Legislative Update

GENERAL ELECTION, CORONAVIRUS Bring Many Changes to State House

By Neil Rashley, Senior Vice President and Counsel, SCBA

The coronavirus pandemic in 2020 brought many changes and challenges to South Carolina – and the General Assembly and the November election were no exception. In the November 2020 General Election, voter participation significantly increased, with high tens of thousands of voters casting absentee votes. At the State House, the 2020 session was suspended in early March, came back for a few days in May and June, and then for two weeks in September. For banks, many of the elected leaders that strongly support banking remained in office but, even so, with the new legislative focus on the pandemic, there will be many challenges to move bills.

General Assembly Elections

The Senate was up for re-election in November and there are now six new senators, with three of them defeating long-time incumbents. For the Senate as a whole, Republicans gained three seats and now have a 30-16 majority. Committee chairs critical to banking should remain the same: Sen. Ronnie Cromer, Banking and Insurance; Sen. Hugh Leatherman, Finance; Sen. Luke Rankin, Judiciary; and Sen. Thomas Alexander, Labor Commerce and Industry. In the Senate Banking committee there are two vacant slots to fill and those slots will be filled in 2021 on the first day of session.

In the House, sixteen new representatives were elected and Republicans gained one net seat to increase their majority to 81–43. The House met in early December and assigned committees and elected chairs. Chairmen on key committees where most banking legislation goes will be: Rep. Bill Sandifer, Labor Commerce and Industry; Rep. Murrell Smith, Ways and Means; and Rep. Chris Murphy, Judiciary. Rep. Jay Lucas was re-elected the Speaker of the House. There will be six new legislators on the Labor, Commerce and Industry committee.

Legislation for the 2021 Session

Coronavirus shut down the session in 2020 and then re-ordered legislative priorities. When the General Assembly returned in September for a brief session they focused on adopting a budget and passing legislation dealing with the pandemic. As such, many bills and issues that would have been handled in 2020 instead were pushed off until this session, including many SCBA advocated for in 2020. Many of these bills were re-introduced when the General Assembly returned. Here are some of those bills as well as new bills and issues SCBA anticipates:

n BANK STATUTE MODERNIZATION

SCBA was the primary proponent for this issue last session that would modernize South Carolina’s banking statutes. The bill passed the Senate last year but the House had no time to review it. This session both Chairman Cromer in Senate

Banking and Chairman Sandifer in House Labor, Commerce and Industry introduced identical bills (S467 and H3583) and both bills will be top priority. The bills main focus is on de novo creation, conversion of non-South Carolina statechartered banks to a South Carolina charter, codifying some of the Board of Financial Institutions’ operational instructions – along with deleting old, outdated language.

n REMOTE ANNUAL SHAREHOLDER MEETINGS

South Carolina is one of only two states that requires an in-person annual shareholders meeting, and has no provision for remote meetings. This caused many difficulties for banks and corporations based in South Carolina during the pandemic. SCBA brought this issue to Chairman Sandifer’s attention and he introduced H3760, a bill that brings South Carolina up to speed with the rest of the country, allowing remote meetings if approved by the board of directors.

n ELDER FINANCIAL ABUSE

Chairman Alexander of the Senate Labor, Commerce and Industry, working with SCBA, introduced S425, a bill that allows a bank to decline or place on hold a transaction if elder financial abuse is suspected.

n COVID-19 BUSINESS LIABILITY

Providing a protection from liability due to COVID-19 was a priority of the business community in 2020 but the issue was not resolved last session. This year the Senate introduced S147 and the

House introduced H3698 to address the liability problems businesses face.

n ELECTRONIC AND REMOTE ONLINE NOTARIES

Like other issues, this did not pass. The Senate had passed the bill but it stalled in the House

Judiciary committee due to objections from the South Carolina Bar on the remote online notary issue—even though allowing notaries to conduct their business remotely and not in person would be a great benefit during the pandemic. Twenty-nine other states have now enacted statutes adopting this technology. Nonetheless, a bill allowing electronic notaries will be pushed forward next session and, hopefully, the legislature will also take another look at remote online notaries.

n TAX REFORM

Tax reform did not get off the ground in 2020 but two bills were pre-filed in December that would reform income and sales taxation. Like last session’s bill, H3393 proposes to lower and flatten the individual income tax. Yet, it also eliminates all individual income tax credits, including the S

Corp bank tax credit. H3992 is the sales tax reform bill and it also lowers and flattened the rate but does so by eliminating many sales tax exemptions and also imposing a sales tax on financial services. Property tax reform may also come up but will be much more difficult as true reform would require removing the present cap on residential property tax rates.

n MEDICAL MARIJUANA

Two key bills were pre-filed for this session—S150 and H3361. Both legalize marijuana for medical use and also provide that if marijuana is still illegal under federal law, a bank that does business with an entity or person involved with medical marijuana could not be prosecuted or penalized by state authorities.

n BLOCKCHAIN TECHNOLOGY

In the 2020 session there was a blockchain bill that proposed controversial concepts such as a fintech regulatory sandbox. This year a new bill, H3495, was introduced and it does not include this idea. Its focus is more on securities and anti-money laundering exemptions as well as amending South Carolina’s laws to recognize concepts like certificate tokens, digital assets and virtual currency. SCBA will work closely with legislators and state regulators to make sure that if this bill moves forward it will not negatively affect banks or consumers.

n FORBEARANCE, FORECLOSURE AND EVICTION

One bill that would ban foreclosures during a state of emergency, H3390, was prefiled. With the economic stress that the coronavirus pandemic has caused SCBA anticipates more bills concerning these issues will be introduced or discussed.

With coronavirus restrictions and safeguards in place, how business is conducted at the State House will be significantly different in 2021. But issues and bills will still arise and SCBA will work hard to address them—even virtually. If you have any questions about legislation, you can email Neil Rashley at SCBA at nrashley@scbankers.org. Legislation, members of the General Assembly and committee meetings can be found at www.scstatehouse.gov.