COLUMBIA -- Legislative leaders in South Carolina said Thursday that tax increases are out of the question as they look to fill a budget gap of more than $800 million. Republican House and Senate leaders said no agency will be spared deep budget cuts they know will cause hardship to people across the state. However, while they could give few specific examples of what services they're willing to trim, they also wouldn't rule out further tax cuts. The state spending plan has been reduced from $7 billion to $5 billion over the past two years. Continued cuts will dig into basic services, said House Ways and Means Chairman Dan Cooper, R-Piedmont. Most of the cuts will likely come from education and Medicaid, because that's where a bulk of the state money goes, he said. "There's going to be a lot of pain before we get through this year," Senate Finance Committee Chairman Hugh Leatherman, R-Florence, said during legislators' annual pre-session meeting with reporters. "Will there be tax increases? No! Absolutely not." Voters clearly said in November that they're taxed enough, said Senate Majority Leader Harvey Peeler, R-Gaffney. But the automatic no-tax-increase pledge leaves a glaring question, said Gilda Cobb- Hunter, D-Orangeburg: "Is the money just going to fall out of the sky?" And she notes taxes have increased in the past two years, though in the form of fines and user fees. She said she'll again propose lifting the state's $300 sales tax cap on cars, though she acknowledges it has no chance of passing. The GOP majority has repeatedly rejected any change in the cap. House Minority Leader Harry Ott lambasted service cuts to disabled children, which were announced last month by the state's Medicaid agency and take effect beginning Feb. 1. Other cuts announced by the agency include eliminating vision, dental and hospice programs for adults, increasing some co-pays, and scaling back on meal and care programs that keep seniors living at home instead of nursing facilities. The state's Medicaid agency will essentially run out of money by March. It projects a $228 million shortfall this fiscal year and is among three Cabinet agencies asking for permission to run a deficit. The social services department faces a $29 million shortfall, while corrections says it will run $7.5 million short. Legislators of both parties criticized the requests, saying it's unfair for agencies overseen by the governor to spend more than they're allocated. If agencies overseen by the governor can deficit spend, why couldn't the Education Department, asked Sen. Nikki Setzler, D- West Columbia. He opposed one cost-cutting idea of requiring teachers statewide to take unpaid leave during 10 planning days when students aren't in class. While legislators said deficit spending must end, and questioned whether it was constitutional, they fell short of saying they won't grant the request. The decision rests with the state's five-member budget board, which includes Cooper, Leatherman, and the governor. Gov.-elect Nikki Haley, who takes office next week, campaigned on eliminating the state's corporate income tax. Cobb-Hunter says doing so would be fiscally irresponsible. The state's corporate income tax rate is already among the nation's lowest. Ott said if Republicans put up a plan to eliminate corporate taxes, he'll counter it with an idea to instead eliminate the bottom two personal income tax brackets, so that all residents benefit. But Peeler said Haley's win shows her ideas can't be discounted: "We need to listen to everything she says." Cooper said a phase-in elimination could be a possibility, but he saw no way to further reduce revenue in the coming year. The House Republican Caucus released their priority list Thursday for the upcoming session. It included some rehashed ideas that previously passed the House but failed to get final approval, such as requiring photo identification at the polls, shortening the legislative session, tort reform, spending caps, and reforming when real estate is reassessed. New proposals include giving a tax credit of up to $100,000 yearly to each so-called "angel investor," or wealthy residents who invest in South Carolina startup companies. Proponents contend it would encourage entrepreneurship and create jobs.
