Posted on Wed, Mar. 09, 2005


Sanford wants House to curb government growth, cut taxes


Associated Press

Gov. Mark Sanford thinks House budget writers haven't done enough to curb spending, repay trust funds or give tax breaks to South Carolinians.

"If we stay on the course that we're on, we're probably jeopardizing South Carolina's triple-A credit rating," Sanford said Wednesday.

"There's still room for improvement," the Republican governor said before the House takes up the budget next week. With about $616 million more to spend in the state's budget, legislators need to do more to repay trust funds and include money for his proposal to trim the state's top income tax rate.

Sanford praised education and health care spending, but the self-described penny pincher said he was concerned the House version of the budget increases government spending 5.3 percent.

House Speaker David Wilkins, R-Greenville, said the governor was "creating controversy where none exists."

"It seems like we are in heated agreement about ... his priorities and yet the governor doesn't seem to understand that," Wilkins said.

Wilkins said the House budget reflects top state priorities, such as restoring education spending to proper levels, making roads safer and restoring money taken from trust funds.

"The governor seems to think (paying back trust funds) is mutually exclusive," Wilkins said. "It took three years to take this money out of trust funds. Our plan is to pay it back over three years."

Legislators have raided a variety of trust funds since 2000 as they tried to balance the state's budget without steeper cuts in agency spending.

The House Ways and Means Committee's budget would put $117 million back into those accounts, and pay off what was borrowed from more accounts than Sanford asked for, said committee chairman Rep. Bobby Harrell, R-Charleston.

Sanford wanted the budget to include $7 million for the first year of his proposal to reduce the state's top income rate.

That plan would, over a decade, reduce the state's top income tax rate to 4.75 percent from 7 percent and cost about $1 billion. He says that will help small businesses and attract wealthy executives and retirees to the state.

Harrell said the bill, which has cleared the House, would have to be approved by the General Assembly before it was included in the budget. But few legislators expect it will pass the Senate before the Legislature adjourns in June.

While Sanford works to persuade lawmakers his tax break is a good idea, he also plans to convince credit rating agencies.

Moody's Investor Services and Standard and Poor's have said Sanford's plan would take revenues away from the state and cited it as a reason for having a negative outlook on the state's credit.

Sanford said he is "going to make it a point to go to New York and have a conversation with a number of different credit agencies" to explain it more fully.

It would be unusual for a South Carolina governor to make that type of trip without other financial leaders.

When asked about that, Sanford said he wouldn't go solo. "If that's the way it's normally done, I have no problem with taking a delegation," he said.





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