Journal of the House of Representatives
of the Second Session of the 111th General Assembly
of the State of South Carolina
being the Regular Session Beginning Tuesday, January 9, 1996

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| Printed Page 1150, Feb. 29 | Printed Page 1170, Feb. 29 |
Printed Page 1160 . . . . . Thursday, February 29, 1996
(B) The Department of Natural Resources and the Department of Public Safety must use funds appropriated in the annual appropriations act to enforce the provisions of this section."/

Renumber sections & amend totals/title to conform.

Rep. J. HARRIS explained the amendment.

POINT OF ORDER

Rep. RHOAD raised the Point of Order that Amendment No. 113 was out of order as it was not germane.

Rep. J. HARRIS stated that it tied back into the county fine money.

SPEAKER Pro Tempore HASKINS stated that it directly affected an appropriation and he overruled the Point of Order.

Rep. J. HARRIS continued speaking.

Rep. J. HARRIS moved to adjourn debate upon the amendment.

Rep. RHOAD moved to table the motion, which was agreed to.

Rep. RHOAD moved to table the amendment, which was agreed to.

Rep. TOWNSEND proposed the following Amendment No. 122 (Doc Name P:\amend\JIC\5354SD.96), which was adopted.

Amend the bill, as and if amended, Part II, Permanent Provisions, by adding a new section appropriately numbered to read:

/SECTION

TO AMEND SECTION 59-26-20, AS AMENDED, OF THE 1976 CODE, RELATING TO THE DUTIES OF THE STATE BOARD OF EDUCATION AND THE COMMISSION ON HIGHER EDUCATION INCLUDING DUTIES WITH REGARD TO THE SOUTH CAROLINA STUDENT LOAN PROGRAM AND THE GOVERNOR'S TEACHING SCHOLARSHIP LOAN PROGRAM, SO AS TO REVISE THE MANNER IN WHICH LOANS UNDER THESE PROGRAMS MAY BE CANCELED.

(1) Section 59-26-20(k) of the 1976 Code, as last amended by Act 259 of 1992, is further amended to read:

"(k) The Commission on Higher Education, in consultation with the State Department of Education and the staff of the South Carolina Student Loan Corporation, shall develop a loan program whereby talented and qualified state residents may be provided loans to attend public or private colleges and universities for the sole purpose and intent of becoming certified teachers employed in the State in areas of critical need. Areas of critical need shall include both rural areas and areas of teacher

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certification and must be defined annually for that purpose by the State Board of Education. The recipient of a loan is entitled to have up to one hundred percent of the amount of the loan plus the interest canceled if he becomes certified and teaches in an area of critical need. The loan must be canceled at the rate of twenty percent of the total principal amount of the loan plus interest on the unpaid balance for each complete year of teaching service in either an academic critical need area or in a geographic need area. Beginning July 1, 1989, the loan must be canceled at the rate of thirty-three and one-third percent of the total principal amount of the loan plus interest on the unpaid balance for each complete year of teaching service in both an academic critical need area and a geographic need area. Each complete year of teaching service in an academic critical need area or in a geographic need area shall cancel the unpaid principal on the loan plus the interest that has accrued on that portion of the principal which is attributable to the cost, as determined by the commission, of twenty-four credit hours of instruction at the institution attended; provided, that if the complete year of teaching service is in both an area of academic critical need and an area of geographic critical need, the cost of thirty-six credit hours of instruction shall be canceled in the manner provided in this section. The credit hours must be canceled in the order they were completed with the credit hours earned first being canceled first. `Cost' as used herein means any educational cost which the student was entitled to pay from the proceeds of the loan. In case of failure to make a scheduled repayment of any installment, failure to apply for cancellation of deferment of the loan on time, or noncompliance by a borrower with the intent of the loan, the entire unpaid indebtedness including accrued interest, at the option of the commission, shall become immediately due and payable. The recipient shall execute the necessary legal documents to reflect his obligation and the terms and conditions of the loan. The loan program, if implemented, pursuant to the South Carolina Education Improvement Act, is to be administered by the South Carolina Student Loan Corporation. Funds generated from repayments to the loan program must be retained in a separate account and utilized as a revolving account for the purpose that the funds were originally appropriated. Appropriations for loans and administrative costs incurred by the corporation are to be provided in annual amounts, recommended by the Commission on Higher Education, to the State Treasurer for use by the corporation. The select committee shall review the loan program annually and report to the General Assembly."

