June 2013 Newsletter

South Carolina Small Business Chamber of Commerce

2013 Legislative Wrap-Up

The 2013 South Carolina legislative session was not a great success for small businesses.

Affordable health insurance was rejected by the General Assembly. The health insurance premiums small businesses and individuals pay for family coverage will continue to be about $1000 more each year because both the House and Senate rejected efforts to use Federal money to expand Medicaid. A bill (S.145) that would also make health insurance more affordable by ending anti-competitive behavior by insurance companies was put off until next year.

Legislation (H.3425 and S.536) that would make solar energy equipment affordable for residential and commercial buildings was killed-off or stalled. And unfortunately a special interest bill (H.3369)that would possibly increase workers’ compensation insurance premiums for all businesses in order to benefit a handful advanced from the House to the Senate.

But there was some good news. Legislation (H.3125)that would direct the SC Department of Commerce to develop financial resources for microbusiness lenders crossed the hall to the Senate. A bill (H.3437) to establish a committee to take a big-picture look at all legislation that would impact small businesses advanced from the House to the Senate.  

The Legislature will pick up this two-year session starting in January.

Duke Energy’s Massive Rate Hike Proposal

The S.C. Small Business Chamber of Commerce is opposing Duke Energy Carolina’s proposed 15.1% average electric rate hike. By intervening in the upcoming Public Service Commission rate hearing on Duke Energy’s filing, the Small Business Chamber is a party of record and will present a witness and cross examine witnesses. This is the seventh time either the Small Business Chamber or its President, Frank Knapp, has intervened in a utility rate case but the first against Duke. For a complete review of the amazing success the Small Business Chamber and Mr. Knapp have had in dramatically reducing rate increases on small businesses to as little as 0.08%, click here.

Members Saving Money with Our Health Insurance Plan

The Small Business Chamber in partnership with Carolina Care Plan is saving our members money with our health insurance plan. Find out if our plan can make health insurance more affordable for your business by clicking here.

Listen to what our members are saying about our health insurance plan:

“Not only do we now have a plan with better benefits than our previous plan, but we also will be saving thousands of dollars in premiums during our first year,” says Bruce Fewell of Corporate Concepts in Columbia.

“I am already seeing better benefits and lower deductibles. Plus, we will save over $8,000 in premiums in the first 12 months,” says Leslie Hagan of Hagan Heating & Air Conditioning in Anderson.

Duke Energy files for 15.1% electricity rate hike—WOW!

Last week Duke Energy told the SC Public Service Commission that it wants its 540,000 customers to give it more money…a lot more money.  $220 million more a year to be exact.

Duke’s filing is for electricity rate increases for residential (16.3%), small businesses (14%) and industrial (14.4%).  In February of last year Duke received a 6% average rate hike.  If Duke’s gets the hike it wants, that would mean a staggering 21% increase to customers in about a year.

While Duke wants its customers to pay more, it is fighting in the Legislature to stop them from being able to pay less.  Duke and the other energy utilities successfully derailed a bipartisan bill just several weeks ago in the House that would have allowed third parties to finance and own solar panels on buildings and sell the electricity generated to the owners of the buildings.  Other states have successfully gone this route and taken away the biggest obstacle to more use of solar energy by residential and commercial buildings—the upfront cost to the building owner.

But Duke says no to this great free-market idea and instead wants it to be “studied” more.  Fortunately the idea will get more study in the Senate where 15 Senators on both sides of the aisle have filed the same bill (S.536).  The act is called the “Energy System Freedom of Ownership Act”. 

For those keeping score, 15 Senators is 33% of the entire Senate.  Duke and its energy buddies will have a lot harder time burying this bill.

But back to Duke’s massive rate hike request.  The South Carolina Small Business Chamber will be intervening to fight the increase.  We have the experience and a solid track record (from my personal participation with SCE&G rate cases) to take a hatchet to this over-stuffed filing. 

Stay tuned.  It’s going to be fun.

Expanding Medicaid Essential for Controlling Health Insurance Costs

ACTION ALERT!!

Call Your House Member NOW!!!

Today the South Carolina House begins their budget debate.  Whether our state should expand Medicaid to cover individuals with incomes up to 138% of the federal poverty level will be debated.

It is critically important for our state to accept $11.2 billion through 2020 of federal money to cover all the cost for the first 3 years and 90% of it after that. 

An economic study projects that this new money will create 44,000 jobs and the result will be that the state will actually net $9 million more to its budget by 2020.

Even more important is the direct effect expanding Medicaid will have on small businesses.  The S.C. Small Business Chamber was the first business organization in the state to support the expansion and last week the Charleston Chamber of Commerce also endorsed expanding Medicaid.

Read the op.ed below to see how expanding Medicaid will help small businesses in promoting healthier workers and reducing health insurance expenses.

Call your House member now with this message:

Please expand Medicaid to help control the cost of health insurance and health care for small businesses.

You can find the contact information for every House member here:  http://www.scstatehouse.gov/member.php?chamber=H

Thank you for your support.

