Tax reform, energy, health care costs dominate business legislative agenda

On Tuesday, our Pee Dee legislators will return to Columbia for what is expected to be a tough legislative session. With threats of double-digit unemployment in South Carolina, state and local governments facing limited budgets, and many businesses tightening their belts significantly to avoid further cutbacks, it is vitally important that legislators examine proposals to make our state economically healthy for years to come.
South Carolina businesses are the creators of jobs, and therefore the creators of wealth for citizens. A state’s business climate is a main factor in where businesses decide to locate. Sonoco has been proud to call South Carolina home for 110 years. Our state offers an abundance of resources for citizens, and it is those citizens that make South Carolina businesses successful.

But in order to continue that success, our state government must take a hard look at three major issues that are negatively impacting each of us. First, the state’s tax system is out of date and must be reformed. South Carolina businesses already pay the highest property taxes in the nation on industrial property and the seventh highest rate on commercial property. Compounding added property tax rates is Act 388, the 2006-passed property tax bill, which eliminated school operating taxes on owner occupied property and increased the sales tax by one-cent. This well-intentioned legislation is having a negative impact on the state’s business climate. The unintended consequences on the business and education communities are now coming to fruition, albeit sooner than some thought.

In 2009, it is critical that the legislature examine comprehensive tax reform including creating a statewide millage for all classifications of property except owner occupied, since the General Assembly already swapped that with a one-cent sales tax. Numerous organizations across the state, including the South Carolina Chamber, are supporting comprehensive tax reform in 2009 to bring fairness, predictability and balance back to the system.

In addition, the state’s budget revenue forecasting method needs a closer look. Families across South Carolina budget according to their income, working diligently not to spend more than they have, especially in these tough times. South Carolina government should do the same. Mid-year cuts, because of revenue not meeting projections, negatively impact education, infrastructure projects and other needed programs. The Chamber supports moving away from a revenue estimating-based budget process to using the prior year’s budget as a basis for projections. This way, the state will use income from the previous year to determine what we can afford the next year.

For many South Carolinians, health insurance costs are a limiting factor in care. Health insurance costs now represent the second highest expenditure for businesses after payroll, and more than 700,000 South Carolinians are uninsured. At the same time, the state forfeits more than half a billion dollars in available federal money that could be used to reduce health care costs. The Chamber supports raising our state’s lowest in the nation cigarette tax, at seven-cents per pack, by 50-cents and using the revenue to offset costs for small businesses and provide premium assistance for employees that purchase their own health insurance. Businesses here in the Pee Dee want to provide health insurance for employees, but rising costs are a huge inhibitor.

Finally, when a business owner and employees walk into their offices or warehouses every morning, the lights must come on and power rates must remain affordable. The availability of electricity can be a primary limiting factor for economic growth in this state. South Carolina faces an expected population increase of more than one million in the next 15 years, and our energy resources must be ready to meet that demand. Two summers ago, the state had 14-plus days of over 100-degree weather. Our energy providers in most areas of the state were operating at 98 percent capacity, making us dangerously close to rolling blackouts. A statewide energy policy to ensure adequate supplies for the future is needed now.

As our legislators return to Columbia this Tuesday, they face a host of challenges, including trying to do more with less. The business community thanks our diligent public servants and urges them to use this legislative session to put in place initiatives to make South Carolina more competitive in the long run: comprehensive tax reform, reducing health care costs and planning for energy needs of the future.

— Harris DeLoach is chairman, president and chief executive officer of Sonoco Products Co., which has headquarters in Hartsville with more than 300 locations worldwide and 18,000 employees. He is also past chairman of the South Carolina Chamber of Commerce and was honored as the 2008 Business Leader of the Year by the Chamber.