC)

The payroll tax cut, emergency federal unemployment benefits, and a delay in scheduled pay cuts to Medicare physicians will all expire on December 31 without congressional action. The Senate measure, which addresses all three matters through the end of February, is facing fierce resistance from conservatives upset with both the temporary nature of the bill and its impact on funding for Social Security.

In an interview last week with Greenwood affiliate WLMA, 4th District Congressman Trey Gowdy said he doesn’t like temporary tax policy and he doesn’t like taking money from Social Security.

Republican House Speaker John Boehner said he wants the issue to be taken up by a House-Senate conference committee; that would require the Democratic-controlled Senate to return from its holiday break.

Gowdy says if they have to stay, he and his Republican colleagues will have to find a way to pass the time until an acceptable comprise is reached– joking they would sing “Silent Night” and exchange gifts in DC if they had to. The payroll tax break is worth roughly $1,000 a year for an average family, and it affects roughly 160 million Americans.

AUDIO: Gowdy says he’s willing to spend Christmas in Washington

Anne Eller of Greenwood affiliate WLMA contributed to this report

Rep. Trey Gowdy (R-SC) (File)

The Republican controlled U.S. House passed legislation Tuesday to extend a payroll tax cut that expires at the end of the year. The extension is tied to a provision that restarts work on a much-disputed U.S.-Canada oil pipeline project.

In an interview Wednesday with Greenwood affiliate WLMA, 4th District Congressman Trey Gowdy said he and his fellow three freshman South Carolina congressmen were probably the last four to vote on the measure.

President Obama has indicated that he will veto the Keystone XL pipeline provision, hoping to delay a decision on the Canada to Texas pipeline project until after the 2012 elections. Approval of the project has been delayed to allow for more review of its environmental impact.

Gowdy says indications are the Democratic-controlled Senate will make some changes to the measure that he says will probably not be accepted by most House Republicans.

There is speculation House Republicans could break for the holidays Friday to force a Senate vote on their bill. President Obama has called on Congress not to go home until legislators extend the payroll tax cut. The cut is estimated to have saved a typical middle class family about $1,000 last year.

AUDIO: Gowdy calls House bill the best we’re going to get

Anne Eller of Greenwood affiliate WLMA contributed to the story

The SCDOR worked with Bank of America Merrill Lynch and Visa to set up a prepaid debit card, intended to eventually replace the printing and mailing of paper checks.

Right now, taxpayers will still have the option to designate direct deposit or to receive a paper check on their income tax return instead of a debit card.

According to the agency, the refund is delivered electronically to a unique prepaid debit card account created for the taxpayer. They say it is a better option for taxpayers who do not have a traditional bank account.

Reps. Gilda Cobb-Hunter, Kenny Bingham, and Jim Merrill talk before Monday's meeting

State employees would pay more into their retirement under draft legislation the South Carolina General Assembly is likely to take up next year.

A House retirement subcommittee unanimously approved a plan Monday that would require state employees to contribute 7.5 percent of their pay towards their pension– up from 6.5 percent.

The state Budget & Control Board voted earlier this year to increase its employer contributions, which trimmed a $17 billion liability in the state retirement system down to $13 billion.

Committee chairman Jim Merrill (R-Charleston) said the changes announced Monday are important to cutting into that debt further. “It will make the system solvent,” he said, “We think this is the way that would be good to proceed for the next “x” number of years so that we do have a pension system that works.”

The report approved Monday is an early draft that still needs to be formally introduced to the full House next year.

Under other changes recommended in the report, employees could not collect full benefits unless they worked at least 30 years (rather than the current 28 years) and were at least 62 years old when they retired. It would also require employees to calculate their benefits based on the average salary of their final five years with the state (rather than the current three) — which would likely lead to slightly smaller benefits.

The changes would affect anyone who currently has less than 23 years of service. Merrill said committee members sympathized with those employees less than five years from retirement who had already based their financial future around the current system.

Rep. Gilda Cobb-Hunter (D-Orangeburg) voted for the report, but said she is worried that employees will have to pay more when they have not received a raise in years. “In my district, they are just convinced we have done something terrible,” she said, “Even though, long-term, this will benefit them at the point of retirement… (Right) now they don’t perceive it that way.” 

