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3D"SCSEA

Sunday’s edit= ion, October 9, 2011, of The State newspaper covered the governor’s top three legislative priorities for= the upcoming session. As expected, changes to the state retirement system are “open game”. Please read the article below. The retirement system section has = been highlighted for quick reference.

Again, this comes a= s no surprise. Twenty-eight (28) y= ear retirement and COLAs for retirees will be challenged. If you have not already done so, p= lease contact Whitney Moon at (803) 212-6640 or whitneymoon@scsenate.gov to register to make comments at one of the public hearings in your area.

Online SCSEA Member= ship enrollment, for registered SCEIS users, is now available from our website, = www.scsea.com. SCSEA membership applications can = also be downloaded from our website. Additional payment options, PayPal, will be added in the near future= .

Exclusive member di= scounts have also been uploaded to our website.&nb= sp; New discounts and promotions will be added periodically so be sure to check back regularly for limited time and exclusive member offers.

As always, please f= eel free to contact me directly at (803) 765-0680.

Carlton B. Washington

SCSEA Executive Dir= ector

Posted on Sun, Oct. 09, 2011

Exclusive: HaleyR= 17;s Agenda for Year 2

By = GINA SMITH

Gov. Ni= kki Haley’s priorities for her second year in office include replicating a controversial Georgia jobs program to retrain S.C. workers, taking another = stab at reforming the state’s tax code and requiring state employees to work longer — 30 y= ears instead of 28 — to receive full retirement benefits.(SCROLL DOWN FOR MORE ON RETIREMENT)

The Lex= ington Republican is traveling around the state this month, talking to residents i= n a series of town-hall meetings.

In those meetings, the first-term governor is laying out her agenda for her second legislative session. Friday, Haley sat down with The State to flesh out that agenda, starting with what can be done to lower the state’s chronical= ly high unemployment rate, now 11.1 percent.

Haley s= aid she and her team have been talking with Georgia Gov. Sonny Perdue about how they can replicate that state’s “Georgia Works” program h= ere in South Carolina= .

The pro= gram — which has won bipartisan praise, including some kind words from Democratic President Barack Obama — allows businesses to “hire” the unemployed for a limited period of time for free.

The job= less continue to collect their unemployment benefits while they are learning new= job skills with their host company. At the end of that training period, they, hopefully, get a crack at landing a permanent job with the company.

Georgia residents receiving state unemployment benefits can sign up for 24 hours of on-the-job training for u= p to eight weeks with a local company. Residents also receive a stipend from taxpayers to help cover child care, transportation and other job training-related costs.

Fans sa= y the program helps at least some of the unemployed get the new skills that they = need to get a job.

Accordi= ng to the Georgia Department of Labor:

•= In 2010, about 1,100 Ge= orgia residents completed training programs at local companies through the “Georgia Works” program. Eleven percent were hired by those companies at the end of the training program.

•= At least 69 percent of those new hires still had that job nine months later.

South Carolina’s unemployment rate = 212; the fourth-highest in the nation — is proof that the state’s jobless need new skills, Haley said.

“= There are a lot of people who want to be trained,” Haley said Friday. ̶= 0;So how do you incentivize those who want to be trained and then also incentivi= ze those to not want to sit on the couch?

“= I’m only doing half my job if I’m bringing these companies in if I’m not making sure our people are ready to take the jobs when the companies get here. If we have Bridgestone, if we have Continental Tire ... it’s no good if when they get here, I don’t have that work force ready to go = and (the companies are) saying, ‘Let’s bring them (workers) from wh= ere we were.’ ”

Haley s= aid the new program will be tailored to South Carolina’s economy and workforce needs, and will not be an exact replica of the Georgia program. In Georgia<= /st1:place>, for example, the majority of program participants — 40 percent — were trained for clerical jobs.

“= Georgia is very different,” Haley sa= id, adding that South Carolina has a burgeoning transportation industry. “We are making things in South Carolina. You’ve got three major tire companies. You’ve got planes. You’ve got cars.”

The Georgia= program has its critics. They say the program misuses unemployment money and exploi= ts desperate job-seekers, willing to work for free, just for the chance of get= ting a job.

At first blush, lawmakers — even Haley critics — say they are open to the plan and want to hear more. “I’m willing to work with her or anybody else on efforts that put people back to work,” said House Minority Leader Harry Ott, D-Calhoun.

Tax reform — again

Haley s= aid she and her staff also will begin pushing for tax reform in January. The en= tire plan will take three to four years to fully enact, she said.

