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Legislature Might Take Control of Licensing Fees

The S.C. General Assembly is moving to take control of a questionable legislative cash cow in the form of professional and occupational licensing fees.

The fees, from a few dollars to several hundred dollars, generate excess millions every year for the state treasury, according to an independent investigative report and officials involved in collecting the fees.

Tens of thousands of South Carolinians – from accountants, barbers and contractors to dentists, nurses and real estate agents – pay the fees for various forms of certification and licensure.

Currently, state law gives some 40 boards that oversee the licensed trades, and the director of a state cabinet agency that works with the boards – the Department of Labor, Licensing and Regulation – wide latitude in setting the fees.

A bill with bipartisan support, and decent prospects for passing, would change that, giving the Legislature control over determining the fees.

Sen. Joel Lourie, D-Richland, is chief sponsor of the bill, S. 1395. The Senate passed it unanimously in late April, less than one month after Lourie introduced it.

That’s light speed for the Senate.

The bill is now in the House Labor, Commerce and Industry Committee. As of Tuesday it had not been assigned to a subcommittee.

House LCI Chairman Bill Sandifer, R-Oconee, did not return messages left at his State House and work offices Tuesday and Wednesday seeking comment on what if anything he intends to do with the bill.

Committee chairmen control the fate of bills that end up before their panels.

Five Republican senators are co-sponsoring Lourie’s proposed legislation: Raymond Cleary of Georgetown, Kevin Bryant of Anderson, Shane Martin of Spartanburg, Senate Rules Committee Chairman Jake Knotts of Lexington, and Lee Bright of Spartanburg.

At face value, the bill could be construed as a power grab by the Legislature.

But if so, for better or for worse?

The measure would delete Section 40-1-50 (D) from the S.C. Code of Laws, a passage that lays out requirements for the LLR boards and director to set, monitor and adjust licensing fees.

In place of that more than 500-word section of the code would go this 31-word sentence:

“All fees for revenue-funded boards must be recommended by each board and approved by the General Assembly as provided by legislative enactment in the general and permanent law of the state.”

Licensing fees are a major cash cow for the state. And evidently the LLR boards and agency have failed to do their job – required under the law – of keeping fee amounts in check.

So, allow me, the Senate essentially said in passing the bill. 

But would legislators better perform the task of tracking and minimizing the fees – or keep on keeping on with the money machine as is?

“In FY 09-10, we found that the (LLR’s licensing) division had over $43 million in revenues, expenditures of over $9 million, and transfers of about $13 million,” the General Assembly’s inspector general agency, the Legislative Audit Council, said in a July 2011 report.

About 330,000 people were licensed through the LLR boards that fiscal year, according to the Audit Council review, which highlighted a huge fee balance among the boards as a whole.

“We also found that $9.8 million was transferred to the state general fund from board revenues by provisos in the FY 09-10 appropriations act,” the report says.

“In FY 09-10,” it continues, “the collective year-end balance for all the boards was about $20 million, so the boards should review their fee structures as required by state law to determine if the licensing fees should be adjusted.”

Those figures were just for fiscal 2010.

Former Department of Labor, Licensing and Regulation director Catherine Templeton provided some specifics about the fees in testifying to a Senate subcommittee on the agency’s latest regulatory report.

South Carolina law requires the LLR director to prepare such a yearly report on state occupational regulations that do not meet the spirit and intent of protecting “the health, safety, and welfare of the public.”

One example Templeton cited was hairstylists who rent booths at beauty salons.

“We as a state take $300,000 on average every two years from people who don’t need to pay us $300,000 for booth renters’ licenses,” she said, adding, “You’re hurting the working man and woman.”

Templeton, now head of the S.C. Department of Health and Environmental Control, also cited residential specialty contractors, or plumbers, painters and roofers and the like.

State law requires people in those trades to obtain a license if they perform work costing more than $200.

“We don’t require anything (of residential specialty contractors),” Templeton said. “But you give us some money, and now you’ve got your license.”

Sen. Lee Bright, R-Spartanburg, derided such practices as a scam. “The revenue is what it’s about,” Bright said.

Templeton: “Well, LLR does have plenty of it. I mean the Legislature comes and gets it every year.”

“We don’t need the fees and the fines that we’ve got,” she added.

The question concerning the bill is: What if anything would change if the Legislature took direct control of the state’s professional and occupational licensing fees?

In addition to Bright co-sponsoring the bill, Lourie suggested at a subcommittee hearing on the measure in April that it’s about scaling back the fees.

During the hearing, current LLR director Holly Pisarik said she had looked at the fee amounts historically. “And what we had done with a number of our boards is actually reduce the fees,” she said.

“And so, what I would like built into the bill is discretion to lower the fees without having to come back through the (legislative approval) process,” Pisarik added.

Said Lourie: “I think to give them the discretion to lower fees falls within the spirit of perhaps why we introduced the bill to begin with.”

If it passes, tens of thousands of South Carolinians might start wondering if such intentions lead to corresponding action by the Legislature – or whether lawmakers do something else with the fees.

Reach Ward at (803) 254-4411 or eric@thenerve.org.

Budget General Assembly Lobbying

S.C. Department of Labor Licensing and Regulation Sen. Joel Lourie Catherine Templeton Sen. Lee Bright Rep. Bill Sandifer Legislative Audit Council Holly Pisarik