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Greenville News March 11, 2013   Guest column: Medicaid expansion is critical here By Frank Knapp Jr.   Recently a representative of the Heritage Foundation told a South Carolina Senate subcommittee that expanding the state’s Medicaid program as allowed under the Affordable Care Act would be bad welfare policy.   Director Tony Keck of our Department of Health and Human Services has framed the argument against expanding Medicaid as an inefficient way of improving the health of our citizens.   These opponents of Medicaid expansion want to distract us from the real purpose of national healthcare reform and providing health insurance to our low-income citizens with incomes up to 138 percent of the federal poverty level.   In 2000 when I co-founded the South Carolina Small Business Chamber of Commerce we held meetings around the state to find out the major issues on the minds of small businesses. One of the top priorities we found was the cost of health insurance. Small businesses wanted affordable health insurance for themselves and their employees. They weren’t talking about welfare or making South Carolinians healthier.   Addressing this problem became one of the key issues throughout the last decade. My organization offered several proposals including raising the state’s cigarette tax to generate funds to subsidize small businesses providing health insurance to low-income workers. This tax was eventually increased in 2010 but the revenue was no longer necessary to help small businesses because national health care reform passed to address the problem of healthcare costs for all small businesses across the country.   There is no question about what national healthcare reform was about. It was titled the “Affordable Care Act.” It wasn’t called the Welfare Act of 2010 or the Improve the Health of our Citizens Act. It was primarily about affordable health insurance and health care. It was the compromise solution to the demands of businesses to get health insurance and healthcare costs under control.   Our Legislature is now considering one of the most important aspects of the Affordable Care Act that will help make health insurance more affordable for businesses and individuals — expanding Medicaid to those who have incomes up to 138 percent of the federal poverty level.   Many of our state’s low-income workers are employed by our small businesses and here is how a Medicaid expansion will directly help us:   First, there is a significant cost to a small business when workers are not on the job because they are sick or have to care for a family member who is ill. Workers with health insurance for themselves and their families miss less work due to illness and are more productive.   Second, small businesses that want to offer health insurance to employees will find it more affordable under a Medicaid expansion. Small employers with Medicaid-eligible workers will have fewer employees to cover on a private group health plan and thus have less in premiums to pay. In addition, with Medicaid expansion the cost of the employee’s private insurance will drop due to a reduction in the “hidden tax” on every health insurance policy to pay for the uncompensated care for the uninsured. Based on projections by Milliman Inc., the actuarial firm used by Director Keck for his cost projections, the reduced premiums could be up to $1,000 per year for family coverage.   The third benefit of a Medicaid expansion involves the requirement of the Affordable Care Act that businesses with 50 or more employees either offer health insurance or pay a penalty. Many larger small businesses in this category will decide to offer insurance but they won’t have any premiums to pay for their employees on Medicaid.   Medicaid expansion is thus critical to achieving affordable health insurance and health care for small business and all of us. Those who want to distract the public and Legislature from the real purpose of expanding Medicaid do so only to confuse the issue. We cannot let them hijack this debate.

Frank Knapp Jr. is president and CEO of the South Carolina Small Business Chamber of Commerce. For more information go to www.scsbc.org.

http://www.greenvilleonline.com/article/20130311/OPINION/303110009/Guest-column-Medicaid-expansion-critical-here?odyssey=mod|newswell|text|Opinion|p

Webinar: Affordable Care Act Benefits for Small Business

The Affordable Care Act signed into law two years ago this Friday continues to inspire controversy and misinformation for small-business owners.  What exactly are the benefits and requirements for small businesses will be addressed in a free webinar sponsored by the South Carolina Small Business Chamber of Commerce (SCSBCC).  The webinar will be held from 5:00 to 6:00 PM, Wednesday March 21^st. 

Small-business owners are encouraged to participate in the webinar and hear from the SCSBCC President and CEO, Frank Knapp Jr., who will provide information on health insurance tax credits and an affordable high risk pool for people with pre-existing conditions.  Mr. Knapp will also discuss new features in the Affordable Care Act to be rolled out as well as proposed changes to the law. 

Joining Mr. Knapp will be Lee Long of Gibson & Associates, an independent insurance agency headquartered in Columbia.  Mr. Long will share information about a new small business health plan offered through the SCSBCC.   The health plan was created by Carolina Care Plan specifically for South Carolina small businesses.  The benefit-rich plan has proved to be very competitive offering up to double-digit reductions in premiums for many small businesses.

The webinar is free.  To register small businesses should contact Sheila Starkey at Sheila@scsbc.org to receive the link to the webinar.

Help for retirement planning

Here’s a startling statistic.  One in three small-business owners aren’t prepared for retirement.  USA TODAY reported last week that the American College surveyed small-business owners and found that about a third of the owners “do not have a personal or business-sponsored retirement plan such as a 401(k), a SEP IRA or deferred annuity. 

We might be an optimistic lot but this isn’t good.  We will stop working someday (or at least slow down).  So your income from the business will also stop or slow down.  And if you’re counting on financing your retirement from selling your business, ask the owners who tried that over the last 4 years. 

One of the reasons small-business owners aren’t prepared according to Gary Kushner, CEO of a human resources consulting firm, is that setting up a 401(k) for the owner (and employees) is a big challenge that most owners don’t feel they have the knowledge and time to do.

If you’re a small-business owner in South Carolina, the Small Business Chamber is riding to the rescue. 

Within the next few weeks we will have a new member benefit plan that will let small businesses join a 401(k) Multiple Employer Plan that will offer the employer and employees a menu of over 40 brand name money market funds.  By combining with other small businesses through the Small Business Chamber’s 401(k) Plan our members will find reduced set up, recordkeeping and administrative service charges.  Our members will save $200 up front and another $200 every year of the plan.  Plus, a professional will make setting up a plan simple. 

If our members are only interested in a solo 401(k), our program through Complete Investment Management and plan administrator My Benefits, LLC, can help there also.

