Income tax plan faces Senate ire

e-mail this story Dan Hoover • In spring, Dems' fancy lightly turns to 2006 (03/27/04) • Latest switch puts damper on Dems (03/21/04) • Sanford's call for change at critical juncture (03/07/04) • Political ties never seem to be permanent (02/28/04) • Income tax plan faces Senate ire (02/22/04)

Back in early 2002 when he was an obscure former Lowcountry congressman with single-digit polling numbers, candidate Sanford built a campaign strongly centered around total elimination of the state income tax over 17 years and immediate extension of the sales tax to gasoline, a tax swap, if you will, to provide a relatively even exchange of revenues.

By his first legislative session in 2003, one that ultimately yielded him little, the gas tax notion disappeared and Sanford would modify his goals to an income tax cut and a cigarette tax boost.

"When I got up here, there seemed to be no appetite for the gas tax, or any tax increase except on cigarettes," he said last week.

Even a whopping cigarette tax hike to bail out Medicaid, paired with cutting the income tax rate to 5 percent from 7 percent, was shot down in the Senate, although not as fast as the House disposed of the original plan.

Last week, Sanford, with House Speaker David Wilkins beside him, announced agreement on a 10-year income tax reduction plan, .225 percent annually, paring the maximum rate to 4.75 percent from the current 7 percent. The first phase would kick in on July 1, 2005; subsequent annual cuts would be dependent on 2 percent revenue increase projections.

There's no corresponding increase to cover the possibility of reduced revenue. Sanford and Wilkins say the economic stimulus will cover that.

'Evolution'

"It's been a three- or four-year evolution," Sanford said of his tax policy odyssey.

"The resounding feedback we got from the House was that (a governor has) an election every four years, we have one every 24 months."

The rhetoric of a campaign almost always has to bow to the reality of that place where politics and governance converge.

As legislators packed up to head home last June when the session ended, Sanford said he would hit the road, targeting legislative districts whose incumbents voted against the tax-swap plan, what he called "a smoking-out approach."

What impact, if any, that had isn't clear.

But Wilkins said House leaders held a series of fall and winter meetings at which some resolution was sought. One aspect was totally ruled out: There would be no tax increase of any stripe.

Since all involved are Republicans, as is Sanford, lawmakers may have been seeking an out palatable to all their needs.

In his second State of the State address last month, Sanford made a less than impassioned appeal for an income tax cut, paired with a cigarette tax hike.

"The discussion was to take an income tax (cut), put some safeguards in there for when the economy doesn't grow and spread it out for a number of years," Wilkins said. "So then the discussion moved to how many years, should the cut be to 4.5 or 5 percent."

By Tuesday, there was agreement. Even 15 or so House Democrats signed on.

More hands-on?

It may also mark evolution by Sanford to a more hands-on approach to the executive-legislative relationship. Last year, some lawmakers in his party roundly faulted him for being too distant, not clueing them in on his agenda.

While Sanford says no one can spend six years in Congress and not come away without an understanding of its importance, he was also a legislator who often found himself on the short end of 432-3 or 433-2 votes.

"I can remember me and (Rep. Steve) Largent or me and (Rep. Ron) Paul," accounting for the only two or three votes on certain bills in the U.S. House, he said with a laugh.

"You're over on the far right flank on some vote and you know you're not going to change the outcome, but what you do is give the middle some cover so they can say, wait, it's a very reasoned vote because you've got these guys over here actually wanting this, so it's a way of affecting the debate."

The Sanford-Wilkins agreement aside, don't rush out and start spending your tax cut right away.

Notably absent from the Statehouse news conference were members of the Senate, although its most powerful member, Majority Leader Glenn McConnell of Charleston, sent his expressions of support.

Others, mostly Democrats, but with a solid core of Republicans, rejected cutting taxes after years of taking the knife to state agencies and while dealing with a $300 million-plus shortfall in the 2004-05 budget.

Senate roadblock

Among Republicans, Sens. Verne Smith of Greer and Larry Martin of Pickens have voiced deep reservations about the wisdom of a tax cut while budget writers are in yet another year of cutbacks and when the possibility of selling off state assets, from universities to cars, has been proposed.

Yes, Sanford knows what a roadblock the Senate can be. "The joy of the political process," he said wryly.

In a body where one member can use its arcane rules to tie up and delay legislation, opposition of that scope can mean curtains.

Some discussion has been given to a sweetener for the Senate, with revival of the cigarette tax a more likely option than raising the sales tax.

But a sweetener for Senate Democrats could be a bitter pill for House Republicans.

Wilkins is adamant: "We're not going to support increased taxes."

Sanford says he's hopeful that jawboning in Columbia and grass-roots pressure at home will win an election-year tax cut.

If not?

"Try and try again."