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County Council, October 3

“Temporary” employees made “full time”
Another FILOT program for Daimler Vans
Warwick Jones

The agenda for last night’s Finance Committee meeting was light and none of the items up for discussion seemed controversial. But some Council members had a different view and a lot of heat was generated over some issues.

The plan to move 69 “temporary” employees to “full time” generated the most heat. As staff explained, the implementation of the Affordable Care Act (ACA) precipitated, but was not responsible for the action. Under the Act in its original form, the County was required to provide health benefits for its temporary employees from the beginning of Calendar 2014. However, the deadline was moved by the Federal Administration to the beginning of 2015. Notwithstanding, staff recognized that all of these temporary employees had been on the County payroll for some years, and in one case, 11 years. It was contrary to County policy to maintain a position with a temporary status after 12 months. If the jobs were essential, the employees should be moved to full time status.

Staff noted the difference between “part time” and “temporary” employees. The latter generally worked a 40 hour week but being “temporary”, the County was not obligated to contribute to health insurance or other fringe benefits. That there were so many temporary employees reflected action by the County at the onset of the recent recession to leave unfilled those positions vacated by retirement or departures. This brought about a large drop in the number of Full Time Employees (FTE) - from about 2800 to 2400 some staff members opined. However, to maintain important services, some positions were filled with temporary employees.

Staff told the Committee that the cost of moving the 69 employees to full time would be $500,000 for Fiscal 2014 (only 6 months) and $1 million for a full year. Essentially the increased cost reflected the County’s contribution to health care insurance and retirement fund premiums. The FY2014 budget already provided for the $500,000 cost, staff said.

Council members Schweers and Qualey were not happy about the move and voted against it. Both Council members are fiscal conservatives and reticent to approve any items that raise County expenses. Council member Schweers thought that the County was surrendering some flexibility on converting all these temporary employees to full time. Despite staff assurance that the ACA only prompted staff to look at the issue and was not the reason for the recommendation, Council member Qualey spoke as though the ACA was responsible for the increase in costs. As the Federal Administration had pushed back compliance by 12 months, he didn’t think the Committee should vote for the change in employment status at this time.

Other Council members had different views and most were strongly supportive. Council member Johnson asked whether the temporary employees, on becoming full time could some way be credited with the time spent as temporary employees. Staff said they would look into it but from the comments of Chairman Pryor, it would seem unlikely. Full time employees had premiums for insurance and retirement taken out of their pay. Temporary employees did not have these deductions. Presumably, if they were to be made whole for the period they were temporary, they would have to pay much more in future premiums, or make a lump sum payment immediately. Most likely, the State which administers the funds will say it’s not possible.

And then there was the issue of Fees in Lieu of Taxes (FILOT) in relation to an expansion of the Daimler Vans plant in North Charleston. Over the years, the County has approved a number of FILOT programs; perhaps the most prominent is that for Boeing. Effectively, a FILOT program lowers the taxes that are paid to the County, and in the case of Daimler, by some 40%.

As staff explained last night, property taxes in South Carolina for businesses such as Daimler Vans are high and considerably higher than other states. To attract investment by major corporations, FILOT incentives are essential. (We have often asked why the State does not lower property tax rates for manufactures so municipalities don’t need to go down the FILOT route. The high taxes reflect the attitudes of the Ben Tillman era of a century ago, to keep South Carolina an agrarian state. But clearly, the proliferation of FILOT programs is recognition of the unreasonable level of taxes.)

Daimler Vans has been highly successful since it moved into its site on the Palmetto Commerce Parkway. It entered into a FILOT program with the County for $12 million in 2006. The program was set to expire in 2026. It is now seeking a FILOT for another $4 million. It is asking that the FILOT for this and the $12 million expire in 2036.

Most Council members had nothing but praise for Daimler and its contribution to the community. Council member Summey described it as a pioneer in the development of the Commerce Parkway. It was a substantial employer of labor and the $4 million investment should lead to the creation of 60 more jobs. Questioned by Council member Darby, a spokesman for Daimler said that all but a few jobs would be filled by locals. He went on to say that when Daimler first set up, a number of people had been brought in from Germany. Most of those had now returned and the positions had been filled locally.

Council member Schweers was somewhat skeptical about the FILOT and asked how much revenue the County was giving up. He also thought that there was a risk that Daimler could walk away from its operation leaving the County with little benefit. The representative of Daimler took strong issue with this and noted the longevity of US and German operations. He also noted that the company held another 60 acres on the Parkway which it had no intention of selling – presumably the land will be used for further expansion.

The Committee approved the FILOT and amendments with only Council member Schweers voting against.
The final item was a delay in implementing the County’s Bar Closing Time Ordinance. As written the Ordinance would require all bars in the unincorporated areas to close at 2 am. Its implementation would bring the County’s ordinance in line with those of North Charleston, Mount Pleasant and the City of Charleston.

However, a number of small municipalities within the County do not mandate a 2 am closing time. It was hoped that these municipalities would review their ordinances and bring them in line with the County and major municipalities.

The Committee agreed to delay the implementation of the proposed ordinance by a few months though Council member Schweers was not in agreement. He thought the County should go ahead with implementation, regardless.

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