The Legislative Landscape: South Carolina State House Activities Impacting the Hospitality Industry

The South Carolina State House has been a hive of legislative activity since the commencement of the second half of the 125th legislative session of the SC General Assembly back in early January. At the time of writing this article, we have already seen several bills set for special order in the Senate, with topics covering the constitutional open carry of firearms, the legalization of medical marijuana, establishing a cabinet-level Office of Health and Policy, and the necessary qualifications for teachers to serve in SC public schools based of relevant industry prior experience. With 2024 being an election year (every seat in the SC House and Senate are up for grabs) and with such little time remaining before the crossover deadline (when a bill must pass at least one legislative body) on April 10th, there are many bills working their way through the legislative process that are vying for the attention of our elected officials. And of course, the budget process demands a great deal of time and discussion.

Skyrocketing insurance premiums across all lines of business continue to have the growing attention of the public, the media, and our lawmakers. Most notably, a House Ad Hoc Committee, tasked with studying the surging costs and availability of liquor liability insurance and commissioned by Speaker Murrell Smith, has introduced H. 5066 – the Fair Access to Insurance Requirements Act. For businesses required to carry liquor liability insurance, coverage could be obtained directly through a newly established state pool which would be funded by revenue collected from the excise tax imposed on alcoholic liquor by the drink for on-premises consumption. The bill would also update the existing code to drop the amount of mandated liquor liability insurance coverage ($1 million minimum) if certain factors are met. Examples include:

• Closing your business at 10pm or earlier.

• Completes an alcohol server training course approved by the SC Department of Insurance.

• Meets requirements set by the SC Department of Insurance to limit the risk to the public, which may include identification scanners, cameras, and limits on drink specials.

• Has less than 30% of its total sales deriving from alcohol sales.

Furthermore, the bill also puts into code the recent SC Department of Revenue interpretation of needing a liquor liability policy or general liability insurance policy with a liquor endorsement for an aggregate, not per occurrence, of at least $1 million. At a recent Ad Hoc Committee hearing, SCRLA Immediate Past Chair, Carl Sobocinski, and SCRLA President & CEO, Susan Cohen, both shared vital industry-specific comments and prospectives and requested several points of clarification needed on the bill. Committee Chairman Jason Elliott said after the meeting that additional industry-friendly changes to the bill would be considered due to the association’s advocacy efforts. In addition to legislative focus, the SCRLA Ad Hoc Alcohol Task Force has held several meetings, including three with DOR staff, to address the often confusing and outdated alcohol regulations related to both permits and licenses.

If you’ve been following our weekly updates in the Legislative Insight, it’s no surprise that lawsuit reform remains a hot topic of debate on both sides of the isle. S. 533 – the SC Justice Act, would modernize the way South Carolina’s liability laws work to ensure businesses are only responsible for paying damages equivalent to their share of fault in civil lawsuits. The bill has already received several subcommittee hearings so far this session, though at the time of writing this article, no action has been taken by members of the subcommittee on the bill. There has been increasing chatter in the State House lobby that Senate leadership is poised to recall the bill from committee and bring it directly to the Senate floor for immediate consideration, though it remains to be seen if Majority Leader Shane Massey has the needed votes to invoke cloture and force a vote on the bill. South Carolina’s business community has long advocated for ensuring that our state remains competitive in recruiting and retaining job creators while continuing to protect injured South Carolinians. The SC Justice Act would ensure just that, and the SCRLA will continue to advocate for its passage.

Short-term rentals remain a topic of concern at the State House, with several bills being filed this session that require the industry’s close attention. H. 3253, if signed into law, would prohibit local governments from enacting any type of ordinance that bans the renting of a residence, spanning from entire homes to individual beds, for fewer than 29 days, and if a local government enacts any type of short-term rental regulation anyways, they could be out millions of dollars of state funds. What’s even more concerning is that the bill ignores the South Carolina Department of Revenue’s definition, derived from the original accommodation tax legislation, of a short-term rental which is “any sleeping accommodations furnished at any place in which rooms, lodgings, or sleeping accommodations of any kind, including a taxpayer’s residence, are furnished to transients for less than 90 consecutive days.”

A growing number of cities around the state already have set, or are in the process of setting, their own regulations around short-term rentals in their communities. In Greenville, homes in residential zoning districts can’t be leased for any fewer than 30 days, and in Myrtle Beach, it’s no fewer than 90 days. In Folly Beach, residents voted to cap the number of short-term rentals allowed at 800, and in Charleston, homeowners must follow strict rules, including obtaining a business license and living at the residence for at least half the year. Under the bill, cities and counties that impose short-term rental bans would face penalties, including not being able to collect a 6% commercial property tax currently levied on short-term rentals. Instead, those property owners would be charged a lower 4% rate reserved for primary residences. Local governments would also be barred from receiving money from the state’s Local Government Fund, from which annual allocations can range from hundreds of dollars to millions, based on population. A similar bill was introduced in the Senate (S. 953) in January. At the time of writing this article, neither bill has been assigned to a subcommittee for public comment, but we expect there to be public hearings on both H. 3253 and S. 953 at some point this session.

While these topics are all priorities of the SCRLA’s Governmental Affairs team, there are dozens of other bills that we are actively monitoring, including increasing the apprenticeship tax credit, establishing a statewide family medical leave program for small businesses, additional workforce development programs specific to South Carolina’s hospitality and tourism industries, public school start dates, and minimum wage legislation, just to name a few. For more information about bills we are monitoring this session and the SCRLA’s ongoing advocacy initiatives at both the state and federal level, please visit our website at scrla.org/GA or scan the QR code below. Scan Me