If you can’t wait to find out more, email me at sbchamber@scsbc.org and we’ll be in touch. 

Owing a small business is truly an opportunity to dramatically improve your own personal wealth.  Don’t throw it all away from a lack of planning, saving and investing.

Letter to Governor Nikki Haley

October 10, 2011

The Honorable Nikki Haley

Governor

State House

Columbia, SC

Dear Governor Haley,

In an interview reported in The State yesterday you indicated your desire to revise the South Carolina tax code.  Specifically you mentioned that one of the goals of this process would be to phase out the corporate income tax in an effort to encourage companies to locate in our state.

As you know, the vast majority of small businesses in South Carolina are not organized for tax purposes as C-Corporations.  Consequently, the Mom and Pop businesses you are quoted as saying we “need to be helping” will not be directly helped by reducing or eliminating the corporate income tax.

We at the South Carolina Small Business Chamber of Commerce would like to work with you in developing a small business agenda to promote economic growth and job creation.  Our Board of Directors would like to meet you and your economic development team to discuss this issue. 

Given that the legislative session will start in just three months, a prompt reply to our request for a meeting is essential.

Sincerely,

Frank Knapp, Jr.
President & CEO

Small Business Health Plan

Now for some shameless self-promotion for the South Carolina Small Business Chamber’s new Small Business Health Plan.

Here is a link to a radio interview that will air this afternoon at 4:07 on WOIC (1230AM).  Lee Long of Gibson and Associates discusses what makes our new health insurance plan from Carolina Care Plan different from traditional association plans.  Affordability is the goal and I think we've done that.

If you like what you hear, click on this link and fill out a request for more information.  

Jobs: Part 2

In yesterday’s blog I talked about some of Dr. Douglas Woodward’s keynote address at this weekend’s South Carolina NAACP African American Economic Summit.  I discussed his latest research on the important role of small business our state and the prospects for the nation’s economy.

Dr. Woodward also made it clear that job creation is what we need.  Dr. Woodward believes that South Carolina lost its focus on creating jobs back in 2003 when Harvard Professor Michael Porter convinced state leaders to adopt a new bible for economic development centered around business clusters.  We created a whole new organization for cluster development—New Carolina, South Carolina’s Council on Competitiveness. 

It wasn’t that this cluster idea was bad, said Dr. Woodward, it was that the state lost its focus on creating jobs and instead just wanted to pursue wealth and raise per capita income.

Confused?  Let me give you a real life example of what happens in state government if the focus is on wealth creation and not job creation.

In 2005 the Legislature passed a bill amending the state’s job tax credit program.  Prior to this time only certain types of businesses (primarily manufacturing) that created 10 net new jobs were eligible for a tax credit on each new job.  The South Carolina Small Business Chamber lobbied very hard to open up the job tax credits for the first time to small businesses that created a minimum of two net new jobs.  A job was a job was a job we argued.  The House agreed and included this provision in the bill.

But the Senate then caved into the state’s big business community that argued that South Carolina should not be rewarding the creation of just any net new job but only jobs that paid far above the average per capita income in that county.  Generating wealth in the state by raising per capita income was THE goal, not creating jobs.  

Our response to this misguided economic approach was that getting an unemployed person into a job regardless of the pay would also raise the per capita income of the state.  But apparently our economic development leaders were only interested in raising per capita income from the top down, not bottom up.  Fortunately we prevailed in a House-Senate Conference Committee.

While we all would like more high-paying jobs in our state and pursuing clusters can yield rewards, we must get back to focusing on creating JOBS.  As Dr. Woodward’s research has clearly pointed out, we should start focusing on the business sector that is creating the most net new jobs already—our small businesses.

Health insurance meetings start Monday in Charleston

Benefits of Healthcare Reform on Small Businesses Focal Point of South Carolina Listening Tours

New Small Business Health Plan Rolls Out

Free events beginning Aug. 29 open to all small businesses; chance for entrepreneurs to learn about new law and share ideas about how to implement it in South Carolina.  Plus information on new small business health plan.

Columbia, South Carolina, Aug. 25, 2011—The South Carolina Small Business Chamber of Commerce (SCSBCC), in conjunction with small business advocacy organization Small Business Majority, will host interactive events starting August 29 on healthcare reform’s benefits to South Carolina small businesses and the state’s role in implementation.

Also at the meetings details of a new small business health plan will be announced.  The SCSBCC has partnered with the Carolina Care Plan to offer a highly competitive health insurance for small businesses.  Plan benefits and rate information will be available at the meetings.

The free events, which are open to all small business owners, will feature a panel of small business experts and advocates discussing the topics in the new law most relevant to small businesses. These include small business tax credits, the state’s work setting up a health insurance exchange, wellness grants and cost containment. It will also give small business owners a chance to provide the panel ideas and suggestions on how to proceed with implementing healthcare reform in South Carolina. A question and answer period will follow the panel discussion.

“There have been many reforms to our healthcare system over the past year, both nationally and in South Carolina,” said Frank Knapp, president and CEO of the South Carolina Small Business Chamber of Commerce. “It’s important that small business owners hear about how many of the new healthcare law’s business-friendly provisions can help, and also for them to tell us what the state can do to make healthcare reform work for them.”  

Additional panelists include Jessica Stone, outreach manager at Small Business Majority and Lee Long with Gibson & Associates.

