Offshore Energy Exploration Support Trumps Party Lines

This week Senators up and down the East Coast from Georgia to Virginia signed a joint letter advocating for offshore energy exploration. Perhaps what's most remarkable is that it was a bipartisan letter featuring senators from both sides of the aisle. We all know how rare it is for Republicans and Democrats to agree on things, but when the potential benefits are so overwhelming, even partisanship must bow in the face of such economic advancement. 

 

Offshore Debate Heating Up

Over the last few weeks, the gloves have come off in South Carolina with environmental activists pushing hard on local governments to enact resolutions opposing offshore energy exploration in the Palmetto State.  They are even pushing to oppose the safe, new mapping of the resources so we know what’s actually off our coast!  

This refusal to deal in reality comes as no surprise to those of us who have watched environmental extremists engage in misleading campaigns to stop the Keystone Pipeline, drilling on Alaska’s North Slope and countless other job creating American energy projects.

On Thursday, U.S. Representative Jeff Duncan took to the pages of The State to set the record straight…and to share why offshore energy exploration is a generational opportunity for South Carolina’s future:
 “Discovering vast quantities of oil and gas reserves would be a blessing for the citizens of South Carolina. Our strategic location transforms the arrival of the American energy renaissance off our shores, into an economic renaissance for all of our people. 

The federal Bureau of Ocean Energy Management has released its five-year plan, which opens the South Atlantic region to one lease sale for energy development. It also defines an area of sale outside a 50-mile buffer zone for any resource drilling or exploration. It will take public comments through Monday.

The bureau should note that a January Harris Poll showed 75 percent of South Carolinians favor domestic oil and gas production, while just 12 percent oppose such measures. Studies have projected that offshore oil and gas development could create tens of thousands of S.C. jobs over two decades, while injecting $2.7 billion into the economy. Such a boost in economic activity could generate more than $80 million annually in new state revenue, creating a critical boost in revenue for infrastructure investments. As current revenue plans only increase taxes on hard-working citizens, no wonder South Carolinians support energy development; it just makes sense.

Opponents of energy production have recently taken aim at seismic surveys, which use “sound sources” to provide 3D maps of potential oil and gas reserves under the sea bed. The data provides critical new insights into geologic activity under the ocean for scientists.

Interestingly, some groups claim seismic surveying is directly linked to deaths among marine mammals.
The criticism has political undercurrents gradually stirred amidst the discussion of whether to produce energy off our coasts. It is a particularly surprising tactic given the clear lack of scientific evidence provided to support the arguments. In fact, senior U.S. government officials have testified under oath, and also stated on the bureau’s website, that there is not a single recorded instance of a marine mammal being injured or killed by seismic surveys. Ocean Energy Management Director Abigail Hopper concurred with these statements at an Energy and Mineral Resources Subcommittee this month.

Discovering vast quantities of oil and gas reserves would be a blessing for the citizens of South Carolina. Our strategic location transforms the arrival of the American energy renaissance off our shores, into an economic renaissance for all of our people.

The future is not something we can predict; we can only prepare. Economic ingenuity is an immeasurable and beautiful feature of humanity carefully cultivated in a state of liberty. The path toward prosperity is illuminated by a free-market framework, and it leads just over the horizon."

SC Statehouse: The Reality Show

Most weeks in the Statehouse probably wouldn’t be mistaken for an episode of a Bravo reality show. Then came last week’s pandemonium, where back room debate over whether to borrow $500 million almost brought back code duello---and that was just within the House Republican Caucus. Last week will be hard to beat for pure political theater, but this week wasn’t bad either.

Beginning last fall, those who do government for a living in Columbia began to beat the drum for a roads bill, also known as a gas tax bill. So both the Senate and House set to work crafting legislation.

Then in January came the announcement from Governor Haley that any gas tax bill that did not include income tax reduction and a restructuring of the Department of Transportation (DOT) board to give the executive branch more authority would earn her veto. (Currently DOT is a part of the Governor’s Cabinet, but the Director essentially reports both to the Governor and the DOT Board, which is elected by the legislature.)

