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Winners, losers in Sanford’s executive budget plan
By Scott Miller
Staff Writer
One’s loss is another’s gain under a trimmed-down $6.8 billion budget Gov. Mark Sanford introduced this month.
The College of Charleston, for example, loses $3.6 million for various graduate programs, while the Port of Charleston would receive $2.4 million to deepen the harbor passage.
Sanford’s plan redirects nearly $183 million from last year’s budget to fund increases to K-12 education, public safety, conservation and other initiatives.
But some of his cuts will be emotional, as in Sanford’s proposal to eliminate a program that provides health care for children living in a low-income family by cutting about $21.56 million.
“My New Year’s resolution was to not say anything bad about the governor,” said Sen. Harvey Peeler, R-Gaffney, when asked about the cut. “I changed my mind. I think I’ll lose 20 pounds instead. That’ll be easier.”
Comparing cuts to the governor’s proposed spending increases, like the additional $50 million to fund land preservation, lawmakers also will question Sanford’s values.
“He has put more priority on land than health care for children,” said House Minority Leader Harry Ott, D-St. Matthews.
But Sanford never seems to shy away from a showdown. Sparring with lawmakers, including those in his own party, is nothing new to the governor and, undoubtedly, the Legislature must cut somewhere. So a face-off awaits.
Hard decisions ahead
“I know it’s fashionable to bash the governor, but at the same time, his budget is advisory. It’s doesn’t hold any weight,” said House Majority Leader Jim Merrill, R-Daniel Island. “I think what he’s done is asked us to look at these various things and make some hard decisions.”
As Sanford noted, the state has increased spending 43% in the last three years, far beyond its means. He expects about $200 million in new state revenues this year, down nearly $1 billion from increases last year.
“Now we’re seeing the effects of that overspending, and as a result some tough choices are going to have to be made this year with regard to the state budget,” said Sanford, who introduced a $6.8 billion fiscal 2008-’09 budget that cuts overall spending by about 4.6%, or $326 million.
While overall spending would be cut, K-12 education would receive an additional $106.7 million, a 4.5% increase, and Conservation Land Bank funds would increase from $15 million to $65 million to help preserve rural land.
Sanford also proposed directing an additional $87.8 million to law enforcement. The move would create 300 more officers, including 50 state troopers.
Among his tough choices, meanwhile, is a $30.5 million, or 3.4%, cut to higher education,
though Sanford’s budget would provide $19.6 million in additional scholarship money for students.
In other efforts to trim fat, the governor said he can save $18.1 million by consolidating some state agencies, boards and commissions.
Among other proposed cuts, the University of South Carolina, Clemson University, the Medical University of South Carolina, Trident Technical College and The Citadel all would receive less state funding in the upcoming fiscal year.
But even omissions in the budget could spark as much debate as spending cuts.
No new road funds
Transportation funding is a high priority for the business community, according to the S.C. Chamber of Commerce, but it’s unlikely the state will funnel any new money there this year.
“Obviously, with the bridge collapse in Minnesota, we saw the need to maintain our roads and bridges,” said Darrell Scott, governmental affairs director for the state chamber. “We can’t wait another year for a bridge to collapse right here in South Carolina.”
Sanford’s proposal includes no new money for road maintenance or construction, though he said he intends to present ideas to seek private financing for transportation.
Sen. President Pro Tem Glenn McConnell, R-Charleston, noted that the Senate will consider directing the 2% sales tax on motor vehicles to a transportation fund for road maintenance and repairs.
“We could fix (roads) if we were willing to step up and pass a bond bill and dedicate the funds to roads and bridges, but I just don’t think that’s going to happen,” Ott said.
Another option is to raise the state tax on gasoline, an unpopular move politically.
“The more you drive, the more you pay. It’s the fairest tax there is,” said Sen. John Land, D-Manning. “I think we’ve put it off long enough.”
Merrill agreed.
“There’s no way to do it,” he said.
Raising taxes
The lone proposal to raise taxes is already creating a stir.
Sanford wants to raise the state’s tax on cigarettes from 7 cents a pack to 37 cents to offset revenue losses from an optional 50% income tax cut —from the current 7% to 3.4% — for those who forego deductions. The move would cost the state around $107 million.
Several key lawmakers don’t like the idea, however, including Sen. Hugh Leatherman, R-Florence, chairman of the Senate Finance Committee. They support raising the tax to fund health care, not the general revenue fund, as Sanford proposes.
Leatherman suggested using the money to fund tax credits for health insurance premiums businesses pay for employee health care.
“Cigarette tax revenue, in my opinion, has to go to health care,” he said. “The governor’s plan only helps the wealthy. I will never go there.”
But Sanford repeatedly has said he won’t support a tax increase without a tax cut to offset it.
Limiting spending
Many of the budget cuts or increases could hinge on efforts to reform spending as well.
Sanford’s budget includes several calls for spending reform, including a cap on state spending at the rate of inflation plus the rate of population growth and a limit on the use of one-time revenues to cover ongoing expenses. That limit would be equal to 1% of the state revenues.
Scott said the chamber will push heavily for caps at both the state and local levels.
“We think it’s essential to make sure the tax burden isn’t shifted to the business community,” he said.
Neither cap is likely this session, however, as a legislative study committee still must hammer out the details, agreed Peeler and Land.
Leatherman worries a spending cap could tie the state’s hands in the event of great need, like a hurricane.
Lawmakers must study the revenue impact of property tax relief extended to homeowners last year. The state swapped the portion of owner-occupied property tax revenue that funds schools with a 1% sales tax increase, Land said.
Lawmakers will consider extending that relief to commercial property this year.
The governor’s budget proposal is viewable at www.scgovernor.com.
Scott Miller is a staff writer for the Business Journal. E-mail him at smiller@setcommedia.com.
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