(2) Section 59-26-20(o) of the 1976 Code, as last amended by Act 259 of 1992, is further amended to read:

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"(o) The Commission on Higher Education in consultation with the State Department of Education and the staff of the South Carolina Student Loan Corporation, shall develop a Governor's Teaching Scholarship Loan Program to provide talented and qualified state residents loans not to exceed five thousand dollars a year to attend public or private colleges and universities for the purpose of becoming certified teachers employed in the public schools of this State. The recipient of a loan is entitled to have up to one hundred percent of the amount of the loan plus the interest on the loan canceled if he becomes certified and teaches in the public schools of this State for at least five years. The loan is canceled at the rate of twenty percent of the total principal amount of the loan plus interest on the unpaid balance for each complete year of teaching service in a public school. However, beginning July 1, 1990, the loan is canceled at the rate of thirty-three and one-third percent of the total principal amount of the loan plus interest on the unpaid balance for each complete year of teaching service in both an academic critical need area and a geographic need area as defined annually by the State Board of Education. Each complete year of teaching service in a public school shall cancel the unpaid principal on the loan plus the interest that has accrued on that portion of the principal which is attributable to the cost, as determined by the commission, of twenty-four credit hours of instruction at the institution attended; provided, that if the complete year of teaching service is in both an academic critical need area and a geographic need area, the cost of thirty-six credit hours of instruction shall be canceled in the manner provided in this section. The credit hours must be canceled in the order they were completed with the credit hours earned first being canceled first. `Cost' as used herein means any educational cost which the student was entitled to pay from the proceeds of the loan. In case of failure to make a scheduled repayment of any installment, failure to apply for cancellation or deferment of the loan on time, or noncompliance by a borrower with the purpose of the loan, the entire unpaid indebtedness plus interest is, at the option of the commission, immediately due and payable. The recipient shall execute the necessary legal documents to reflect his obligation and the terms and conditions of the loan. The loan program must be administered by the South Carolina Student Loan Corporation. Funds generated from repayments to the loan program must be retained in a separate account and utilized as a revolving account for the purpose of making additional loans. Appropriations for loans and administrative costs must come from the Education Improvement Act of 1984 Fund, on the recommendation of the Commission on Higher Education to the State Treasurer, for use by the corporation. The select committee shall review this scholarship loan
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program annually and report its findings and recommendations to the General Assembly. For purposes of this item, a `talented and qualified state resident' includes freshmen students who graduate in the top ten percentile of their high school class, or who receive a combined verbal plus mathematics Scholastic Aptitude Test score of at least eleven hundred and enrolled students who have completed one year (two semesters or the equivalent) of collegiate work and who have earned a cumulative grade point average of at least 3.5 on a 4.0 scale. To remain eligible for the loan while in college, the student must maintain at least a 3.0 grade point average on a 4.0 scale."

(3) The provisions of this section shall be construed to be the payback method referred to in Part IB, Section 19A, Paragraph 46 under which students receiving student loans and Governor's Teaching Scholarships provided from EIA funds are permitted to pay back such loans or scholarships./

Renumber sections & amend totals/title to conform.

Rep. TOWNSEND explained the amendment.

The amendment was then adopted.

Reps. KNOTTS, KOON, RISER, WRIGHT, WHATLEY and LIMEHOUSE proposed the following Amendment No. 164 (Doc Name P:\amend\DKA\3568HTC.96), which was ruled out of order.

Amend the bill, as and if amended, Part II, Permanent Provisions, by adding a new SECTION, appropriately numbered, to read:

/SECTION

TO AMEND SECTION 12-36-2110 OF THE 1976 CODE, RELATING TO THE MAXIMUM SALES TAX ON CERTAIN TRANSACTIONS, SO AS TO DELETE THIS MAXIMUM TAX EXCEPT FOR THE MAXIMUM TAX ON THE SALES OF MUSICAL INSTRUMENTS SOLD TO RELIGIOUS ORGANIZATIONS; TO AMEND SECTION 12-36-2120, RELATING TO SALES TAX EXEMPTIONS, SO AS TO REVISE THESE EXEMPTIONS, DELETE CERTAIN EXEMPTIONS, AND PROVIDE THAT A SALES TAX OF THREE AND ONE-HALF PERCENT SHALL BE ASSESSED ON THE GROSS PROCEEDS OF THE SALE OF FOOD WHICH MAY BE PURCHASED LAWFULLY WITH UNITED STATES DEPARTMENT OF AGRICULTURE FOOD STAMPS; AND TO PROVIDE FOR THE USE OF THE ADDITIONAL REVENUE GENERATED BY THE ABOVE PROVISIONS.

