S.C. Statehouse Report
Dec. 14, 2003
are coming legislature's targets
SC Statehouse Report
DEC. 14, 2003 - - If you thought the last couple of budget years
were bad, the legislative wrangling over money and policy in the
coming session of the General Assembly will be one you'll never
big reason is the state's big-ticket needs for millions of dollars
in rising Medicare costs, school improvements, prisons and lots
of other areas won't be funded simply with economic growth. Indicators
show the state's economy is starting to perk up, but the heady days
of growth of the late 1990s aren't yet on the horizon.
"It's not growing fast enough to get through this next budget
year," said House Majority Leader Rick Quinn, R-Columbia.
Because the state isn't going to grow out of its problems, it will
have to look to other opportunities:
- In the coming year, it's a good bet the state won't get a last-minute
infusion of hundreds of millions of dollars like earlier this
year, which allowed lawmakers to fund Medicaid increases and bypass
- In an election year and with a Republican legislature, politicians
aren't likely going to raise new money with new taxes.
- So for lawmakers to wiggle out of another tight budget year,
they're going to be faced with even more tough decisions to cut,
reshape or reform programs and services to generate enough money
to fuel the state's needs.
WORLD: A real holiday treat
Good tax article
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The coming session's major legislative battles will come in two
linked areas: dealing with the budget and how government should
be restructured, which could create savings and make it easier to
deal with the budget.
At the heart of the budget debate will be a focus on how the state
should be taxing its citizenry. Look for bloodletting in the House
and Senate as leaders compete to woo support for their pet plans.
There are plans to increase sales taxes to cut property taxes. Another
calls for income tax cuts fueled by cigarette tax increases. Others
include cutting some sales tax exemptions to help boost state coffers.
Regardless which plan or plans win, the way South Carolinians are
taxed likely will be reshaped by members of the coming legislature.
"Something involving the tax code will probably happen - -
probably something involving the property tax," said S.C. Rep.
Jim Merrill, R-Daniel Island.
Affecting budget decisions is the restructuring agenda being pushed
by Gov. Mark Sanford. More than likely, restructuring will go far
beyond making some constitutional officers, such as agriculture
commissioner and secretary of state, into to non-elected, gubernatorial
Restructuring of state agencies, practices and programs to reduce
duplication of services, create efficiencies and consolidate programs
could generate enormous savings, proponents say. And while restructuring
is a "hot" topic that seems to be set to happen in some
manner, others observe the state has gone through several years
of budget cuts - - including a handful of painful mid-year cuts.
Due to those slashes, they say there's not a whole lot of fat left,
which means there may not be a lot of low-hanging fruit for restructuring
without significant pain.
Other key issues for the coming legislature:
- Medicare changes. Republicans and Democrats seem to agree
in general that they'll have to make cost-cutting, screening and
other measures to counteract the huge projected rises in costs
to provide Medicare to seniors.
- Tort reform. Business groups are pushing feverishly to
change rules on lawsuits and damages. While some reforms, such
as changes to rules to make it harder for lawyers to "shop"
for friendly jurisdictions, may pass, look for a showdown between
the business/medical community and the legal community over sweeping
- Higher education. It looks like the General Assembly
will consider ways for colleges and universities to borrow to
build infrastructure for research, which can help attract jobs
over the long term. There also may be a real move to reshape the
way government oversees higher education, such as an idea floated
by Sanford to allow some public institutions to become private.
The bottom line for the coming legislative year is it's going to
be another tight budget year and that will drive everything else.
But compared to the previous two tight years, the battles will be
bigger and bloodier over the way the state will do business and
Next week: "Sleeper" issues on next session's legislative
Santa gets all kinds of requests
This week's cartoon by our Bill McLemore:
12/8: Good tax article
To the editor:
I thought your editorial (Dec.
7) about the fairness of SC's current tax system was good and
well thought out. There is another point that I have not seen mentioned
in anywhere, even though it should be an important consideration.
That is the role of federal taxes in the make-up.
If we start with the assumption that the people of the state pay
the taxes (yes, I know that tourists pay some portion, but by and
large, taxes are paid by the residents of SC), then it makes sense
to structure the tax system where whenever possible, the state taxes
are deductible items when computing federal taxes.
I think the only state taxes that are deductible for
federal purposes are income and property taxes. For every $100 in
taxes the state needs, if the residents pay in the form of sales
tax or some other form of use tax, then the after-tax cost to the
resident is $100. If the state collects the same $100 in income
tax, then the resident gets a benefit of $100 x the marginal federal
tax rate. Many people have marginal federal rates in excess of 25%,
so the after tax cost in my example is under $75. This means that
far more capital stays in South Carolina.
With income or property taxes, the federal government
is essentially contributing 15-35%, depending on the payer's tax
bracket. Under a system where the state relies on sales tax, the
federal government contributes nothing. This is one more reason
why it is not smart to replace part of the income tax with sales
or other use taxes.
-- David Pardue, Hilton Head Island, S.C.