 “We believe it’s important for small business owners in South Carolina to learn more about healthcare reform and how it affects them,” said Small Business Majority CEO John Arensmeyer. “This interactive dialogue is a great way for them to get the information they need to take advantage of and comply with key provisions of the new law, and for us to get feedback on their thoughts and concerns.”

“The new health plan is just another one of our efforts to help make this employee benefit more affordable for small businesses,” said Knapp.

To register and find additional details about the events, click on the corresponding link below:

Monday, Aug. 30

Location: Berkeley Electric Co-op Johns Island District Office, 3351 Maybank Highway, Johns Island, SC 29455

Time: 6-8pm

To register: http://www.smallbusinessmajority.org/news-and-events/details/0811_charleston_flyer.pdf

Tuesday, Aug. 30

Location: ILA Union Hall, 1142 Morrison Drive, Charleston, SC

Time: 8-10am

To register: http://www.smallbusinessmajority.org/news-and-events/details/0811_charleston_flyer.pdf

Tuesday, Sept. 6

Location: Midlands Tech Harbison Theater, 7300 College Street, Columbia, SC

Time: 6-8pm

To register: Contact Sheila Starkey at Sheila@scsbc.org or (803) 252-5733

Tuesday, Sept. 13

Location: West Columbia City Hall, New Brooklyn Room, 200 N 12th Street, West Columbia, SC 29169-6458

Time: 6-8pm

To register: Contact Sheila Starkey at Sheila@scsbc.org or (803) 252-5733

Tuesday, Sept. 27

Location: Greenville County Library, 25 Heritage Green Place, Greenville, SC

Time: 6-8pm

To register: Contact Sheila Starkey at Sheila@scsbc.org or (803) 252-5733

About Small Business Majority

Small Business Majority is a national nonpartisan small business advocacy organization founded and run by small business owners and focused on solving the biggest problems facing small businesses today. We speak for the nearly 28 million Americans who are self-employed or own businesses of up to 100 employees. Our organization sponsors scientific research that guides us to understand and advocate on behalf of the interests of small businesses across the country.

 

Creating Jobs from the Ground Up

The below is an editorial by the Sun News that ran in the Myrtle Beach area newspaper on July 05, 2011

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Creating Jobs from the Ground Up

Frank Knapp has a message for those who want to create jobs and bolster our state's economy: Look to the little guys.

Knapp, the president and CEO of the S.C. Small Business Chamber of Commerce, is helping put together an initiative that would create a mini business trade group tailored specifically for the microenterprises in our state. According to the statistics presented by Knappand the national Association for Enterprise Opportunity, 87 percent of the businesses in our state qualify as microbusinesses, enterprises with five or fewer employees.

The goal of Knapp and other business leaders is to pool resources to help those businesses succeed and to create new ones. But wait, isn't that already function of the state Commerce Department? Sadly, not quite. Knapp expressed frustration this week that the state department and regional development organizations spend their time chasing after big game instead of seeking to foster the smaller enterprises that already exists.

"It's not as sexy as Boeing or Amazon," he said, "but the reality is that it's our small businesses that create the most jobs in our state and our country." Indeed, the AEO estimates that if one in three microbusinesses could employ just one more worker, the U.S. would be at full employment.

Knapp's complaint about a lack of attention to the little guys hits home. While we've been impressed so far with the efforts and goals of the Myrtle Beach Regional Economic Development Corp.'s new CEO, Brad Lofton, it's hard to imagine him stopping in at the local tanning salon that employs three people, just to see how he can help their business grow. But then, with only 24 hours in his day and so many resources to devote, we can't say that would be the best use of his time anyway.

And that's exactly why the trade association proposed by Knapp and others makes sense. Similar state groups already exist in North Carolina and Georgia, and founding one in South Carolina would provide another handhold for entrepreneurs looking to climb toward success. North Carolina's program has created nearly 3,000 jobs since its inception in 1989, through technical assistance, planning help and small loans.

One of the biggest ways these groups help the smallest businesses is by linking them with banks or by offering access to lending pools of their own. It's often hard for entrepreneurs or small businesses that already exist to find and secure smaller loans of $5,000 or $10,000. Combining this sort of seed money with technical assistance and business experience can make the difference between a business fizzling and flourishing.

Knapp and company began their statewide push May 5 and plan to have a strategic plan in the works by September. A legislative study committee on the need to help microenterprises is also in the works, with plans to report some time next year. There's still a long path ahead, however. One hurdle avoided just this week was Gov. Nikki Haley's veto of the funding for the state's small business development centers, one of the partners in this effort. The House overrode that decision - though local Reps. Kevin Ryan of Georgetown and Thad Viers of Myrtle Beach disagreed.

The group is chasing a worthy goal - making it be easier to start and run a small business - and we wish them all success.

Legislative score card

While the South Carolina Legislature might or might not go back into session this week (but for sure next week), the legislative agenda of The South Carolina Small Business Chamber of Commerce is done for this session. But remember that this was the first year of a two year session. So what didn’t get done in 2011 might still have life in 2012.

Here’s our state legislative score card.

S.36—Passed—Good and bad news here. We supported this bill for two reasons. It would prevent the S.C. Department of Revenue from going rogue like it did last year when it told numerous businesses that the service contracts they sold to others should have included sales tax. But these businesses had no idea about this new Revenue interpretation of a law and faced owing tens of thousands of dollars to the state—sales tax they had never collected. Fortunately the bad publicity that we helped generate resulted in Revenue backing off and giving the Legislature time to correct the situation.

