Posted on Fri, May. 07, 2004


Old debt may siphon $151 million from budget
Senate favors using surplus to pay off debt rather than spend it on services

Staff Writer

The Senate blew a $151 million hole in the proposed state budget late Thursday — a hole the size of the Department of Social Services’ and the Department of Juvenile Justice’s budgets combined.

A coalition of Democrats and some Republicans loyal to Gov. Mark Sanford cast a 27-11 vote in support of paying back an old debt from 2001. They want to take unexpectedly high tax collections from this year and pay back the debt, rather than spend the money on services in the next fiscal year, which begins July 1.

“I know this puts us in a difficult spot, but I feel like we need to deal with it,” said Sen. Vincent Sheheen, D-Kershaw, who is leading the coalition. “I don’t think we keep running away from it.”

The vote was in direct conflict with the wishes of key Senate leaders, including Sen. Hugh Leatherman, R-Florence, chairman of the Finance Committee; President Pro Tem Glenn McConnell, R-Charleston; and even Minority Leader John Land, D-Clarendon.

“I see some of you with smiles on your faces,” said Leatherman, the Senate’s chief budget writer. “But I’ve never seen an issue more serious than this in 25 years in the Senate.”

Leatherman warned that if senators decided to pay back the debt rather than provide services next year, children would not get the education they need, elderly people would be thrown out of nursing homes and guards would be laid off from prisons — and that could lead to uprisings and prison breaks.

“Your families may not be safe,” he said.

Leatherman sent senators home immediately after the vote with a stiff admonishment to consider the havoc their decision would wreak. Senators had expected to work as late as midnight, to take a final vote on paying back the deficit and on the $5.3 billion budget itself.

But Leatherman dismissed them at 7:30 p.m. to sleep on the decision. They meet again at 10 a.m. today to take a binding vote.

Leatherman favors paying the $155 million debt back gradually — about $50 million for each of the next three years.

Sheheen said the state has no choice but to pay back the money as soon as possible. The General Assembly has been spending money it doesn’t have and the constitution requires the debt to be paid — period.

Sheheen, in his third month as a senator, said he expects his colleagues will be under great pressure — overnight and at an early-morning Republican caucus meeting — to change their votes.

But he said the vote would force the Senate to deal with the fact that the state has been spending money it does not have.

“We have to make choices,” he said. “We haven’t been making any choices.”

The fight over the deficit was the first major squabble in three days of Senate debate on next year’s budget, set to take effect July 1.

Sanford had been pushing senators to pay the deficit back before spending a surplus of as much as $130 million from this fiscal year on services next year. He held a press conference on Monday, then lobbied senators all week to tear down the old budget so a new one could be built.

A few hours before the vote, Sanford said he was not sure he could persuade enough of the 46 senators, “but there is a fairly large contingent of Democrats who are going to go hard core with me.”

Sanford said the state must protect its excellent credit rating and long-term financial health.

Senate leaders say that if a final vote to pay back the money succeeds today, the Senate will spend the next week or more re-writing the entire budget. That would mean cutting state agencies deeply, including some already facing cumulative cuts as high as 40 percent in four years.

The commanding margin of Thursday’s vote surprised Sanford, coalition leaders and Senate veterans.

The hole would be at least $151 million, because it includes $130 million from this year’s surplus as well as two other wrinkles — decisions not to allocate $15 million from the sale of surplus property; and not to include $6 million by taking on additional waste at the Barnwell low-level nuclear waste dump.

Those voting with Sanford had a variety of reasons for their stands:

• Most were philosophically determined to pay back money the state owes.

• Some Democrats acknowledged privately they wanted to wreck the Republican budget train.

• A few wanted to force the Senate to consider raising the state’s 7-cents-a-pack tax on cigarettes to plug the hole.

Sen. Robert Ford, D-Charleston, who voted with Sanford, raised his eyebrows after the 27-11 vote.

“Now what are we going to do?” he asked Land, who was standing beside him.

“I don’t know,” Land said. “We’re in a hell of a mess.”

Reach Bauerlein at (803) 771-8485 or vbauerlein@thestate.com





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