Harvey Peeler

One of the biggest issues facing the S.C. Legislature this year is what to do about the state retirement plan.

Leaders of both houses, including Sen. Harvey Peeler (R-Cherokee), discussed this and other issues they will face during a workshop with reporters Thursday in Columbia.

The retirement plan as it exists today will become insolvent in the future — no one can say exactly when — so legislators will be looking at several changes including:
1. Years of service before benefits begin;
2. Employee contributions;
3. Benefit adjustments (cost of living increases) and;
4. Number of years before employees are vested.

One of the reasons the plan is in trouble is the ratio of active members to retirees has dropped from 3-to-1 in 1999 to 1.7-to-1 in 2010. Lawmakers are talking about increasing by 1 percentage point, to 7.5 percent, how much employees contribute toward their pension.

All is not doom and gloom, however. The overall financial picture for the state is much brighter this year.

In January 2011, lawmakers were lamenting an $850 million budget gap, due to the slow economy and the end of federal stimulus money. But South Carolina’s budget outlook for 2012-’13 is relatively rosy, even as other states continue to face budget deficits.

Budget advisors expect an additional $913.4 million in one-time and recurring revenue because of surplus from the fiscal year that closed June 30, along with more money coming in this fiscal year than legislators budgeted, plus continued growth.

Even after some key funding issues are covered — such as increases to employee health costs, Medicaid, and scholarship programs— legislators will have several hundred million dollars of additional revenue to allocate for 2012-’13, according to the state’s budget office.

Raises for state employees is a prime objective for several legislators.

“We can’t in good conscience just increase the rate of contribution (for retirement) without some acknowledgement and some giving on our part to increasing wages,” Cobb-Hunter said. “The bottom line is, we have got to recognize the sacrifices state employees have paid.”

Each 1 percent raise for state workers would cost $14 million. How much of a raise employees receive, if any, will be part of a protracted budget debate.

But don’t look for lawmakers to restore agency budgets to previous levels.

“We’re going to be on an Atkin’s Diet,” Peeler said. “If it isn’t red meat we aren’t eating it.”

Peeler wants to impose spending caps and continue the “fiscal fitness” course the state has been on.

“If we don’t have spending caps, they (referring to Democrats) will try to spend every dime we have,” Peeler said. “We need to pay down debt and return any excess to the taxpayers. Some of my colleagues think they know best how to spend your money. I don’t.”

In response to a question about funding for the new I-73 along the coast, Peeler said, “We need to take care of what we have first. We’ve got bridges on I-85 you can see through. Portions need to be widened. I will not go along with I-73 until we fix the problems on our existing roads and bridges.”

The senator from Cherokee also thinks the highway commission should be abolished and the Department of Transportation (DOT) made into a cabinet agency. He confirmed Sunday that he has pre-filed a bill to just that. It has been referred to the Senate Transportation Committee.

“Right now, four commissioners control everything. My commissioner might as well not show up for meetings,” he said.

Despite partisan barbs in some of the discussions, there was consensus on the 9-member panel that there is a problem at DOT and also that Gov. Nikki Haley has done a good job in economic development.

The director of the office of State Budget, Les Boles, told reporters that health care costs is the “elephant in the room.” The federal mandates known as ‘Obamacare’ will “hit all states hard.”

Courtesy of Gaffney Ledger