This bill also would gradually phase out sales tax on durable medical equipment purchased with Medicare and Medicaid funding from South Carolina retailers by January 1, 2013. Because federal law prohibits these durable medical equipment vendors from charging sales tax on Medicare and Medicaid purchases, requiring them to pay sales tax out of their small profits was unfair. We have supported the elimination of sales tax collection in these situations since 2007 and were instrumental in passing a law that year that should have addressed the problem. But then the economy went south and the phase out stopped. Now the problem is solved.

Now the bad news. This was the bill that the Amazon.com supporters successfully attached an amendment to exempt the retail giant from collecting sales tax on in-state sales for five years. You know the story from here. Our opposition helped force Amazon to increase their offer of new jobs by 60%, expand its investment by 39% and agree to notify its South Carolina customers that they might owe sales tax to the state. But in the end, Amazon won the battle against all the other retailers in the state and will have an unfair competitive advantage over them.

H.3111—Passed the House and is in the Senate Banking and Insurance Committee—Good news. We support this legislation that will require workers’ compensation insurance companies to use the most recently approved Loss Costs and Loss Cost Multiplier. I won’t make your eyes glaze over with an explanation but take my word for it; this would be a good thing for small businesses.

H.3346—Passed House and is in the Senate Banking and Insurance Committee—Good news. This bill has the potential of creating a vibrant, job creating solar industry by providing tax credits for commercial building solar installation.

S.461—Passed Senate and is in the House Agriculture Committee—Not good news here. While we support recycling and the recycling industry, this bill would mandate restaurants and bars to recycle glass, aluminum and cardboard. We oppose requiring small businesses to incur costs that will help all of us in general and provide free resources to some recycling businesses at the expense of other businesses. Either the restaurants and bars should be given tax credits for their required efforts or the users of the recyclable materials should cover the costs of the mandated activity. The proponents of this bill have made some changes to lessen the cost to restaurants and bars but there is still work to do as the bill goes to the House.

H.3473—Lots of discussion but no movement. Still in Labor, Commerce and Industry subcommittee—Not good news. We support this bill that will prohibit the sale of HVAC equipment of more than 3 tons to unlicensed heating and air conditioning contractors. The S.C. Association of Heating and Air Conditioning Contractors believes that H.3473 is needed to protect the public and promote professionalism in the industry.

H.3738—Lots and lots of discussion. Still in House Ways and Means Committee—Good and bad news. First the bad. We support this bill that will establish an insurance exchange for South Carolina and be run by the state. The Affordable Care Act requires each state to have an exchange by 2014. The exchange will be the place (internet based) where individuals and employees of small businesses can go to obtain health insurance. With the failure of this controversial bill getting passed by the House this session, the prospect are not good for it being passed by the Legislature next year.

Now the good news. The federal government will set up and run an insurance exchange for the state if we fail to do so ourselves. In this case, South Carolina might end up with an exchange that is more transparent and easier to use. A federal exchange might also actively promote more insurance company competition and engage insurance companies in making sure consumers get the lowest premiums possible.

S.316—No action. Still in Senate Banking and Insurance Committee—This is very bad. In spite of guarantees that this important bill would be given a subcommittee hearing, the legislation did not move. We support it because it would prohibit a health insurance carrier from forcing a healthcare provider to contractually give the carrier a “most favored nation” status—the provider could not negotiate a lower or even the same reimbursement rate with a different health insurance carrier. The “most favored nation” clause in contracts is one of the important reasons that there is no real competition between carriers resulting in ever-increasing insurance premiums.

S.124—No action. Still in Senate Committee—This is very good. The primary sponsor of the bill has decided not to push for a subcommittee hearing on this legislation we oppose. The bill would require wage garnishment of an employee by the present employer to pay back a commercial debt of the employee. We do not believe that small businesses should be in the debt collection business for other businesses.

S.31—No action. Still in Senate Banking and Insurance Committee—This is also very bad. Again, in spite of promises to hold a subcommittee hearing on this bill that we support, no subcommittee was ever given. The legislation would guarantee that the State Consumer Advocate could ask for a public hearing before a Judge to contest proposed changes, up or down, in workers’ compensation rates. Now only increases in rates allows the Consumer Advocate to make a court challenge but our experience is that proposed reduced rates should be examined because they might not be enough of a reduction.

S.214—No action. Still in Senate Banking and Insurance Committee—We agreed to drop our request for legislative action on this workers’ compensation insurance issue to allow the S.C. Department of Insurance to address the problem administratively. The problem is that there are businesses that have not had their workers’ compensation insurance experience modification rate adjusted downward when it should have been in Second Injury Fund cases. As a result of the insurance carriers not obeying the law, these businesses might be due a premium refund. Unfortunately, the present law and regulation sets up an arbitrary time limit to correct the problem. We want this time limit removed.


We fully expect that in addition to the above bills there will be more legislation that will find its way onto our agenda in 2012.

House stands with state’s small businesses

Congratulations to the South Carolina House!

Yesterday after nearly two hours of hot debate, Representatives voted not to give Amazon.com an exemption from collecting sales tax on in-state purchases. The vote turned out not to be even close.

A clear bi-partisan majority in the House established a new principle for the state’s big business recruitment efforts—do no harm to our existing small businesses.

That was the underlying problem with the Amazon.com sales tax deal. All month we and other business organizations have been saying that exempting Amazon.com from collecting sales tax would give it an unfair competitive advantage over our existing brick-and-mortar and online businesses. (Check out my WIS-TV editorial that ran yesterday afternoon before and during the floor debate.)