SENATE

This week we had confirmed what we had long suspected----a majority of the Senate is moving in a very different direction from the Governor. First, a bill to restructure DOT hit a roadblock this week in the Transportation Committee, though both Democrats and Republicans say they are committed to keep the conversation going. The next day, the Senate Finance Committee advanced a bill championed a bill by Sen. Ray Cleary (R-Georgetown) that would raise the fuel tax 12 cents over three years to 28 cents per gallon on July 1, 2017. The Cleary bill includes a number of other revenue enhancements like increased user fees, indexing the tax to inflation, while attempting to keep our tax lower that Georgia and North Carolina. Efforts to cut state personal income taxes? Not on the Senate’s radar.

 

• Total roads funds raised per year: $800 million.
• Total income tax cut when fully implemented over 10 years: $0 per year.

HOUSE

With a two-week Easter break looming, on Thursday afternoon the House Ways & Means Committee scrambled to send two bills to the floor that together would approach the Governor’s prescription. The first, a fuel tax-DOT reform bill crafted by Rep. Gary Simrill, (R-York) would raise the tax 10 cents per gallon and raise the sales tax cap on car purchases from $300 to $500.  The bill would also allow the Governor to appoint the members of the DOT board and approve the Commission’s choice of Secretary. (Again, most of the DOT members are currently elected by the legislative delegation of each congressional district.)  A second house bill adjusts income tax brackets, saving an average taxpayer $48 a year.

 

• Total roads funds raised per year: $427 million.
• Total income tax cut when fully implemented over 10 years: about $51 million per year.

GOVERNOR

The Governor’s actual plan, introduced in the House by Rep. Tommy Stringer, would raise the gas tax by 10 cents over 3 years. It would also cut the state’s top tax rate from 7 percent to 5 percent.  Under the Haley plan, the entire DOT Commission would be replaced by a gubernatorially-appointed Secretary of Transportation who would answer to the Governor exclusively.

• Total roads funds raised per year: about $350 million.
• Total income tax cut when fully implemented over 10 years: $1.8 billion per year.

Bottom line: Our roads and bridges are crumbling, our state income tax rate is harming our ability to compete regionally and nationally, and the state Department of Transportation has too many masters, too few funds and too many roads. Chances of escaping this morass in the short term appear dim.

Dr. Oran Smith is the Senior Policy Fellow at Palmetto Promise Institute

An "Exceptional" Visit to a Special South Carolina School

This past Tuesday, a room filled with expectant faculty, parents, and students eagerly celebrated with two very special students at Hidden Treasure Christian School, a school for students with mental, physical, emotional, and developmental disabilities.   

Joined by former Florida Governor Jeb Bush, a long-time champion of tax credit scholarships for students with special needs in his home state, these two students received life-changing checks, thanks to South Carolina's new Exceptional Needs Tax Credit Scholarship. 
 

These scholarships will allow them to afford to stay at Hidden Treasure and receive an education that meets their unique needs and equips them to reach their full God-given potential. What a joyful celebration!

As Hidden Treasure headmaster Dr. John McCormick said, the staff at Hidden Treasure believe that “every child has been designed by God for a special purpose,” and Hidden Treasure seeks to help children with extraordinary needs realize that purpose.

After several other speakers touted the transformational power of school choice, Mr. Bush moved to the front of the room. The “need to make sure that all of our precious children are able to reach their maximum potential” was the central theme of his message. Mr. Bush further explained that allowing children to reach their maximum potential can only be accomplished by making the “move to a child-centered educational system.” 

He further confirmed his support of the school’s mission by stating that he “completely agree(s) that life is a blessing, and that God has given us the ability to succeed.” After finishing his remarks, Mr. Bush took several questions from the students and parents, and participated in the presentation of scholarship checks by the Advance Carolina and D.E.S.K. scholarship funding organizations to students of Hidden Treasure. Several faculty of Hidden Treasure then guided Mr. Bush on a tour of the school’s building and Becky Vaughn, the school's first student, presented him with a book sharing her amazing life story.

Bush's interest in the school is far deeper than a campaign trail photo-op. While governor, he implemented numerous key school reforms that radically improved Florida's education system. These changes included a huge special needs tax credit scholarship program (a model for South Carolina's much smaller program), an easy to understand school grading system, an increase in virtual schools, an intensive focus on 3rd grade reading (like South Carolina's Read to Succeed plan), and a host of new incentives for good teachers and alternative paths for teacher certification.

