An ambitious, bipartisan plan to reform South Carolina's tax structure, give more money to schools and slash property tax bills will be unveiled next week. Supporters believe the plan is the best chance the state has to fix how it pays for education.

Sponsored by House Majority Leader Rick Quinn, R-Richland, and state Rep. Vincent Sheheen, D-Kershaw, the plan would:

• Increase the statewide sales tax to 7 percent, from 5 percent, bringing in $860 million a year in new revenue; sales of food and medicine would be exempt from the 2-cent-on-the-dollar increase

• Eliminate exemptions from the sales tax for a laundry list of products and services now exempt, generating more than $400 million a year

• Increase teacher pay to the national average

• Eliminate property taxes that go to pay for school operating expenses, saving taxpayers $1.6 billion; most homeowners would see their tax bills cut in half, Quinn and Sheheen said.

"It's really reforming the tax system and totally reforming our education funding system," Sheheen said. "When you put those things together, that's a huge positive move forward, which I don't think this state has tackled."

With schools reeling from three years of budget cuts and a proposed $5 billion state spending plan for next year that would fund education at 1977 levels, when adjusted for inflation, Quinn and Sheheen's plan will generate much attention.

"It's encouraging to see that the General Assembly hasn't completely given up on restoring some of the funds cut from schools," said Jim Foster, spokesman for state Superintendent of Education Inez Tenenbaum. "We'll certainly be giving the package a close look when it's unveiled."

While the proposal is not likely to go far before the legislative session ends June 5, Quinn and Sheheen believe they can gather support over the summer and come back in January with enough votes to get it passed.

As it is, the plan has early pledges of support from county governments, who largely bear the responsibility of pay for schools now. However, teachers and other educators have raised early concerns about the plan.

AN EQUITY SOLUTION?

The Quinn-Sheheen plan would remove all responsibility for paying for schools from local governments and give it to the state. It also would pay for schools using sales taxes, abandoning property taxes.

Homeowners, businesses, farmers and others would no longer pay property taxes to fund day-to-day school operations. However, construction projects, such as new schools, still would be paid for by property taxes.

Property taxes make up more than a third of most school districts' operating budgets. The other two thirds comes largely from direct state funding and federal money.

While some argue that the property tax is a more stable source of revenue than a sales tax, Quinn said property taxes "pit property owners against children." A sales tax is "a more fair and just distribution of dollars for education," he added.

The sales tax often has been called a "regressive tax," meaning the lower a person's income, the greater percentage of that income is paid out in sales taxes. To try to blunt that argument, Sheheen and Quinn exempt food and medicine from the increased sales tax.

Relying on property taxes has put the state in the fix it's in now, Sheheen said. The state is being sued by rural school districts who claim there is an unequal method of funding education in South Carolina.

Simply put, the lower the value of property in counties, the less money there is available to run schools. That's unfair, Sheheen said.

"If you live in a small county, with no infrastructure, your (tax) rate is so high right now just to try and meet the basics," he said. "So you end up with a town full of trailers, an intensely high (tax) rate and a school system (funded) not close to the state average."

Either the state will have to subsidize poorer counties and let "rich districts pay all the property taxes," Sheheen said, "or have a unified system that makes sense and gives everybody a fair shot."

In nearly every case, Quinn said, school districts would receive more money under their plan.

Each district would get money based on its student population. However, the formula would be weighted to give more money for students with disabilities or special needs. For instance, Quinn said, schools in Beaufort County would get more money because they serve more students who don't speak English.

BUILDING SUPPORT

The Quinn-Sheheen plan has been in the works for months. Each had similar ideas, eventually discovered they were working on parallel proposals, and then joined efforts.

Quinn said he has more than 40 commitments from Republican House members to support the plan. Sheheen hopes he can count on many Democrats to support it.

But House Minority Leader James Smith, D-Richland, said he has not had a chance to share the plan with his fellow Democrats and is not ready to pledge full support.

Quinn believes he probably still could get the plan through the House this year before the Legislature adjourns next week.

But, instead, he and Sheheen plan a "barnstorming" tour of the state this summer and fall. They'll visit school groups, chambers of commerce, newspaper editorial writers and taxpayer associations to sell it.

That's wise, other legislative leaders said.

"It really scares me to move forward with something this dramatic without really fleshing out these details," said Senate Finance Committee chairman Hugh Leatherman, R-Florence.

His counterpart in the House, Ways and Means Committee chairman Bobby Harrell, R-Charleston, agreed.

"I want to make sure that everything is as I think it is before we move forward and try to implement it," Harrell said. But, he added, the plan "is the right idea."

REACTION MIXED

A spokesman for Gov. Mark Sanford said the governor has not seen the plan and could not say whether he would support it. Sanford has proposed his own plan for reforming school funding that combines the many streams of state money that go to districts into a few block grants. It does not change the source of those dollars, however.

Sanford also has proposed lowering the income tax as a way to spur the economy. Quinn and Sheheen said they are committed to including some form of income tax relief in their plan, but they have yet to settle on a method.

Eliminating nearly half of all property taxes will ease the burdens being felt by local governments, faced with dwindling state revenues and possible local tax increases. Robert Croom, assistant director of the S.C. Association of Counties, believes county officials are likely to support the Quinn-Sheheen plan, though they would first need to see details.

The group's legislative committee supports moving away from relying on property taxes to pay for schools and toward a statewide funding source. The committee did not specifically endorse a higher sales tax, Croom said.

"This proposal addresses the biggest problem with property taxation in our state," Croom said. "It's the statutory requirement for property tax increases for schools to keep up with inflation and to account for growing student bodies."

Others aren't sure about the plan.

The plan is opposed by some of the people who Quinn and Sheheen say it would benefit. For example, the S.C. Education Association, the largest group of teachers and educators in the state, is against it.

"We are wary of any plan to roll back funding of education from a stable revenue source in favor of an unstable revenue source," said Cecil Cahoon, the association's director of government relations. "The property tax is a stable revenue stream that is going to exist this year and next year and the year after."

But Quinn and Sheheen don't agree that the sales tax is unstable. Since 1990, sales tax collections have increased year to year by an average of 4.8 percent. The assessed value of property has increased by an average of 5.8 percent, Quinn said.

Only once since 1990 - in 1991 - has sales tax revenue not increased from year to year.

Other political obstacles to the plan could include industries - utilities, media companies and car dealers - that could see the exemption from sales taxes on their goods and services removed.

Inertia is another threat, Sheheen said.

"It's substantial change, and there's a segment out there that always reacts badly to change."