House denies plan to increase cigarette tax

JIM DAVENPORT, Associated Press

COLUMBIA -- House members rejected plans to raise the state's cigarette tax to 39 cents a pack as one legislator called South Carolina the nation's low-cost drug dealer.

The House started debate Monday on a $6.3 billion budget bill that bogged down Tuesday over the cigarette tax and school funding issues.

Rep. Todd Rutherford, a Columbia Democrat, said neighboring North Carolina and Georgia both have raised tax on smokes far above South

Carolina.

"We are like the drug dealer ... that sells weed cheaper than the one down the street and so people come and buy their weed from him," said Rutherford, a criminal defense lawyer. "We ought to be so proud of ourselves to be selling a drug cheaper than the rest of the country."

Rutherford and others in the House wanted to increase the current 7-cent a pack tax by 32 cents. That would generate more than $100 million, matched more than threefold by federal Medicaid dollars. The money would be used to create a state-subsidized health insurance program for lower income workers and to expand Medicaid coverage to 40,000 children whose parents earn too much to qualify now.

The proposal was killed on a 67-46 vote after others argued the plan was flawed. For instance, Rep. Tracy Edge, who handles the Medicaid budget for the House Ways and Means Committee, said it would create a budget nightmare.

The budget bill can only have temporary law changes. If the Legislature didn't make the tax increase permanent through regular legislation or failed to adopt the tax in the 2008 budget, there would be a $420 million hole in the budget, said Edge, R-North Myrtle Beach.

"It's not the right thing to do," he said. "It's a recipe for disaster."

After putting 40,000 children in a health care program, the state can't say "oops" there's not enough money for it, Edge said.

But other legislators are expected to offer a different plan Wednesday.

The House also rejected efforts by Lowcountry legislators to take $20 million out of school budgets around the state to help those in Charleston and Beaufort counties.

Their efforts failed with an 81-33 vote as legislators questioned why two of the state's wealthiest counties needed the cash.

The school funding issue came up late in last year's debate and legislators reluctantly put $14 million into those two counties' budgets. But lawmakers did not address the formula that created the funding problems. Because of that, Lowcountry legislators said schools wouldn't be able give teachers raises and might face cutting staff.

House Education Committee Chairman Ronny Townsend said tinkering with spending in the budget wasn't the way to address the shortcoming.

"These people have a dilemma. I understand that dilemma," he said. But 84 other school districts "are going to have dilemma if there is a shift."

Charleston and Beaufort districts can seek grants or raise property taxes to cover costs, Townsend said.

"I hope you won't do that to us," said Rep. Wallace Scarborough, R-Charleston. Other districts won't get less than they got in the current fiscal year, he said, but without help, Charleston and Beaufort schools will.

"Please, please, please don't make us raise taxes," Scarborough said.

But rural legislators had little sympathy for those pleas.

"If it takes a property tax increase, do it," Rep. Ken Kennedy, D-Greeleyville, said.

Beaufort County legislators won one concession. The House went along with a plan that allows the county's schools to set its own curriculum and programs as long as they follow state safety, teacher and student assessment standards.

"The children would still have to meet the assessment standards," Rep. Richard Chalk, R-Hilton Head Island, said. "But we would be free to design how we would like to get them to that point," he said. "If we're not going to be funded, why should we be dictated to about how we should run our school system.