Amid cuts, many taxing questions
Everyone seems to have an opinion on state's money woes, and what can be done to resolve them
The Post and Courier
Senate President Pro Tem Glenn McConnell talks about approving the state budget bill to meet deadlines Thursday as the Senate worked to pass budget cuts of $488 million.
For more information
Check out the Palmetto Institute's Website.
Previous Stories
Legislators to meet to cut spending; Lawmakers must find $500M in reductions, published 10/15/08
Budget-slashing ax ready; Lawmakers to start making painful cuts today, published 10/21/08
House approves deep cuts, published 10/22/08
Pared budget spreads pain, published 10/24/08
COLUMBIA — As lawmakers found themselves in the position of cutting services for autistic children, draining funds for land conservation and eliminating an advocacy program for disabled residents, they started asking the half-a-billion-dollar question:
What's happening to the state's money?
The latest revenue collections forced the Legislature this week to cut $488 million from the budget after a session in which they approved a sales tax holiday for guns and an income tax break worth about $66 a year for the average worker.
They also did away with the sales tax on food sold in grocery stores, a savings of $225 for the average family of four, and built in exemptions for the purchase of energy-efficient appliances.
Those changes set the backdrop in a state that's becoming increasingly dependent on the volatile sales tax that also gives $1.5 billion in exemptions to everything from furniture purchased by churches to paper used to print the news and fuel burned by shrimpers.
"In my opinion, the fundamental underpinning of our system of government, that is the state's tax system structure, is broken," Darla Moore, chairwoman of the Palmetto Institute, told businesswomen in Charleston on Thursday.
"Now, you may say that it is not the tax system but the spending system that is broken. However, I will tell you unless and until the General Assembly develops and maintains a tax structure designed from the standpoint of adequacy, equity and efficiency, and with the goal of maintaining and enhancing South Carolina as an optimum competitor, it will fall miserably short."
The Palmetto Institute is a nonprofit, nonpartisan and independent think tank that commissioned two studies, which found that South Carolina needs to have a broad-based tax structure with the lowest rates possible.
Instead, over recent years the Legislature has narrowed the tax base by swapping property taxes for the penny sales tax while disproportionately affecting businesses, institute executive director James Fields said Friday.
Income taxes and sales taxes make up 84 percent of the revenue for the state budget, and both are tied to the ups and downs of the economic cycle, Fields said.
During the first quarter of this fiscal year alone, income tax revenue remained flat while sales tax revenue had declined by 13.4 percent, or $57.1 million, and continued downward since.
"We will be facing these dips unless we try to find a more fair, stable, competitive structure, and that requires reform," Fields said. The institute recommends that the Legislature form an independent, professionally staffed tax study group to consult.
Legislators raised their own ideas throughout the days they spent this week in the Statehouse to fix the budget.
Rep. Ken Kennedy, D-Greeleyville, blamed his Republican colleagues for handing out tax cut after tax cut, arguing that a government can't run on air.
Several Democrats and Republicans supported reviving an effort that ultimately failed this year to raise the state's cigarette tax that, at 7 cents a pack, is the lowest in the nation.
Sen. Robert Ford, D-Charleston, wants South Carolina to legalize gaming, a cash cow he said could cure all the economic woes.
Several lawmakers also are calling for the creation of a commission to review the more than 100 sales tax exemptions, many of which have been in place since 1951.
Senate President Pro Tem Glenn McConnell, R-Charleston, has been lobbying for a constitutional amendment that would limit what the Legislature can spend during a given year, based on average of revenue collections over a decade.
Republican Gov. Mark Sanford said he thinks the Legislature simply is spending too much, and doing it recklessly. His potential vetoes of the budget cuts could bring lawmakers back on Oct. 31, with all likelihood that any changes to the tax structure will wait until next year, when a new Legislature convenes.
"Come January, all bets are off," said Rep. Gilda Cobb-Hunter, D-Orangeburg.
To see what's being cut, click here
Click here to read the speech Palmetto Institute Chairwoman Darla Moore delivered in Charleston Thursday.
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Comments
sixcar (anonymous) says...
Darla Moore's speech calls for a broad based tax structure that is fair and equitable, enhances economic growth, and is attractive to new business. Whether she realizes it or not, she's calling for a "fairtax" at the state level.
It's time has come.
October 25, 2008 at 8:17 a.m. ( permalink | suggest removal )
k5 (anonymous) says...
Fairtax across the board would tax everybody and not just some of us, that's the only way that the state is going to collect taxes from everyone since not everyone files income tax returns!
October 25, 2008 at 9:27 a.m. ( permalink | suggest removal )
martin (anonymous) says...
churches should pay sales taxes.
October 25, 2008 at 9:42 a.m. ( permalink | suggest removal )
commonsence (anonymous) says...
I'm no tax expert but I don't see any system of taxation that is not tied to the "ups and down of the economic cycle." All money ultimately comes from the people and when they hurt, tax collection hurts.
October 25, 2008 at 10:15 a.m. ( permalink | suggest removal )
counterpoint (anonymous) says...
Wow, 30+ comments about Inabinett and only 4 here.
Wake the **** up people.
October 25, 2008 at 10:50 a.m. ( permalink | suggest removal )
k5 (anonymous) says...
