Senate in budget quandary

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Senators return today for more deliberations on how much state government can spend next year. They are slowly coming to grips with the prospect of producing a smaller budget than that passed by the House.

In a General Assembly where the Senate has traditionally prided itself on "fixing" what they think a parsimonious House has left out, spending less would be quite an event.

Senate Finance Committee Chairman Hugh Leatherman, R-Florence, said he remains committed to trying to raise additional money for education, which the House funded at $1,643, the lowest per-pupil level in a decade. Democratic senators want to increase that to the Education Finance Act recommendation of $2,201. Leatherman has tried, but so far failed, to get the figure above $1,900.

Leatherman cautioned that because of revenue measures already stripped out of the House plan on the Senate floor, including a $25 surcharge on all traffic fines, the Senate will resume debate today $67 million in the red.

Failing agreement on some new revenue-raising measure, Leatherman said, "We'll have to cut."

Because of that shortfall and the reluctance to raise taxes, Sen. Gerald Malloy, D-Hartsville, said the House version of the budget could end up with more money for education than a Senate plan.

So far, efforts by Senate leaders on both sides of the aisle to increase the cigarette tax by 53 cents per pack for health care, and increase the sales tax by as much as 2 cents on the dollar, have failed. But those debates are not over, and advocates of raising more taxes said they'll try again when they resume debate today.

Bruce Ransom, chair of policy studies at Clemson University's Strom Thurmond Institute, said some voters are becoming uneasy about the erosion of public services, while at the same time resisting tax-rate increases.

ù "The majority may not yet be there, but more bipartisan voices are looking at tax enhancement strategies. Those lawmakers who are speaking out are hearing the footsteps of the citizens. There isn't a huge outcry yet, but the rumblings are there," Ransom said.

Sen. Tommy Moore, D-Clearwater, said if there's no consensus on new revenue, "we'll be into the hard decisions of who will get the cuts."

Moore wants to raise the sales tax 2 cents on the dollar, exempt the first $15,000 of individual income from taxes, and create a dividend tax break for small business owners. It would also provide additional funds for agencies such as prisons, police, public health and education. But so far he has failed to win majority support for the $1.1 billion proposal.

Sen. David Thomas, R-Fountain Inn, is promoting an alternative plan that would raise the sales tax 2 cents, but devote most of the new revenue to wiping out property taxes on owner-occupied homes and personal vehicles.

Education and health care are not the only government services threatened by two consecutive years of shrinking spending. General-fund appropriations peaked in 2001-2002 at $5.55 billion, fell to $5.44 billion this year, and the General Assembly is currently planning to spend $5.1 billion next year.

The vise squeezing state agencies is a combination of a struggling economy and the tendency of the Legislature to start new programs with one-time revenue.

For several years they got away with the practice because economic growth allowed them to continue the new programs. But when the economy stagnated, lawmakers were forced to curb spending or increase tax rates.

Sen. Scott Richardson, R-Beaufort, proposed a 1-cent sales tax for one year only to bridge the economic chasm the state finds itself in this year.

Richardson described the Corrections Department as "a prison riot looking for a place to happen," because of the layoff of hundreds of corrections officers.

If funded at the House-approved levels or lower, the budget could have serious consequences for the state's prison agencies.

The Department of Corrections already is running a $28 million deficit and has slashed education and other nonessential services as a result. Some lawmakers, including Richardson, believe the giant prison system, whose inmate population has grown in recent years, may be vulnerable to another class-action federal lawsuit and federal court control.

At the Department of Juvenile Justice, which has been under federal court monitoring since 1996, director William Byars hoped that money included in the Senate Finance Committee proposal would finally allow the agency to end its 13-year-old federal lawsuit and improve conditions. The committee recommended adding $7 million, needed to help operate DJJ's Coastal Evaluation Center and to hire more correctional officers on second shift, when much of the violence occurs in long-term facilities.

But those and other additions could be cut.

"The Department of Public Safety can't keep the Highway Patrol on the roads. And I don't want to read another story about mental health patients being chained to a fence," Richardson said.

Richardson's 1-cent plan failed to win support. Opposition to any new taxes remains strong in the Senate.

Sen. Larry Martin, R-Pickens, said last week he recognizes the needs that will go unmet without a sales tax increase. But he probably would not support such an increase "because I have a $300 million hole in my county's economy," he said, referring to the bankruptcy of Carolina Investors and HomeGold Inc.

Martin has supported the increase in the cigarette tax, because he said raising $171 million to produce $500 million in health care services with the federal match is irresistible mathematics.

But Senate President Pro Tem Glenn McConnell, R-Charleston, urged the Senate to reject the cigarette tax, which he described as "punitive."

"You cannot tax your way into prosperity," McConnell said.