A. Section 12-36-2110 of the 1976 Code is amended to read:

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"Section 12-36-2110. (A) The maximum tax imposed by this chapter is three hundred dollars for each sale made after June 30, 1984, or lease executed after August 31, 1985, of each:

(1) aircraft, including unassembled aircraft which is to be assembled by the purchaser, but not items to be added to the unassembled aircraft;

(2) motor vehicle;

(3) motorcycle;

(4) boat;

(5) trailer or semitrailer, pulled by a truck tractor, as defined in Section 56-3-20, and horse trailers but not including house trailers or campers as defined in Section 56-3-710;

(6) recreational vehicle, including tent campers, travel trailer, park model, park trailer, motor home, and fifth wheel; or

(7) self-propelled light construction equipment with compatible attachments limited to a maximum of one hundred sixty net engine horsepower.

In the case of a lease, the total tax rate required by law applies on each payment until the total tax paid equals three hundred dollars. Nothing in this section prohibits a taxpayer from paying the total tax due at the time of execution of the lease, or with any payment under the lease. To qualify for the tax limitation provided by this section, a lease must specifically state the term of, and remain in force for, a period in excess of ninety continuous days.

(B) For the sale of a manufactured home, as defined in Section 40-29-20, the tax is calculated as follows:

(1) subtract trade-in allowance from the sales price;

(2) multiply the result from (1) by sixty-five percent;

(3) if the result from (2) is no greater than six thousand dollars, multiply by five percent for the amount of tax due;

(4) if the result from (2) is greater than six thousand dollars, the tax due is three hundred dollars plus two percent of the amount greater than six thousand dollars.

However, a manufactured home is exempt from any tax that may be due above three hundred dollars as a result of the calculation in item (4) if it meets these energy efficiency levels: storm or double pane glass windows, insulated or storm doors, a minimum thermal resistance rating of the insulation only of R-11 for walls, R-19 for floors, and R-30 for ceilings. However, variations in the energy efficiency levels for walls, floors, and ceilings are allowed and the exemption on tax due above three hundred dollars applies if the total heat loss does not exceed that calculated using the levels of R-11 for walls, R-19 for floors, and R-30 for ceilings. The

Printed Page 1165 . . . . . Thursday, February 29, 1996
edition of the American Society of Heating, Refrigerating, and Air Conditioning Engineers Guide in effect at the time is the source for heat loss calculation. The dealer selling the manufactured home must maintain records, on forms provided by the State Energy Office, on each manufactured home sold which contains the above calculations and verifying whether or not the manufactured home met the energy efficiency levels provided for in this subsection. These records must be maintained for three years and must be made available for inspection upon request of the Department of Consumer Affairs or the State Energy Office.

(C) For the sale of each musical instrument, or each piece of office equipment, purchased by a religious organization exempt under Internal Revenue Code Section 501(c)(3), the maximum tax imposed by this chapter is three hundred dollars. The musical instrument or office equipment must be located on church property and used exclusively for the organizations exempt purpose. The religious organization must furnish to the seller an affidavit on forms prescribed by the commission. The affidavit must be retained by the seller.

(D) The maximum tax levied pursuant to this chapter on the sale or use of each item of machinery for research and development is three hundred dollars. As used in this subsection, "machinery for research and development" means machinery used directly and exclusively in research and development in the experimental or laboratory sense for new products, new uses for existing products, or for improving existing products. To be eligible for the limitation imposed by this subsection, the machinery must be located in a separate facility devoted exclusively to research and development as defined in this subsection. The limitation does not extend to machinery used in connection with efficiency surveys, management studies, consumer surveys, economic surveys, advertising, promotion, or research in connection with literary, historical, or similar projects."

