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Sanford's tax plan toned down

Senate subcommittee OKs altered version
BY CLAY BARBOUR
Of The Post and Courier Staff

COLUMBIA--Gov. Mark Sanford's income tax reduction plan finally emerged from a Senate subcommittee Wednesday, a pale reflection of its former self.

The question now is whether the plan can make it through the Senate before the end of the session.

Sanford's tax plan originally called for reducing the state's highest income tax bracket by .225 percent annually for the next 10 years, dropping the rate from 7 percent to 4.75 percent. The cut would not occur unless the state's general fund grew by 2 percent or more, based on projections by the state Board of Economic Advisors.

The Senate Finance subcommittee approved an altered version of the governor's income tax plan Wednesday, increasing the amount of economic growth needed to initiate the cut and stipulating that some of the state's bills must be paid before any such cut could take place.

If passed in its current form, the tax cut, scheduled to begin in July 2005, could be postponed by as many as three years.

"Eventually we will get to it. It will just take a little longer," said subcommittee chairman Sen. Robert Hayes, R-Rock Hill. "We will probably need to see more than $250 million in growth before we can start it."

Hayes said some of the logistics would be worked out in the full Senate Finance Committee, could take the matter up next week. Though unlikely, the full Senate could get to the governor's plan within the next two weeks. The state's $5.3 billion spending plan is on the horizon, and the Senate is suffering through a legislative logjam.

The Finance Committee is debating the budget this week. The full Senate is expected to take up the document May 3. Last year, senators argued for three weeks before approving a budget. Should that occur again, the governor's top legislative priority could be competing for attention during the last days of the session.

The income tax reduction plan passed the state House last month. It has been stuck in the Senate subcommittee ever since, where it has had as many detractors as supporters.

Sanford has said his plan would reduce state revenues by $62 million annually. But, according to the governor, 2 percent growth would add $100 million to state coffers, which would more than cover the loss.

Many senators, however, felt 2 percent was too little growth to trigger such a cut, a sentiment reinforced by the testimony of economists before the committee.

The altered plan, approved Wednesday, increases the growth trigger to 3 percent and stipulates that $150 million the state borrowed during hard economic times two years ago must be paid back and the $100 million state reserve fund must be restored before the governor's tax cut could be initiated.

"There were a lot of people with questions about the plan," said Sen. Larry Grooms, R-Bonneau. "These changes seemed to make it more palatable to them. But it will still face a battle on the Senate floor."

Sanford spokesman Will Folks said the governor was pleased to see his plan making its way through the Senate, but "the governor believes a 2 percent growth trigger is more than adequate."

Sanford has struggled to get any meaningful legislation passed during his first two years in office. Currently there are five pieces of legislation, either inspired by him or important to him, stacked and waiting in the more "deliberative body."

The governor has another eight pieces of legislation on deck in the House, including charter school legislation and a "bobtailing" bill to prevent non-related amendments from being tacked on to legislation.

House Speaker David Wilkins, R-Greenville, said he is committed to helping the governor get these legislative items to the Senate by May 1, the deadline for consideration.

Even if Wilkins is successful, it's unclear how far that momentum will go. Senate President Pro Tem Glenn McConnell, R-Charleston, has already said any legislation on bobtailing will have to wait until next year.


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