The Amazon.com supporters tried to change the subject to one of honoring our promise to Amazon.com to give them the sales tax deal. But no such contractual promise was ever given to Amazon.com.

In response to yesterday’s vote, Amazon.com announced that it was pulling out of building a distribution center in Lexington County. This could be a ploy to scare the legislature into yet giving in. Or it could be a clear indication that Amazon.com is not the corporate citizen we want here. One that either gets its way 100% or takes off for greener pastures.

If it’s the former, the House should not flinch and the Senate shouldn’t tremble because Amazon.com will eventually keep their contractual promise to build. If it’s the latter, our state will survive without Amazon.com and our ability to recruit business will be just fine. We’ll see Amazon.com in court to recover the tangible property already given to the company as part of the contractual incentive.

Comments reported in The State today from a Lexington County official are clearly over the top predicting that “It’s like no one will even look at coming here for 10 years.” You’d think that Sherman burned Columbia and Lexington again yesterday.

However, at the exact same time some legislators were predicting recruitment impotence yesterday if we turn down Amazon.com’s sweetheart sales tax deal, I received the S.C. Department of Commerce’s weekly e-newsletter, Commerce Communications. (I encourage you to sign up for this well designed, clearly written and informative publication.)

In the last 3 issues of this e-newsletter Commerce has announced six new or expanding businesses planning to invest $53.3 million and creating 568 new jobs in the state. Does anyone really believe that this kind of success is going to come to a grinding halt because Amazon.com couldn’t bully the South Carolina House into dropping our collective pants?

Of course not.

Now attention must be paid to the Senate. Amazon.com hasn’t been paying possibly six digit fees to lobbyists just to give up as long as the legislature still has a breath of life this session.

Amazon’s tantrum

Last week legislation was introduced in both the South Carolina House and Senate to exempt Amazon.com from collecting sales tax on sales to South Carolina residents from its proposed distribution center in Lexington County. The bills have an uphill fight.

My earlier blogs lay out the arguments against the Amazon deal:
April 5th--Selling Small Businesses down the Amazon
April 7th--Amazon.com: The bigger picture
April 8th--Amazon.com’s business plan revealed

Business organizations like The S. C. Small Business Chamber, the S.C. Chamber and the newly formed S.C. Alliance for Main Street Fairness are opposing the Amazon.com sales tax exemption for its obvious unfairness to all brick-and-mortar and on-line stores in the state. Tea Party groups across the state have registered their opposition to the deal directly to Governor Nikki Haley in a private meeting encouraging her to veto a bill if it reaches her desk (something she has said that she won’t do). Competing TV and radio commercials are airing statewide encouraging the public to contact legislators to support and oppose the Amazon sales tax deal.

Realizing that South Carolina was not going to be a pushover like all the other state’s it has bullied into getting its way over sales tax, Amazon.com threw a tantrum announcing it had stopped the hiring of 11 management positions for the Lexington County center.

Obviously this is a childish ploy to influence the legislative process. But if it should somehow be successful, Amazon.com will have shown small businesses a new lobbying tactic—stop hiring any new employees until we get what we want from the General Assembly. With over 100,000 small businesses in South Carolina can you imagine how effective this collective “holding our breath” can be?

But back to Amazon’s media effort. Their latest postcard to Lexington County residents (from the company’s new front group—Save Our Lexington Jobs) plays off the Wal-Mart advertising campaign by saying “building the economy in Lexington County has fallen victim to a Wal-Mart ROLLBACK.”

However, the word “rollback” is not what most small businesses across the state are interested in. They want to know if Amazon.com will blackmail our Legislature to ROLLOVER.

Small businesses still need loans

The South Carolina Small Business Chamber was a strong and vocal supporter of last year’s Small Business Jobs Act. I spoke at a press conference at the Capital along with several U.S. Senators to state our support and that of the American Sustainable Business Council for the legislation.

A key component of the effort was the establishment of a $30 billion lending fund to encourage community banks to make small business loans. Of course, just like Small Business Administration (SBA) loans, this program can only make issuing the loans more attractive. The SBA does this through federal guarantees and the lending fund does it through low interest rates.

The success of this new program is totally in the hands of the private lenders. Financial institutions cannot be forced to make the loans.

Today was the deadline for community banks to request to participate in the new lending fund. The Wall Street Journal reports that only 7% of the nation’s 7,700 community banks eligible for the loan program (because they have less than $10 billion in assets) have indicated that they want to participate. The Treasury Department has now extended the deadline to May 16th.

The reason given by some banks is that there is little loan demand from small businesses. That’s simply not true. The demand is there. I hear all the time that a small business owner, even with assets, can’t get a loan.

The truth is this. All financial institutions (with the encouragement of federal regulators) have raised the bar for qualified borrowers. Many of them are sitting on large vaults of money but are afraid to make small business loans that are now perceived as risky.

One solution to this dilemma is allowing the SBA to bypass the financial institutions and start making loans directly to small businesses. We’re now doing this with Stafford and other student loans from the federal government that use to go through private lenders. And I understand that the SBA actually does make business loans on its own in some cases.

The SBA direct small business loans idea has been discussed before but always quickly shot down. But if all the government incentives in the world won’t get the financial institutions to start lending to small businesses, then maybe it’s time to jump start the free market and our economy by putting Uncle Sam in the game.