While Palmetto Promise differs with Mr. Bush on the issue of Common Core, his proven track record as an innovative leader with the ability to get things done on behalf of Florida students as Governor can't be denied.

Briley Hughes is a senior at Bob Jones and a Communications Intern with Palmetto Promise Institute.

Educating the Children No One Wants

Last November, we were honored to feature Kevin Chavous, a leading voice for giving every child a chance and a choice, at our annual VisionSC policy summit. While he was here in  SC he learned about the great work happening at Legacy Charter and highlighted them this week in a national piece on the transformational power of school choice.

"Fortunately, around the country, there are a number of schools who take pride in educating the kids that nobody wants.  Schools like the Hope Academy Charter School in Kansas City, Maya Angelou Charter School in D.C. and the Legacy Charter School in Greenville, S.C. Each of these schools, and several others like them, make it their mission to value all of the kids they serve and they refuse to write kids off based on their background, home life or previous school experience....  

At some point, our education elite will wake up to the fact that one size does not fit all. And that having a menu of education offerings available to educate kids with different needs helps not just those kids, but all kids."

Check out the full article, and share it to help us make the voices of parents and students across our state heard.

 

Kevin P. Chavous is a noted attorney, author, and national school reform leader. He currently heads The Chavous Group, an education consulting firm, and is a founding board member and Executive Counsel to the American Federation for Children. He also presides as board chair for Democrats for Education Reform and is a former board chair for the Black Alliance for Educational Options. 

Dorothy, Kansas, and Why “The Inevitable” Didn’t Happen

When the week began, the South Carolina House was in session bright and early, with some members enthusiastic to borrow nearly $500 million dollars. Known officially as Part III of the state budget, this gleaming yellow brick road to debt had come out of the tax-writing Ways & Means Committee with a unanimous vote. The borrowing plan also had the support of most of the Republican and Democrat leadership in the chamber. On Monday this trip to Oz seemed not like an adventure, but a real estate closing, an inevitable pro-forma event where the details had been worked out, all that was needed was a few signatures.

So what happened?

First, the back benchers spoke up. Behind closed doors, a dedicated group of rank and file Republican  House members suggested that the GOP Caucus had lost its way. Tipsy on low interest rates, they said, Republicans were acting like the Scarecrow who hadn’t the brains to find a way to Pay As We Go. 

Then the people found their voice. Legislators were pummeled from back home, causing the  switchboard and social media to melt down. Soon the $470 million bill was half that, then a third of it, then $0. As the week dragged on, constant pressure from citizens helped numerous Cowardly Lions find the courage to say no.

For our part, Palmetto Promise Institute asserted that to borrow that kind of money willy nilly showed the House was missing brains and courage, but also heart. Like The Tin Man---creaky and rusty---the GOP-led House was breaking a promise to our children, saddling them with debt. 

As we said earlier this week, it was fortuitous that legislators got a peek at the new Rich States, Poor States last week, revealed by Economist Jonathan Williams just a block from the SC Statehouse. His ALEC study, co-authored with Dr. Art Laffer and Heritage’s Stephen Moore, shows South Carolina borrows too much already, putting us on the heels of Kentucky for the honor of the #1 ranking for borrowing in ratio to tax revenue.

So, here we are 100 hours later, and the inevitable didn’t happen. The Great Credit Oz turned out to be a phony, and the state of South Carolina won’t borrow a half-billion for buildings, a credit line for yet to be determined K-12 education expenses, something called “economic development infrastructure,” etc. Like Dorothy, thankfully we’re now back in the real world. The tornado has passed…and there’s no place like home.


Dr. Oran P. Smith is Palmetto Promise Institute's Policy Senior Fellow. 

The Quest for Number One

…We only wish we were talking about USC Women’s Basketball.

The South Carolina General Assembly is getting its first crack at a 2015-2016 spending plan this week as the state budget hits the House floor for debate.

The budget always includes Part IA, the spreadsheet of expenditures by agency, and Part IB, instructions from the General Assembly on how those funds should be spent (provisos).