The money does come from the people, but part of the problem is that ALL people are not being taxed. There is a large percentage of people that are not having to pay property taxes or income taxes while we are and they are the ones that can be picked up on with the inclusive sales tax that they keep giving breaks on too.
October 25, 2008 at 11:23 a.m. ( permalink | suggest removal )
KnowAllSeeAll (anonymous) says...
I agree, why all the attention to a local yahoo getting arrested (councilman or not!) and next to no attention to this issue?!?
The purpose of taxation is to collect necessary revenues to the government to provide public services. However, too many do-gooders in the legislative branch of all levels of government are trying to ram their agendas down the collective throat of their constituents by using the tax code to manipulate behavior, and that is flat wrong. However, until the day that people quit jumping on pure nonsense (eg Parking in the fire lanes) and start paying attention to issues that are relevant to them, nothing is going to change.
PS Does the tone in my comment make me appear angry?
October 25, 2008 at 11:47 a.m. ( permalink | suggest removal )
Paulie (anonymous) says...
Sanford said this day was coming and to save the surplus for debt/future budget shortfalls. But they spent the money and overrode his vetoes... We elected them, and we can vote them out Nov. 4.
October 25, 2008 at 11:56 a.m. ( permalink | suggest removal )
dawhetsell (anonymous) says...
The different goverment agencies keep saying they want to get away from sales taxes and put more on property taxes. That way when the economy goes bad they don't have to cut back like the rest of us. They just stick it to the homeowner who are on fixed incomes and can not afford higher taxes or house payments. I was told by a county councilman one time," If you can't pay the taxes, we will take it from you and sell it to someone who can". Needless to say he got voted out. But that is all the taxing goverments philosophy. What are they going to do now that the Legislators did their job and fixed it so they can't tax us out of our homes.
October 25, 2008 at 12:25 p.m. ( permalink | suggest removal )
charlestonhome (anonymous) says...
I agree with Paulie that Sanford was right. He tried to get the legislature to set aside nearly $200 million several years ago for the future. Needless to say, the greedy legislature spent all of it and are now forced to make drastic cuts. Its no wonder Sanford wins every time he runs for something.
October 25, 2008 at 12:35 p.m. ( permalink | suggest removal )
willbillbedamned (anonymous) says...
Strictly for conservative, fundamentalist reasons this State continues to refuse to allow a sure source of revenue for the State. They outlawed the poker machines that were in many quick stops and taverns. Nobody was forced to play those machines. It could have been regulated and taxed. In addition many of those small "mom and pop" businesses went out of business because of the loss of revenue. That means the folks who worked in them got fired. All in the name of "GOD". Can I get a witness??
October 25, 2008 at 12:44 p.m. ( permalink | suggest removal )
Carolina_Politics (anonymous) says...
Is this a serious question?? What has happened to the money??? It's been spent on crap!! How many posts have been made on this blog and others throughout the state hammering the state legislature for reckless spending? How many think tanks in the state like the Club for Growth and South Carolinians for Responsible Government have detailed all of the wasteful pork projects the legislature throws our money away on every single year? This has to be a rhetorical inquiry.
http://www.carolinapoliticsonline.com...
October 25, 2008 at 1:20 p.m. ( permalink | suggest removal )
mNewmanStudio (anonymous) says...
It is time for all of us in South Carolina to come together to solve this critical problem. Please, let's stop all the political posturing while our economy is in free fall. Maybe the members of the SC General Assembly will be responsible to us, our children and grand children and get down to sereious business to balance expenses and income. Most of us do that every day at our work and at home! We give up stuff we cannot afford, but we keep our family as our first priority.
October 25, 2008 at 2:29 p.m. ( permalink | suggest removal )
rebel1 (anonymous) says...
why not cut their pay in columbia
October 25, 2008 at 2:35 p.m. ( permalink | suggest removal )
sdr35hw (anonymous) says...
Its time for the fairtax. video poker is not the solution. spending must be curbed
October 25, 2008 at 3:37 p.m. ( permalink | suggest removal )
yird (anonymous) says...
willbillbedamned ; I bees your witness. The state outlawed poker machines that fools were throwing money into and now sponsors a lottery that the same fools can throw money into.
One positive aspect of the lottery, the "poor" are now paying some taxes!
October 25, 2008 at 6:55 p.m. ( permalink | suggest removal )
moonpie (anonymous) says...
I agree with the fair tax. Lets lead the way in SC by doing this and maybe the nation will follow.
rebel1 the state legislature's pay isn't the issue here. They make pennies by comparison.
October 25, 2008 at 6:56 p.m. ( permalink | suggest removal )
outrage (anonymous) says...
THE FAIRTAX WILL BRING ALL THE CORPORATIONS AND JOBS BACK! MAKE THE GOVT. MORE TRANSPARENT AND GIVE THE POWER BACK TO THE PEOPLE!
I HOPE IT HAPPENS IN MY LIFE TIME.
Sorry, for yelling, but I believe in the FAIRTAX 100%.
October 25, 2008 at 10:15 p.m. ( permalink | suggest removal )
abitskeptical (anonymous) says...
ditto outrage
October 26, 2008 at 12:42 p.m. ( permalink | suggest removal )
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