The proposed bill would also stop allowing employees to use overtime pay towards their pension calculations. However, lawmakers crafted an exception if the overtime was required by supervisors and was not voluntary.

The new rules would also try to end the practice of “spiking,” which is when employees receive massive pay raises in the years before they retire so they can collect larger pensions. The report would cap raises at 20 percent per year in order to be calculated towards retirement benefits. For example, if an employee received a 30 percent raise in their final year, they could only use a 20 percent raise when determining their benefits.

The bill would also require the legislature to approve any cost-of-living adjustments (or COLAs) for retirees each year. They are currently triggered automatically.

The proposal would also close the Teacher and Employee Retention Incentive (TERI) program to new hires. However, any state employees who are working right now would still be eligible for the program, even if they are still 30 years away from retiring.

Sen. Lindsey Graham (File)

The clock is ticking on a current two-percent payroll tax break that is set to expire on December 31.

Republicans and Democrats are still haggling over the extension of the tax cut, which would insure an average American family seeing nearly $1,500 in additional take-home pay. In a recent interview with Greenwood affiliate WLMA,  U.S. Senator Lindsey Graham said at issue is how the tax break would be funded. Graham says the present proposal would hurt a Social Security system (which is funded largely by the payroll tax) that is already running out of money.

Instead, Graham said he would like to see a compromise proposal introduced that would give a “targeted tax credit” for wage earners that make $100,000 or less annually.

Graham says he would not want to fund the payroll tax by taking money from the Social Security Trust Fund because millions of seniors depend on Social Security and more people are being added to the rolls each year. He disagreed with the proposal being pushed by Democrats that would include raising taxes on the top wage earners, who he said are the nation’s job creators.

Democrats have proposed expanding the cut to 3.1 percent, and paying for it with a 1.9 percent surtax on income above $1 million.

Saying that the issue is too important to be left undone,  President Obama threatened to delay Christmas vacations until the tax cut is passed. Graham says he is confident that a tax cut would be passed, but he adds that lawmakers are often guilty of procrastination.

AUDIO: Graham does not want money taken from the Social Security Trust Fund 

Anne Eller of Greenwood affiliate WLMA contributed to the story.

Panel members Jake Knotts (R-Lexington) and Gerald Mallow (D-Darlington) discuss public input at recent hearing

Senate President pro tempore Glenn McConnell (R-Charleston) pushed the bill after South Carolina’s Department of Health & Human Services (DHHS) ran $222 million dollars over budget last fiscal year.

“All of these agencies need to understand there is no bailout at the end of the rainbow for them,” McConnell said Wednesday.

The four Republicans and two Democrats present at the Fiscal Fitness subcommittee meeting unanimously supported the bill Wednesday, which would only allow deficits if the Legislature passes a resolution declaring it unavoidable and out of that agency’s control.

Right now, the state Budget and Control Board– a part-executive, part-legislative body consisting of the governor, comptroller general, treasurer, and two legislators– has the authority to approve an agency deficit if the Legislature is not in session. The board’s move to allow the DHHS deficit over the summer angered many in the General Assembly, although the board’s members blamed the Legislature for underfunding the agency.

An amendment unanimously approved by the committee Wednesday would take away that power. The bill moves on to the full Senate Judiciary Committee for consideration next year.

Sen. Jake Knotts (R-Lexington) said he hopes a new law would take some of the politics out of budget requests. Earlier this year, some legislators accused DHHS of purposely understating what it would require in its 2010-2011. “This would prevent an agency from coming in at the beginning of an election year and lowballing what they need,” Knotts said, “And at the last minute coming up and saying ‘we’re running a deficit.’” 

The bill is part of a package of legislation pushed by the powerful McConnell that would dramatically reform how government is funded, if all were to pass.

Other proposals the panel passed included a constitutional amendment to create spending caps, stricter tax code interpretations, creating a commission to “streamline” state government, and to require any new regulations to first be cleared by the legislature.

“The climate is such right now, with the deficit debate in Washington and the mood of the public, that if I’m ever to have a chance to get these bills through, now is the time,” McConnell said afterwards, “That’s why I’m moving now.”