Medicaid feeds economy

Today the South Carolina House of Representatives begins debating the 2011-12 state budget. One important issue will be how to address Medicaid funding—reduce state funding and thus lose up to hundreds of millions in federal dollars or adopt a plan by the hospitals for them to pay extra into the Medicaid program to avoid the loss of federal funds.

In the letter below The South Carolina Small Business Chamber of Commerce weighed in on the issue with House members.
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March 14, 2011

Dear Representative:

Earlier this month we asked that the Legislature take a more business approach to budgeting in regard to spending cap legislation. As you begin the budget debate this week, no better example of a decision requiring a business approach will be the issue of Medicaid funding.

Some have expressed concern that taxpayers must be protected from increased taxes. However, the bigger fear for the small business owner is less money circulating through our economy that creates consumers. Starving our local economies hundreds of millions of dollars will worsen the economy at the very time it appears to be improving. If small businesses need protection, it is from a state-inflicted loss of customers.

Our hospitals have made a good business proposal to keep federal Medicaid funds from being dramatically reduced to our state and thus reducing the financial impact to themselves. By increasing their contribution to the state’s Medicaid program, they can help keep federal funding to our state from being dramatically reduced.

The importance of this to our small businesses is twofold. First, while our large urban hospitals might be able to weather reduced Medicaid compensation with few layoffs, the same is not true for our rural hospitals. These will certainly need to scale back their personnel costs regardless of the wishful predictions of those with little or no business experience. There will definitely be a negative economic impact on our rural communities and their small businesses struggling to survive.

Second, fewer Medicaid dollars for any health care provider will mean increased cost shifting to those with insurance. The fact that all of us with health insurance are paying for the uncompensated care of others is a primary reason for rising health insurance costs. Intentionally increasing this upward pressure on premiums, at a time when small businesses are hard pressed to offer employees health insurance due to costs, runs counter to the Legislature’s positive efforts to make health insurance more affordable (ex. raising the cigarette tax).

We strongly encourage you to accept the Medicaid funding proposal by the hospitals. It is a good business decision for them and for our small businesses.

Sincerely,

Frank Knapp, Jr.
President & CEO

Good news for business—well maybe or maybe not

There appears to be some good news for South Carolina businesses with workers’ compensation insurance. On good authority I have been told that the National Council on Compensation Insurance (NCCI is the state’s workers’ comp rating organization) has filed for a 3.7% overall decrease in a key component of rates called the loss cost.

The loss cost is the actual difference between the premiums received and the cost to the insurance companies for claims and directly related expenses. A proposed decrease means that the carriers have collected too much in premiums just for those purposes. (Carriers get compensated for administration, taxes, profit, etc. through another component of premiums called the loss cost multiplier.)

But before business owners get all excited in possibly saving some money on their workers’ comp premiums, their insurance companies aren’t obligated to use the new numbers if approved by the S.C. Department of Insurance. They can just go on using their current rates.

That will change if a House Bill 3111 is passed. The bill, which I testified in support of last week at a House Labor, Commerce and Industry subcommittee, will require insurance carriers to use the latest approved loss costs approved by the state. This much needed legislation is sponsored by Representatives Tom Young and Bill Sandifer (chairman of the LCI Committee).

And there’s another problem. We should have no confidence that the proposed 3.7% decrease is enough. Maybe it should be a 5%, 7% or 10% decrease.

Why should we be suspicious?

NCCI is the same organization that had claimed that the insurance companies absolutely needed increases in loss costs of 32.9% in 2005 and 23.7% in 2007. The S.C. Consumer Advocate and The South Carolina Small Business Chamber of Commerce went to the Administrative Law Court to argue that these increases were not justified by the data. The Judge agreed and reduced the increases to 18.4% and 9.8% respectively.

So why aren’t the Consumer Advocate and SCSBCC reviewing the data supplied by NCCI in their rate filing to see if the business community deserves more of a decrease?

The current state law doesn’t require that NCCI’s filing be shared immediately with the Consumer Advocate and the public. As of late last week we had only heard of the proposed reduction through parties that were shown the reports. Obviously this needs to be changed.

Even more troubling is that the law only gives the Consumer Advocate the ability to ask for a public hearing before an Administrative Law Judge if the filing is for an increase.

Senator Glenn McConnell has filed legislation (S.32) to require a public hearing on any NCCI filing.

Until both H.3111 and S.32 are passed, the business community needs to be very wary of any “good news” from NCCI.

UPDATE:  Shortly after this blog was posted, NCCI provided the Consumer Advocate with a copy of the filing in question.

Health care options

The below editorial is from the Anderson (SC) Independent Mail
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Anderson Independent Mail
February 21, 2011

Health care options

What will Republicans offer the American people if the party’s efforts to repeal health-care reform are successful?

“Replacing ‘Obamacare’ is not something we can do overnight,” Rep. Fred Upton, R-Mich., told the Washington Post. “It may take some time. But mark my words, we will get it done.” So far, however, all that has been accomplished (at least for the record) is the drafting of a resolution containing “broad, long-held GOP health-care goals” but no specifics — and the directing of four House committees to develop proposals.

The truth is, according to Fox News, the only plan the GOP has right now is to deny funding for the current plan. In a Feb. 8 story headlined “Republicans plan to choke off funding for health-care law,” the network reported that some House Republicans were eyeing the annual spending bill to pay for government operations as a way to “strip the health-care law of any dollars, thus depriving health-care operations of any money.”

Now that’s productive.

