Governor's economic proposals greeted by legislators' skepticism,
opposition BY CLAY BARBOUR Of The Post and Courier Staff COLUMBIA--Gov. Mark Sanford's economic stimulus package aimed at jump-starting the state's dormant economy is stirring up significant opposition. "It will be a tough, tough sell," said state Rep. Joel Lourie, D-Richland. "I don't think I have heard from one person in the General Assembly who will support it." Sanford's package focuses on several areas of reform, including worker's compensation, health insurance cost containment and a capital access program that would encourage financial institutions to make small business loans considered risky by some. The section that has attracted the most attention is a tax relief plan that calls for a 15 percent reduction in income taxes, offset by a sales tax on lottery tickets and a 61-cent tax increase on a pack of cigarettes. While many legislators seem intrigued, others said its chances are slim. The state is more than $300 million in debt, which alone causes anxiety about changing the tax code. Add that this is an election year, typically a time of conservative moves rather than bold ones, and the outlook dims further. "Now is not the time to be talking about cutting taxes," Lourie said. "With the economy the way it is, I think everyone understands that." Lourie and Minority Leader James E. Smith Jr., D-Richland, released a joint statement Tuesday attacking the tax plan and accusing the governor of "abdicating his responsibility in the face of an unprecedented fiscal and health care crisis." Lourie and Smith took exception to Sanford's plan because it no longer earmarked money raised by a cigarette tax increase for Medicaid funding. During the last Legislative session, Sanford proposed lowering the state income tax from 7 percent to 5 percent over 15 years and increasing taxes on cigarettes from 7 cents to 53 cents a pack. The money raised by the cigarette tax would have gone directly to Medicaid. While Lourie's problem with Sanford's plan is but one group's opinion, opposition can come from other quarters. When Senate Pro-tem Glenn McConnell attended a GOP retreat this week with other Lowcountry legislators, talk of the governor's plan seemed only to increase local interest in property tax reform. "It's an interesting concept, and I think we are all glad the governor is concentrating on jobs and the economy, but from what I'm hearing, a lot of the senators are more concerned with property taxes this year," McConnell said. "Now if that can be folded into his plan, then there may be some support." Several property tax plans are being discussed in both the Senate and the House, but perhaps the most talked about is one from Sen. David Thomas, R-Greenville. Thomas' legislation would do away with taxes on owner-occupied homes and private vehicles. The $1 billion in lost revenue would be replaced by a 2-percent sales tax increase. Over in the House, Medicaid reform is emerging as a competing issue. House Speaker David Wilkins, R-Greenville, said earlier this week that he agreed with the governor's idea but thought the House would want Medicaid reform legislation passed before any cigarette tax is considered. Medicaid, the health care program for the poor, elderly and disabled, was saved at the last minute last year by a $200 million federal bailout. Such a move is not likely to occur this year. "Once you raise cigarette taxes, Medicaid reform will be out the door," Wilkins said. The governor has said that Medicaid will be fully funded in his upcoming executive budget. And he said the increase in taxes on cigarettes is simply a matter of bringing that segment up to the national average, not focusing unfairly on them. But Sanford said he knows he has a battle ahead of him. "In politics, you just keep trying to move forward," he said. State Rep. John Graham Altman III, R-Charleston, sees tough sledding for the plan. "You have people who want property tax reform, people who want Medicaid reform, people who wanted that money to go to fund Medicaid, people who are against any tax increases and people who disagree with single-shot tax proposals on principle," Altman said. "I don't know if anyone thinks it's a bad plan, I just think there is a lot of competition out there."
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