But this year, legislators will take up a Part III. Part III can be summarized in one word: borrowing. The total tab is $497 million, requiring the state debt limit to be raised from $2.58 billion to $3.90 billion.

Most of the borrowed funds ($337 million) will be used to build or renovate various state buildings, many of them on college and university campuses. The remaining $160 million or so will go to the Department of Commerce for “Regionalized Economic Development Infrastructure” ($60 million), to State Technical Colleges for “Pathways to Workplace Infrastructure Development” ($50 million) and to, most generic of all, “K-12 Initiatives” at the State Department of Education ($50 million).

The quest to put the state in hock to the tune of $497 million comes on the heels of the visit to South Carolina last week of Jonathan Williams, the chief tax economist for ALEC, the American Legislative Exchange Council. For a number of years ALEC has published Rich States, Poor States, a state-by-state analysis of the competitiveness of each state government in attracting jobs and economic development. Williams conducts the analysis with oversight from noted economist and Reagan advisor Dr. Arthur Laffer.

In a meeting with key legislators and policymakers last week, Williams presented the brand new data on the fifteen Economic Outlook variables that make up the 2014 edition of Rich States, Poor States. South Carolina shone brightly for our strong Right to Work laws and for our low inheritance tax rates.

But in two categories, South Carolina is competing for worst in the nation.

One of the key variables in those 15 in the determination of fiscal health is Debt Service as a Share of Tax Revenue. We are shocked to learn that South Carolina is the second worst in the country in this category. That means we pay a lot of interest on borrowed money every year.

The other category worth noting for South Carolina’s poor performance is Personal Income Tax Progressivity, or put another way, the “change in tax liability per $1,000 of a person’s income.” Our rank? 43^rd, or seventh worst in the nation.

Last week, SC House leaders poured cold water on the idea of cutting personal income taxes on South Carolina families. This week, they take up the idea of borrowing $497 million. Sounds like DC logic for solving SC problems.

There is no other conclusion we can reach but that in at least two very important economic competitiveness categories, we are moving in the exact opposite direction from more jobs, better jobs, wage growth, and entrepreneurship. The numbers don’t lie. If we don’t change our ways, the Palmetto State could be looking at a #1 ranking in debt and taxes. That’s great news…for North Carolina, Tennessee and Georgia.

Note: With all 15 Rich States, Poor States factors considered, South Carolina ranks #31 in competitiveness, down from a rank of #20 in 2008, the first year of Rich States, Poor States.

Dr. Oran P. Smith is Palmetto Promise Institute's Policy Senior Fellow. 

King vs Burwell: What it is, and what it means for SC

Today the US Supreme Court holds the future of Obamacare in its hands as it hears King v Burwell. Not sure what the significance of this case is? Well, you're not alone. Here's what you need to know about the case that could radically alter Obamacare as we know it.

When the Patient Protection and Affordable Care Act (PPACA) was signed into law in early 2010, there were many things we still didn’t know about the bill and its effect on everyday Americans. Now, with several years of experience under our belts, the truth has grown increasingly clear: far from living up to its name, it has become one more one-size-fits-all Washington boondoggle with a bungled website roll-out, lingering questions about consumer data privacy, rising insurance rates and many people losing the doctor they were promised that they could keep. And that’s just the tip of the iceberg.

The latest controversy: are people in the federal exchange actually eligible for the subsidies that they’ve been receiving to help them pay their premiums?

A clear reading of the law’s actual language would indicate the answer is “no.” In fact, at the time the bill was passed, now infamous PPACA architect Jonathan Gruber said that provision was intentional to encourage states to set up their own exchanges. Now however, with a majority of states like South Carolina standing strong against these federal strong arm tactics, the Administration has changed their tune and said it was a simple bill drafting oversight and should be treated as such.

This is the question that the Supreme Court will decide in King v. Burwell. So what does this mean for South Carolinians and people in other states caught in the cross-hairs of this policy?

One thing the King v Burwell ruling does not signal is the end of the world. Many in the liberal media are painting this case as a partisan attempt to derail Obamacare, lifeline of the American healthcare system. This is patently false. A ruling against the federal government in King v Burwell would simply expose yet another of the many fundamental flaws with the Obamacare system; a flaw that the Obama administration themselves wrote into the bill.