B. Section 12-36-2120 of the 1976 Code, as last amended by Act 61 of 1995, is further amended to read:

"Section 12-36-2120. Exempted from the taxes imposed by this chapter are the gross proceeds of sales, or sales price of:

(1) tangible personal property or receipts of any business which the State is prohibited from taxing by the Constitution or laws of the United States of America or by the Constitution or laws of this State;

(2) tangible personal property sold to the federal government;

(3) (a) textbooks, books, magazines, periodicals, newspapers, and access to on-line information systems sold to primary and secondary schools and institutions of higher learning for use in a course of study in

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primary and secondary schools and institutions of higher learning or for students' use in the school library of these schools and institutions;

(b) books, magazines, periodicals, newspapers, and access to on-line information systems sold to publicly supported state, county, or regional libraries;

Items in this category may be in any form, including microfilm, microfiche, and CD ROM;

(4)(3) livestock. `Livestock' is defined as domesticated animals customarily raised on South Carolina farms for use primarily as beasts of burden, or food, and certain mammals when raised for their pelts or fur. Animals such as dogs, cats, reptiles, fowls (except baby chicks and poults), and animals of a wild nature, are not considered livestock;

(5)(4) feed used for the production and maintenance of poultry and livestock;

(6)(5) insecticides, chemicals, fertilizers, soil conditioners, seeds, or seedlings, or nursery stock, used solely in the production for sale of farm, dairy, grove, vineyard, or garden products or in the cultivation of poultry or livestock feed;

(7)(6) containers and labels used in:

(a) preparing agricultural, dairy, grove, or garden products for sale; or

(b) preparing turpentine gum, gum spirits of turpentine, and gum resin for sale.

For purposes of this exemption, containers mean boxes, crates, bags, bagging, ties, barrels, and other containers;

(8) newsprint paper, newspapers, and religious publications, including the Holy Bible and the South Carolina Department of Agricultures The Market Bulletin;

(9) coal, or coke or other fuel sold to manufacturers, electric power companies, and transportation companies for:

(a) use or consumption in the production of by-products;

(b) the generation of heat or power used in manufacturing tangible personal property for sale. For purposes of this item, `manufacturer' or `manufacturing' includes the activities of a processor;

(c) the generation of electric power or energy for use in manufacturing tangible personal property for sale; or

(d) the generation of motive power for transportation. For the purposes of this exemption, `manufacturer' or `manufacturing' includes the activities of mining and quarrying;

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(10)(7) (a) meals or foodstuffs used in furnishing meals to school children, if the sales or use are within school buildings and are not for profit;

(b) meals or foodstuffs provided to elderly or disabled persons at home by nonprofit organizations that receive only charitable contributions in addition to sale proceeds from the meals;

(c) food stuffs, either prepared or packaged for the homeless or needy that are sold to nonprofit organizations, or food stuffs that are subsequently sold or donated by a nonprofit organization to another nonprofit organization. This subitem is only applicable to food stuffs which are eligible for purchase under the USDA food stamp program;

(11) (a) toll charges for the transmission of voice or messages between telephone exchanges;

(b) charges for telegraph messages; and

(c) carrier access charges and customer access line charges established by the Federal Communications Commission or the South Carolina Public Service Commission;

(12) water sold by public utilities, if rates and charges are of the kind determined by the Public Service Commission, or water sold by nonprofit corporations organized pursuant to Sections 33-35-10 to 33-35-170;

(13) fuel, lubricants, and supplies for use or consumption aboard ships in intercostal trade or foreign commerce. This exemption does not exempt or exclude from the tax the sale of materials and supplies used in fulfilling a contract for the painting, repair, or reconditioning of ships and other watercraft;

(14) wrapping paper, wrapping twine, paper bags, and containers, used incident to the sale and delivery of tangible personal property;

(15)(8)(a) gasoline and other fuels subject to tax under Chapter 27 of Title 12; however, gasoline used in aircraft is not exempt from the sales and use tax;

(b) fuels subject to tax under Chapter 29 of Title 12; however, if the fuel tax is subsequently refunded under Section 12-29-380, the sales or use tax is due unless otherwise exempt, and the person receiving the refund is liable for the sales or use tax;

(c) fuels used in farm machinery and farm tractors; and

(d) fuels used in commercial fishing vessels;

