McMaster Highlights UCC Policy Priorities

Thank you to Governor Henry McMaster for supporting a number of our Coalition’s major policy priorities this evening.

Much of his State of the State Address was focused on his budget priorities. We’re strongly supportive of most of his executive budget — including higher teacher pay, funding for the Department of Commerce, and holding college tuition costs down, among other proposals. But two major policy items the Governor mentioned are issues we continue to advocate for and we appreciate his support…

Closing the Pension System

Finally, the South Carolina Retirement System, often called the “state pension plan,” has one of the largest unfunded liabilities in the nation, at nearly $24 billion. The system only has assets equal to 64 percent of what is required to pay beneficiaries, which places our pension system fifth worst in the nation.

Once again, I ask that the state plan be closed to new beneficiaries as of December 31, 2023, and that new state employees prospectively enrolled in the State Optional Retirement Program, which is a defined contribution 401(k) plan. Another year of inaction is another year in which the unfunded liability in the pension plan will increase. We cannot “kick this can down the road” any further.

Closing the retirement system to new employees is vital to getting our state’s fiscal house in order. Not only is this unfunded mandate starting to resemble a Ponzi scheme, but also it is important to plug this leaky bucket before payments to current retirees are at risk. Liabilities and mandates on local governments are forcing our local officials to choose between funding a failing pension system, raising taxes, or not keeping up with growth. In the case of school districts, any tax increases disproportionally fall on small businesses.

The one item in the speech that we take issue with is the Governor’s proposal to put an additional $500 million into our state’s already-healthy reserves. We believe this funding would be much better used to pay down the unfunded portion of our pension liability and prevent us from kicking “the can down the road any further.”

Joint and Several Protections

One issue in need of re-examination is in the area of civil litigation known as “joint and several liability.” Nobody, including business owners should be penalized for the actions of others, simply because they have more money.  Nor should anyone be absolved of responsibility for their own actions. I am confident that we can find a common sense formula which will provide accountability and just compensation without damaging our economy.

Thank you to the Governor for again highlighting this important legal and economic development issue. As a “red” state, it is shocking that South Carolina is listed as a “judicial hellhole” and repeatedly receives low ratings from lawsuit abuse reform groups. If you have a logo you are a target of the plaintiff’s bar, and most small businesses are only one lawsuit away from going out of business. Businesses are being targeted because they (in theory) have assets and deep pockets, so plaintiff’s attorneys (like the ones you see on TV) are settling out-of-court with folks who can’t pay and coming after businesses for 100% of the liability … even if the business is only, say, 10% at fault.

Nobody claims that businesses who are truly at fault in a lawsuit should not pay their fair share, but strong majorities of voters in polling support everyone paying their fair share in a lawsuit (and more than 4 out of 5 Republicans indicated their support in an advisory referendum last June). We ask the General Assembly to quickly pass this legislation, and thanks again to Governor McMaster for his support.

We appreciate the Governor’s support and his pro-business administration. We look forward to working with the Governor and his office on these initiatives and hope the General Assembly will take swift action on them.

(Quotes above from the Governor were taken from his prepared remarks. The quotes may differ in the actual delivered speech.)