SC passes significant military friendly legislation in 2015

Lost in the fight over the Confederate flag and impasses on ethics reform and road funding, the General Assembly took steps toward making South Carolina more military friendly.

Legislators passed seven bills supporting the military, some in the waning moments of the legislative session. They included extending the property tax exemption on the vehicles of disabled veterans to their surviving spouses and charging in-state college tuition to service members who leave the service while in South Carolina.

With the military sharply downsizing after 13 years of war in Iraq and Afghanistan, a new round of Base Realignment and Closure – called BRAC – could come as soon as 2019. States that show the most support for troops and their families by their laws could stand in better stead with the Pentagon than those that don’t, military backers say.

The bills “support our military bases and service members,” said Bill Bethea, the Bluffton attorney who chairs the S.C. Military Base Task Force. “That’s important because the military is an $18.3-billion part of our economy.”

The task force is charged with helping to protect and expand missions at the state’s six major military installations. The group was formed during the administration of former Gov. Mark Sanford prior to the 2005 BRAC, after the state suffered the loss of the Charleston Naval Base and Naval Shipyard and the Myrtle Beach Air Force Base in the 1990s.

With the military set to cut more than $500 billion over the next 10 years because of the Budget Control Act of 2011, commonly called the sequester, a new round of BRAC is expected in 2019. That could be a watershed moment for South Carolina, considering the military pumps more than $18 billion into the state’s economy each year, according to S.C. Department of Commerce.

Recently, Fort Jackson was threatened with cuts of up to 3,500 employees – both military and civilian. When the cuts were announced last month, the fort – the nation’s largest training base – lost only 180.

Maj. Gen. Roger Cloutier, Fort Jackson’s new commander, was coincidentally head of the Army’s agency that made recommendations for the cuts. Bethea said that during a recent meeting, Cloutier said community support for the base figured into the Secretary of the Army’s decision to leave Fort Jackson relatively unscathed.

“He knows what they look at,” said Bethea, who was appointed by Gov. Nikki Haley. “It meant a lot to that Fort Jackson analysis.”

Still pending in the legislature is a bill that would exempt military retirement pay from the state income tax. The proposal unanimously passed the House this year, but is still in the Senate Finance Committee.

The bill carries a heavy price tag: The tax generates $22 million a year in revenue from military retirees, according to the S.C. Board of Economic Advisors. Nearly 58,000 military retirees are in the Palmetto State, according to the U.S. Department of Defense.

But advocates for the bill say those dollars and more can be recaptured as the state grows its retiree base. The revenue would be made up by additional sales taxes paid by the retirees and income taxes paid by merchants and service providers who profit from them. The retirees themselves would pay income tax if they take a second job, which many do.

Retirees are different from other veterans because they served at least 20 years in the military and draw a pension. That means that a person who goes into the military at 18 can retire and draw a pension at 38. Most, however, choose to stay in longer to increase their benefits.

“When a lot of these folks get ready to retire they roll out the map of the United States and say, ‘which state’s going to tax my retirement?’,” said Stephen Creech, a former Sumter mayor who is that city’s representative on the military base task force, who noted that Southeastern neighbors North Carolina, Georgia, Alabama and Florida all offer better deals when it comes to the retirees’ bottom line.

“We have to keep in mind that most of these are still young, they are going to buy a home and they are going to get a job and work a second career and pay income taxes,” he said. “So the income we would lose, we would more than make up for in additional revenue from property taxes and vehicle taxes. But the real benefit is the expertise they would bring to our communities.”