In 2009, during long-overdue discussions of health care in the United States, the GOP created H.R. 5424, “Reform Americans Can Afford,” in response to the Democrats’ proposal that became the Patient Protection and Affordable Care Act. In our research, we found numerous references to the 2009 plan and its provisions, some portions of which made it into the final legislation signed into law last year.

The GOP proposal calls for the end to “junk lawsuits” through medical liability reforms. South Carolina has already reformed its medical malpractice lawsuit system, said John Ruoff, program director for the advocacy group South Carolina Fair Share.

Ruoff told the Associated Press that South Carolina stands to create jobs with the federal health-care law because more federal matching funds will be available for the state. Opting out would mean the state gives up $10.9 billion that would go to doctors, hospitals and other health- care businesses.

The 2009 GOP proposal gives small businesses the power to pool to offer health insurance at lower prices, like corporations and labor unions do. (That’s also a part of existing law. The Patient Protection and Affordable Care Act (PPAC) created a pre-existing condition insurance plan to offer subsidized premiums to people who have been uninsured for at least six months and have yet-to-be-defined medical problems, according to www.healthinsurance.org, an independent site that researches consumer insurance issues.)

H.R. 5424 allows Americans to buy insurance across state lines, increasing competition. This last provision is a questionable benefit, according to the Congressional Budget Office, which looked at a bill along those lines in 2005. That legislation, reports the CBO, “would reduce the price of individual health-insurance coverage for people expected to have relatively low health-care costs while increasing the price of coverage for those expected to have relatively high health-care costs.” The consensus by the CBO was that the legislation “wouldn’t change the number of uninsured.”

H.R. 5424 “promotes prevention and wellness by giving employers greater flexibility to financially reward employees who adopt and maintain healthier lifestyles.” Thousands of companies already do that. In fact, $200 million for small businesses to implement workplace wellness programs is in existing health-care reform.

And while 2010’s PPAC addresses insurers’ practices, such as cancellation for frivolous reasons, the GOP plan addresses only one instance: if the insured has sloppy paperwork. The plan’s other “plus” is “rewarding innovation by providing incentive payments to states that reduce premiums and the number of uninsured — without expanding government entitlement programs or creating new ones.”

If any state comes up with an idea that effective, we should all sign on — and fast –– and chip in for the reward.

The main objection to the health-care reform law and what has provoked lawsuits by more than 25 states, including South Carolina, to declare it unconstitutional are the individual and business mandates. And we’ll admit we can understand how that would rankle. But the truth, according to Frank Knapp, chief executive officer of the South Carolina Small Business Chamber of Commerce, is that at least 96 percent of the businesses in South Carolina have fewer than 50 employees and wouldn’t be required to comply.

And here’s another truth, a tough one: Without some mandate, something that would encourage the majority of Americans to have health-care coverage, reform will only work for a few.

As consumers, we are frequently trading up or trading down. New cell phones, faster computers, better clothes and cars, all dependent upon our fiscal situation at any point in time. What’s to stop us from doing the same thing with health-care coverage?

Too many people would simply wait until they are sick to get insurance, if insurers aren’t allowed to legally discriminate (as they are today), and in all fairness to the industry, the pool of only healthy people paying regular and long-term premiums with few claims wouldn’t be large enough to maintain a healthy business.

Do we care if insurance companies are healthy? We should. Without them — or a fully funded government-sponsored insurance plan for every American — a lot of us would be out of luck.

And out of money, especially if a catastrophic illness hits.

http://m.independentmail.com/news/2011/feb/21/health-care-options/

Health insurance tax credits available

The South Carolina Small Business Chamber signed on to the following letter sent to two to the country’s largest tax preparer companies, H&R Block and Jackson Hewitt Tax Service, encouraging them to educate their clients about the small business health insurance tax credits available starting in 2010. This is but one of the ways the health insurance reform, the Affordable Care Act, will be helping make health insurance more affordable for small businesses.
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February 17, 2011

Dear Tax Professional,

Tax season is upon us once again, but this season brings with it an opportunity that hasn’t been available in the past—an opportunity to help save your small business clients some money. Thanks to the new healthcare law, small businesses with fewer than 25 full-time-equivalent employees and average wages of less than $50,000 will be eligible for a tax credit on their 2010 returns of up to 35% of their health insurance costs.

In the face of rising healthcare costs, the credit was included in the Patient Protection and Affordable Care Act to help the smallest businesses—the ones who have the hardest time affording insurance—provide their employees with coverage without breaking the bank. More than 4 million small businesses nationwide, or 83%, are eligible to receive the tax credit on their 2010 taxes. However, many don’t know it exists. It’s up to you to inform them.

We encourage you to educate your clients who are eligible for this credit so they can take advantage of it. It was created specifically to bring financial relief to the millions of small business owners struggling to afford health insurance. By spreading the word, you can make a substantial impact and ensure this credit doesn’t go unnoticed in the days leading up to the April 15 deadline.

Regards,

American Booksellers Association
American Small Business League
American Sustainability Business Council
Bay Area Council
Business for Shared Prosperity
Capital Area Independent Business Alliance
Gloucester Fishermen's Wives Association
Main Street Alliance
Massachusetts Fishermen's Partnership
National Puertorican Chamber of Commerce
National Small Business Association
National Gay and Lesbian Chamber of Commerce
Northeast Business Group on Health
Oregon Small Business Advisory Council
Oregon Small Business for Responsible Leadership
Oregon Small Business Healthcare Initiative
Small Business California
Small Business Majority
South Carolina Small Business Chamber of Commerce
Women Impacting Public Policy