The fir= st phase? Simplify the state’s income tax, Haley says.=

“= We have six tax brackets. We’re going to simplify it down. We’re probably going to go down to about three tax brackets,” she said. “You should not have to have a rocket scientist to do your taxes. It should be simple.”

Democra= t Ott said it is too early to say whether Haley’s plan will gain traction w= ith lawmakers.

“= Who does the burden get shifted on?” Ott said. “If I’m in the lowest tax bracket and she combines it into three, does that mean I’m going to have to pay a higher tax? Or if I’m the wealthiest, will I g= et a tax decrease? Until you put a specific plan on the table, it’s all ju= st talk.”

Haley s= ays the details still are being worked out but include:

•= Phasing out the corporate income tax to encourage new businesses to locate in the state.

•= Reducing the state’s manufacturing tax, now 10.5 percent.<= /span>

“= When you see the Boeings and the Bridgestones come in, the reason they’re = not complaining about 10.5 (percent) is they’re getting (job creation tax credit) incentives to not have to pay it. But the small Mom and Pops that don’t have that many employees, those are the one we need to be helping,” Haley said.

Over th= e past few decades, dozens of commissions and committees have recommended overhaul= s of the state’s complicated tax code — to no avail.

Both Republicans and Democrats are quick to call the state’s tax system broken, pointing to the fact that the system exempted more in sales tax tha= n it collected in 2010 as one example.

But, de= spite that consensus, nothing ever happens.

Last ye= ar, for instance, a commission of tax and finance experts completed its yearlong study of ways to overhaul the state’s tax code, recommending a comprehensive list of changes to lawmakers.

But law= makers — nervous about recommendations to charge sales tax on items now that= now are exempt from that tax, including prescription drugs, groceries and utilities, in exchange for an overall lower sales tax rate — never ac= ted on any of the recommendations.

Haley s= aid she will sell her plan directly to the public and lawmakers to ensure its passage.

“= What I’m going to tell lawmakers is, ‘You want me to keep bringing t= hese companies to South Carolina, you have to do this,’ ” she said.

Haley m= ay have some help on the subject in the upcoming legislative session; she is n= ot the only Republican looking to make tax reform a priority.

House S= peaker Bobby Harrell, R-Charleston, recently formed a committee of House Republica= ns to look for ways to reform the tax system.

“= We want to make (the tax system) more competitive and fair,” said Greg Foster, Harrell’s spokesman. “We’re not looking to make another study that sits on a shelf.”

Retirement system changes<= /p>

If Haley can convince lawmakers and her fellow members of the Budget and Control Board, state workers will face a big chan= ge as well — having to work 30 years, instead of 28, to collect full retirement benefits.

There will be other changes in the retirement system as well, she says.

For example, Haley favors lowering the state’s assumed rate of return on its pension fund investments to 7.5 percent from the current 8 percent. Doing so would lower the state’s = $17 billion pension debt by about $3.7 billion, according to a report from Gabr= iel Roeder Smith & Co.

But it also would reduce — and possibly eliminate — the cost-of-living increases that state retirees now get. Haley said it is a painful, but necessary, change.

“We don’t have (a cost-of-living increase) in our homes. We don’t have it in our businesses and, unfortunately, we’re going to have to stop doing that in state government,” Haley said.

The state retirement system owes about $42 bil= lion in pension benefits to its 458,000 current and retired employees and their beneficiaries, but only has about $25 billion to pay those benefits —= a debt so large and growing that accountants project the state never will be = able to pay it off unless changes are made.

However, changes will result in friction.=

A plan recently presented by the State Retirees Association of South Carolina calls for only giving cost-of-living raises to state retirees 55 and older, increasing the amount that state employees and taxpayers pay into the pension system, and keeping the assumed rate of retu= rn on the state’s retirement fund investments at 8 percent.

Haley said Friday she does not want to put taxpayers on the hook. “I don’t want to lean on the taxpayers to fix this,” she said.

But, she added, state workers could be require= d to pay more into the system.

State workers, having faced years of no or only meager raises while their workloads increase, hardly will be excited about = that prospect.

Other state retirees could be impacted by Haley’s 2012 agenda as well.

Haley said she will work to eliminate the controversial retirement system for lawmakers. In some cases, that system p= ays lawmakers who retire but remain in office more than their legislative salar= ies.

A separate retirement system for judges and prosecutors also could be changed, Haley said. “It’s open game.”

But, she added, a fourth system — for law enforcement officers — should be left intact. “Law enforcement = too often takes it on the chin.”