COLUMBIA -- State senators say that
while a proposed cigarette tax to fund Medicaid shortfalls is not
dead, it is on life support.
Without it, thousands of the state's most vulnerable citizens
probably will lose Medicaid coverage, despite a $130 million
infusion of federal money for the state announced Friday as part of
President Bush's tax cut plan.
Senators sent a spartan $5 billion budget back to the House
Thursday night without passing the 53-cents-per-pack increase. The
budget also is $330 million short of the amount needed to fully fund
K-12 public education.
Republicans unsuccessfully tried to use the cigarette tax
proposal as a bargaining chip in an effort to pass Gov. Mark
Sanford's plan to lower the state income tax. Democrats
unsuccessfully tried to use it earlier in the debate as a bargaining
chip for education funding.
Sanford wants to lower the income tax from seven to five percent.
He has stated that he will not support a cigarette tax increase
without passage of the plan or something similar.
The cigarette tax would generate an estimated $170 million
annually and draw about $400 million in matching federal funds to
the state. When fully implemented, the income tax decrease would
deplete the state general fund of an estimated $755 million
annually.
"You do the math," said Sen. Tom Moore, D-Clearwater, adding that
the wealthiest 5 percent of state residents would benefit most from
the governor's tax cut.
Republicans pointed out that the governor's plan would not kick
in until the economy rebounds, and they claim that freeing up tax
dollars will stimulate the economy. But despite last minute efforts
to modify the proposal slightly to make it more palatable to
Democrats, no compromise could be reached. Moore said it didn't help
that Sanford was at a yacht race in Bermuda and was not present to
work with senators on details.
Consequences
The consensus among economists and business leaders is that
underfunding Medicaid will cost the state much more than $171
million in the long run. Some Republicans had said they would
support a stand-alone cigarette tax for this reason. Others
expressed compassion for Medicaid clients.
"What can be worse than to be sick or to have a child who is sick
and not be able to get health coverage?" Sen. Greg Gregory,
R-Lancaster, asked senators. "The next election pales in comparison
to the enormity of this decision."
But most Republicans feared that without the governor's muscle,
the senate could never overcome resistance to the cigarette tax
increase from the S.C. House.
"I talked to the House leaders," said Senate Pres Pro-Tem Glenn
McConnell, R-Charleston. "The cigarette tax wasn't going anywhere
without the income-tax plan."
At three different points in the debate, Sen. Scott Richard-son,
R-Hilton Head, proposed a compromise plan that would have raised the
sales tax by one penny for six months to generate $240 million for
education; imposed the cigarette tax; and lowered the state income
tax by two percent. Of all the revenue generating plans proposed, it
seemed to stand the best chance of passage.
But in the end, as Democrats and Republicans struggled to find
common ground on the income tax portion of Richard-son's plan, about
half a dozen Republicans threatened to filibuster the sales tax
component.
Democrats said the Senate budget places counties and school
districts in a terrible bind.
"The Aiken school board is going to raise the largest property
tax increase in history because of what we're doing here," Moore
told senators.
Contact Karen Addy at (803) 256-8300 or mailto:kaddy@heraldonline.com
