SLC Fiscal Alert

CSG South

Public pension systems continue to face significant challenges, a trend that has continued for more than a decade. While public pension difficulties alone would not be a destabilizing force on the economy, the fact that every other element of our nation’s retirement architecture also faces complex challenges requires the urgent attention of policymakers at all levels of government. This Fiscal Alert reviews the different reforms already initiated by the states in calendar years 2009 through 2011 to stabilize their pension systems, then examines two other trends have surfaced in public pension circles in recent years that require attention: 1) government run retirement plans for private sector employees and 2) cash benefit plans, which include features of both a traditional DB pension and a 401(k)-style system.

On April 27, 2011, the South Carolina House of Representatives, by a vote of 71-47, defeated an amendment that would have provided a five-year sales tax exemption to Amazon.com  in exchange for the company building a distribution center in Lexington County, in the central part of the state. While this vote resulted in Amazon canceling plans to proceed with an operation in South Carolina, it also raised to the forefront a burning issue confronting state policymakers: how should states react to the exponential growth in e-commerce transactions that largely occur without the collection of invaluable sales taxes? As states struggle to deal with the sharp drop-off in revenues caused by the Great Recession, the panoply of issues related to collecting sales taxes on e-commerce transactions continues to roil state policymakers across the country.

CSG South

The federal Small Business Jobs Act of 2010 is designed to generate critical resources to help small businesses drive economic recovery and create jobs. An important component of this new legislation involves the State Small Business Credit Initiative (SSBCI), a formula grant program structured to assist local entrepreneurs and small business owners secure the necessary credit to expand their businesses, create jobs and generate revenue. Specifically, the SSBCI provides $1.5 billion in federal funding to states to initiate programs that expand credit opportunities for small businesses. State commitment to involve the private sector in implementing these programs remains a critical element of the SSBCI, and states are required to demonstrate and help facilitate $10 in new private lending for every $1 in federal funding. In total, it is anticipated that the $1.5 billion federal commitment will lead to a minimum of $15 billion in additional private sector lending to spur small businesses.