What King v Burwell does mean if the Supreme Court rules against the government, is that both state and federal lawmakers will have an outstanding opportunity to make real reforms to the failing Obamacare system. A win could pave the way for more healthcare alternatives that would give people the freedom to choose more affordable plans, improve transparency, and offer states more flexibility. If the Supreme Court sides with the government, a very dangerous precedent will be set that enables the IRS and other federal agencies to ignore and rewrite laws duly passed by Congress at will.

An important detail to remember is that the plaintiffs in King v. Burwell represent the millions of Americans harmed by Obamacare, including those who lost their health plans, doctors, jobs, and those who the law forces to pay higher insurance premiums and taxes. It's worthwhile to take a look back and remember the full extent of the damage brought about by Obamacare in the last several years.

In A Nut Shell

- The Obamacare statue explicitly says that subsidies (to help defray the cost of insurance premiums) are only available for through state exchanges.

- The reason for this provision was to strong arm states into creating their own exchanges.

- After the majority of states resisted this federal coercion and refused to create exchanges, the Obama administration backtracked and offered subsidies for the federal exchanges as well as the state exchange. (This is because without the subsidies, the outrageous cost of Obamacare is prohibitive.)

- King v Burwell is a case challenging the Obama administration's power to reinterpret the law as passed to suit their wants. It argues that the law specifically says subsidies are only available through state exchanges, and the Obama administration has no power to pay subsidies for everyone apart from Congress changing the statute.

- The US Supreme Court heard oral arguments for King v Burwell on Wednesday.

- If the Supreme Court decides against the Obama administration, while it doesn't mean the automatic end of Obamacare, it does mean there will have to be some serious reforms made my Congress, or else coverage will be prohibitively expensive for millions of Americans.

Further Reading
Check out what the Heritage Foundation says every state lawmaker should do in the wake of King v Burwell

FAQ: Offshore Drilling

As we continue to advocate offshore energy exploration because of the huge opportunities it could create for SC, there are also many important questions we need to answer. Tough questions that deserve hard thought as we decide what's the very best policy for our state. Below are some of the most pressing of those questions, and our answers.

Why is new energy exploration important?
While America is producing more and importing less oil and natural gas that in years past, with major problems in Russia, South America and violent unrest in the Middle East, we are still far too dependent on foreign oil.  Meanwhile, we are ignoring 87% of our own offshore acreage and with outdated maps in hand are not even sure what is out there. To be truly energy independent, we must maximize the areas of exploration to improve the odds of finding secure resources.6

Won’t oil rigs be visible from our beaches, affecting tourism?
No, oil rigs would be well beyond sight lines from the beach — 75-100 miles offshore.  South Carolina’s scenic beauty would be preserved intact, with major onshore infrastructure centering around existing development, such as our ports.

What about the danger of a spill like the Deepwater Horizon disaster?
While environmental risk is never entirely out of the question, a Deepwater Horizon-type incident is highly unlikely. In addition to continuing improvements in technology since then, the Deepwater Horizon rig operated 5,000 feet below the surface. This is a far different environment than South Carolina where operations would be in much shallower waters. This, along with vast coastline, is why South Carolina is in such a favorable position. The Considine analysis finds the likelihood of environmental damage unlikely and well worth any potential risk in his formal cost/benefit analysis.

Some experts say there isn’t any oil off the coast of South Carolina, so is mapping a waste of time?
Many of the same arguments were made about the presence of oil in the Gulf, and those estimates were off by a factor of 5:1 (9 billion barrels projected vs 45 billion actual). Dr. James Knapp, a Professor in the Department of Earth & Ocean Sciences at the University of South Carolina testified before Congress that estimates he has seen on South Atlantic oil and gas from Quest Offshore Resources4 appear to be very conservative (low).5

Will the researchers be using “sonic cannons” that might injure wildlife?
Researchers use air guns (nefariously dubbed “sonic cannons” by environmental activists) to produce sound waves that reach the ocean floor that scientists can then use to map the size and location of resources. There is no evidence that seismic instruments have injured animals and in fact, sea life seems to avoid an area during these seismic tests. Research vessels also follow strict safety protocols, sending out less powerful signals before actual seismic tests begin in order to warn away dolphins, whales and the like.