Rep. Jim Clyburn

The congressional deficit-reduction “super committee” has less than a month to bang out an agreement that would reduce the federal defict by at least $1.5 trillion over the next decade. 6th District Congressman Jim Clyburn is one of six Democrats on the 12 member group which also includes six Republicans.

In an interview Wednesday with Columbia affiliate WVOC, Clyburn says the reductions cannot all be spending cuts, saying it would prove ruinous to the economy.

If the super committee doesn’t meet its deadline, a number of automatic cuts would go into effect for the 2013 fiscal year. The vast majority of the back-up plan cuts would fall on discretionary spending, with half of the $109 billion yearly cuts coming from defense spending. Social Security and Medicaid would remain untouched. The third major entitlement program, Medicare, would be cut a maximum of 2 percent, or about $11 billion in the fiscal year 2013 budget.

Clyburn says the deal that the super committee is attempting to hammer out would include several forms of deficit reduction. While a number of critics have expressed doubt that the bipartisan committee will agree on a plan before the deadline. Clyburn says he remains hopeful.

AUDIO: Clyburn says debt reduction cannot involve only spending cuts

Rep. Mick Mulvaney (File)

South Carolina Congressman Mick Mulvaney says he’s supporting Rick Perry and his flat tax plan in the Republican presidential primary.

Mulvaney says he and the Texas governor have similar beliefs on the budget and taxes.

The Fifth District congressman says he’s been helping Perry develop his 20-percent flat tax plan, which was unveiled earlier this week at the State House in Columbia.

A recent poll in South Carolina shows Perry is running third behind Herman Cain and Mitt Romney.

Mulvaney told Greenwood Affiliate WLMA that Perry’s plan has been successful elsewhere.

“It’s actually modeled after a system that has been tremendously successful in Hong Kong and about 90 percent of the people there opt into the flat tax,” said Mulvaney.

“That system…in Hong Kong generates almost as much revenue as a percentage of GDP as our unusually bizarre system does in the United States.”

Mulvaney says that Perry’s plan will give people the choice to opt into the flat tax or pay their taxes under the current system.

He also says President Obama’s mortgage assistance program has failed.

Earlier this week the Obama Administration announced new rules that would offer incentives to banks to refinance the loans of people who owe more than their house is worth.

It’s hoped the changes will offer home owners some debt relief.

However, Mulvaney says the program has been a “dismal failure.”

“It’s easy to explain to people who are hurting, ‘look I’m going to give you money and it’s going to make your life better,’” said Mulvaney.

“That’s an easy message for people to deliver and that’s what the president is out there delivering. It’s a much more difficult message, but I think a much more substantive message to say look, ‘we’re going to have to fix the system in order for it to get better.’”

Specific details of the president’s new mortgage assistance program have not yet been released.

But Mulvaney says it’s a mistake to invest more money in the program, when it didn’t work the first time. He’s government overspending will only harm future generations.

Anne Eller of affiliate WLMA contributed to this article.

DeMint says the Occupy protestors are "misguided"

President Obama’s $447 billion jobs package failed to pass the Democratic-controlled Senate after  a 50-49 vote this week, as a few moderate Democrats joined Republicans against the measure. One of the points of contention was the lack of support for a new 5.6 percent tax on those who earn more than $1 million.

The measure can come up for a re-vote. Democrats are likely to bring up portions of the bill for a vote, including the proposed new tax on millionaires. In an interview with  affiliate WVOC in Columbia, Republican Senator Jim DeMint, who voted against the package Tuesday, said he is adamantly opposed to that millionaire tax. He does say some form of the tax is likely to pass the Democrat majority Senate.

At the same time, a recent NBC News/Wall Street Journal poll indicates that 63 percent of Americans support President Obama’s jobs bill.

Supporters of the tax argue that the American free market system provided the business climate for persons to accumulate wealth and they should be willing to pay their fair share to support the functions of government.

DeMint also commented on  the so-called “Occupy Wall Street” movement that has spread to other areas of the country, including South Carolina, is misguided and includes people who don’t understand how the free market system works.

AUDIO: DeMint sees nation moving into class warfare