Budget measure might not make it

A plan by the House Republican leadership to take money from a workers’ compensation fund might not survive, potentially leaving the state’s budget $40 million short and leading to further cutting in agency budgets.

It’s part of a plan in which lawmakers want to use more than $200 million in one-time money to shore up lagging state revenues and pay for the $5.3 billion state budget.

Next year’s state budget, as proposed, would abolish the Second Injury Fund, used to settle disabled workers’ claims against employers.

The House Ways and Means Committee approved a budget last week that would take $40 million from the fund to pay for general government needs.

But the plan faces opposition from within the House and outside it.

House Majority Leader Rick Quinn likes the plan but doubts it will pass during budget deliberations the week of March 9.

“It’s very iffy,” said Quinn, R-Richland. “If not, we’re going to have to do some additional cuts.”

State Rep. Joel Lourie has asked the attorney general for an opinion on the state’s right to take money that was supposed to serve another purpose.

“I hate to use the term stealing,” said Lourie, D-Richland. “The state is taking funds that do not belong to them. Call it what you want to.”

Lourie and other Democrats also argue eliminating the fund would cause costs to rise for private workers’ compensation insurance.

Outside the House, the plan has managed to unite two of the most powerful lobbying groups — the S.C. Chamber of Commerce and the S.C. Trial Lawyers Association, who frequently are at odds.

On Tuesday, the state’s largest business lobby will join its rival in denouncing the plan at a joint press conference.

Attorneys want the fund to stay in place because they use it to settle workers’ compensation claims.

The chamber’s 2,000 business members are divided on whether to dissolve the fund.

Some like it, but some believe it has outlived its usefulness now that the Americans with Disabilities Act protects employees with previous injuries.

But the businesses are in step against taking the money, said Hunter Howard, the chamber’s president.

“They should not be using trust funds that have been set aside for specific purposes, particularly those set aside for employees’ benefit,” Howard said.

The General Assembly is entering its fourth year of a budget crisis in which the cost of maintaining services exceeds the amount of tax money coming in.

The Republican leaders of the House and Senate, as well as Republican Gov. Mark Sanford, have declined to raise taxes, choosing instead to cut the size of government.

The General Assembly also has taken up the habit of raiding reserve funds and trusts — from environmental cleanup to tobacco settlement money.

But Republicans have been feeling pressure on this latest raid from business leaders, some of their traditional backers.

House Speaker David Wilkins, R-Greenville, said he still expects the plan to survive the floor debate and to be a key plank of the budget sent to the Senate.

Wilkins, an attorney, also expects it to survive Lourie’s legal challenge.

“The Legislature has the right to change the funding revenue streams at any time,” he said.

Wilkins and other leaders — including Sanford and Rep. Harry Cato, who heads the House labor committee — would like to follow 40 other states that have dissolved their funds.

Legislation to do so has been introduced but never seriously discussed because of lobbying from trial lawyers and others, Cato said.

“Eliminating it through the budget process gives us the leverage to have the debate that we haven’t been able to,” said Cato, R-Greenville.

One wrinkle to the discussion: Attorney General Henry McMaster does not know whether he can provide an opinion before the start of the House debate.

“He has promised as prompt a response as possible,” spokesman Trey Walker said, “given the legal research required and the diminished staff resources available due to budget cuts.”

McMaster’s office has had its budget cut by 30 percent and in some cases has one attorney doing the job of two or three, Walker said.

In a twist, the attorney general’s office is in line for some of the fund’s $40 million next year — $380,000 to offset a reduction to its base budget.

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