COLUMBIA--Senate budget writers on Thursday raised the sales tax cap on cars from $300 to $2,500, generating a potential $93 million for public schools next fiscal year.

The current sales tax is 5 percent, meaning that under the current law, a person buying a $6,000 car in South Carolina pays the same sales tax as a person buying a $50,000 vehicle. The new plan would raise the sales tax limit on car purchases to $2,500, forcing people who buy vehicles for $50,000 or less to pay the true sales tax.

The Senate Finance Committee approved increasing the sales tax cap and eliminating a tax break on manufacturing equipment. The two changes would bring in $146 million during the 2003-04 budget year. Those increases came as the committee approved a $5.2 billion state budget.

Committee Chairman Hugh Leatherman, R-Florence, hopes the extra money will be enough to keep schools from having to lay off some teachers and increase the number of students per class.

The state Education Department had said schools were $240 million short of necessary funding based on a version of the budget passed by the House.

"We've got to do everything we can for education," Leatherman said.

The House version of the budget gives schools about $1,643 per student. The version approved Thursday raises that to about $1,894.

The move comes a day after teachers rallied at the Statehouse and Education Superintendent Inez Tenenbaum called for tax increases.

"What impresses me most is that senators are having serious talks about these budget cuts, and they're working creatively to see that children and schools aren't hurt," Tenenbaum said Thursday. "It shows a recognition of the problem and a willingness to do something about it."

While public schools need $2,201 per student, "this is definitely a step in the right direction," she said.

But more should be done, said Sen. Nikki Setzler, D-West Columbia. "You're still going backward," he said.

The funding remains more than $200 short of the requirement set by state formula, Setzler said.

He also said that because the tax law changes are in the budget bill, they would not become permanent law and the Education Department would have to ask for the money again next year.

Also Thursday:

-- The Senate Finance Committee agreed to eliminate a small sales tax break for people 85 and older. They currently pay 4 percent instead of 5 percent. The change would send $5.9 million more to public schools.

-- Sen. David Thomas, R-Fountain Inn, unveiled a plan to increase the state's sales tax by 2 cents on the dollar and eliminate car and home taxes while freezing business property taxes.

That change would require approval from two-thirds of the House and Senate and the approval of a majority of voters in the 2004 election.

-- The committee put money from a cigarette tax increase into the budget to pay for Medicaid programs. The tobacco tax increase is tied to an income tax decrease that would begin in 2004.

Gov. Mark Sanford threatened to veto a cigarette tax increase if it wasn't tied to an income tax reduction. Sanford's spokesman Chris Drummond said the governor would not comment on the committee's sales tax plans until he had a chance to study them.

The committee rejected several other proposed tax changes. The budget bill is expected to go before the full Senate in about two weeks.