(16)(9) farm machinery and their replacement parts and attachments, used in planting, cultivating, or harvesting farm crops, including bulk coolers (farm dairy tanks) used in the production and preservation of milk on dairy farms, and machines used in the production of poultry and poultry products on poultry farms, when such products are sold in the

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original state of production or preparation for sale. This exemption does not include automobiles or trucks;

(17)(10) machines used in ginning cotton, manufacturing, processing, compounding, mining, or quarrying tangible personal property for sale. `Machines' include the parts of machines, attachments, and replacements used, or manufactured for use, on or in the operation of the machines and which are necessary to the operation of the machines and are customarily so used. This exemption does not include automobiles or trucks;

(18)(11) fuel used exclusively to cure agricultural products;

(19) electricity used by cotton gins, manufacturers, miners, or quarriers to manufacture, mine, or quarry tangible personal property for sale. For purposes of this item, "manufacture" or "manufacture" includes the activities of processors;

(20) railroad cars, locomotives, and their parts, monorail cars, and the engines or motors that propel them, and their parts;

(21) vessels and barges of more than fifty tons burden;

(22) materials necessary to assemble missiles to be used by the Armed Forces of the United States;

(23)(12) farm, grove, vineyard, and garden products, if sold in the original state of production or preparation for sale, when sold by the producer or by members of the producer's immediate family;

(24) supplies and machinery used by laundries, cleaning, dyeing, pressing, or garment or other textile rental establishments in the direct performance of their primary function, but not sales of supplies and machinery used by coin-operated laundromats;

(25) motor vehicles (excluding trucks) or motorcycles, which are required to be licensed to be used on the highways, sold to a resident of another state, but who is located in South Carolina by reason of orders of the United States Armed Forces. This exemption is allowed only if within ten days of the sale the vendor is furnished a statement from a commissioned officer of the Armed Forces of a higher rank than the purchaser certifying that the buyer is a member of the Armed Forces on active duty and a resident of another state or if the buyer furnishes a leave and earnings statement from the appropriate department of the armed services which designates the state of residence of the buyer;

(26) all supplies, technical equipment, machinery, and electricity sold to radio and television stations, and cable television systems, for use in producing, broadcasting, or distributing programs. For the purpose of this exemption, radio stations, television stations, and cable television systems are deemed to be manufacturers;

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(27) all plants and animals sold to any publicly supported zoological park or garden or to any of its nonprofit support corporations;

(28)(13) (a) medicine and prosthetic devices sold by prescription, and free samples of prescription medicine distributed by its manufacturer and any use of these free samples;

(b) hypodermic needles, insulin, alcohol swabs, and blood sugar testing strips sold to diabetics under the authorization and direction of a physician;

(c) medicine donated by its manufacturer to a public institution of higher education for research or for the treatment of indigent patients; and

(d) dental prosthetic devices;

(29)(14) Reserved; food which may be purchased lawfully with United States Department of Agriculture food stamps shall be subject to a sales tax equal to three and one-half percent of the gross proceeds of the sale of such food;

(30) office supplies, or other commodities, and services resold by the Division of General Services of the State Budget and Control Board to departments and agencies of the state government, if the tax was paid on the divisions original purchase;

(31) vacation time sharing lease plans as provided by Chapter 32 of Title 27;

(32)(15) natural and liquefied petroleum gas and electricity used exclusively in the production of poultry, livestock, swine, and milk;

(33) electricity, natural gas, fuel oil, kerosene, LP gas, coal, or any other combustible heating material or substance used for residential purposes. Individual sales of kerosene of twenty gallons or less by retailers are considered used for residential heating purposes;

(34) thirty-five percent of the gross proceeds of the sale of modular homes as defined in Section 31-17-20;

(35) motion picture film sold or rented to or by theaters;

(36) tangible personal property where the seller, by contract of sale, is obligated to deliver to the buyer, or to an agent or donee of the buyer, at a point outside this State or to deliver it to a carrier or to the mails for transportation to the buyer, or to an agent or donee of the buyer, at a point outside this State;

(37) petroleum asphalt products, commonly used in paving, purchased in this State, which are transported and consumed out of this State;

(38)(16) hearing aids, as defined by Section 40-25-20(5);

(39) concession sales at a festival by an organization devoted exclusively to public or charitable purposes, if:

(a) all the net proceeds are used for those purposes;

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