Shouldn’t we invest in “greener” resources like wind and solar?
Yes and no.  While the key to energy independence and a thriving environment is a diverse energy portfolio, alternative energy sources are far from ready to sustain the entire American economy and our way of life.  Oil, natural gas, coal, wind, biomass, nuclear and other energy sources are all essential to an “all of the above” strategy that meets our energy needs and strengthens our national security.

Are state and local prerogatives protected during the lease sale process?
Yes, under current law, both the Outer Continental Shelf Lands Act and the Coastal Zone Management Act require input and consultation from state, local and military officials and other interested parties or stakeholders. The Department of the Interior closely coordinates with state and local governments throughout every stage of the leasing process, from planning to exploration and production.  In fact, the Bureau of Ocean Energy Management recently reached out to South Carolina and other coastal states to gauge interest and concerns prior to formulating the next offshore energy leasing plan.

We Have a New Name!

Dear Friends,

I wanted to take a minute to share some encouraging news about an exciting new phase of growth for our organization.

Two short years ago on February 5th, 2013, we first launched what we promised would be South Carolina’s most effective “action engine” for conservative public policy.  With your help, we rolled up our sleeves and got right to work.  And I’m proud to report that your investment is already paying real dividends through the relationships we’ve fostered and the research we’ve published and promoted.

We are energized by early policy victories such as halting Medicaid expansion and Common Core in South Carolina and enacting proven K-3 literacy strategies.  As we move forward, we are confident that we can build on these wins and help make South Carolina a model among the states in embracing free-market policy reforms. 

But as we approached our two-year anniversary, we knew we couldn’t just cool our heels: there is still far too much work to be done.  We took a careful a strategic look at where we’ve been since our launch, and where we need to go to truly effect a better future for our state.

One key conclusion?  It was time to grow our brand beyond simply WHAT we do – policy – and focus on WHY we do it.  To attract and inspire people all around South Carolina, who are looking for proven solutions to our shared problems and the bold, optimistic leadership needed to inspire people from all walks of life to work together to implement them. 

That is why after much careful deliberation, I am excited to let you know that next week, we will announce a new name for our organization: Palmetto Promise Institute!

The word “promise” captures the sense of aspiration and optimism that we stand for as an organization, and evokes two powerful ideas: 

• The unlimited promise of South Carolina and her people to achieve great things when we work together to promote good policy.
• The Forum’s promise as an organization to deliver well-researched, best-practice policy ideas that will create opportunity for every South Carolinian.

And so the idea of Palmetto Promise Institute was born.  “Promise,” because we believe deeply in the limitless promise of South Carolina as we fulfill our promise to promote a policy vision that inspires people to work together for our shared future.  And that’s a promise we intend to keep.

Although the name – and an exciting website that is currently being designed – will be new, we’ll retain the same effective operating strategy you’ve come to expect from us:

• Best Practices: rigorous research methodology and thorough analysis to document and explain what’s working in public policy and why, in South Carolina and beyond.
• Policy Entrepreneurship: addressing recurring problems with innovative solutions, grounded in our conservative principles and communicated with compassion.
• Finding Common Ground: building trust and establishing relationships with South Carolinians of every background.

And please stay tuned for much more information about our ambitious 2015 agenda…

…to provide every parents with information about how to access high-quality educational options for their children regardless of income or zip code – and grow them where they don’t exist.

…to develop a comprehensive tax reform plan to create jobs and economic opportunity.

…to advocate for state-based policies that lower health care costs and increase access to health care in all our communities.

…to highlight the amazing potential of responsible offshore energy development in our state, cutting through the misinformation and scare-tactics of out-of-state environmental extremists.

There’s no question that we have our work cut out for us.  But we’re confident that with your support–and that of a growing team of South Carolinians who share our vision–it can be accomplished. The task is ours, the time is now, and we don’t have a minute to lose. 

Thank you again for the progress you have made possible.  I hope we can count on your continued partnership to help fulfill South Carolina’s full promise!

Together for Freedom,

Ellen

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Ellen E. Weaver
President & CEO
Palmetto Promise Institute