Sanford wants tax cut to balance cigarette hike

South Carolina Gov. Mark Sanford

COLUMBIA — Even before the first vote is cast this year, the state Legislature is at odds with Gov. Mark Sanford, who Monday pledged to veto any plan to raise the cigarette tax without a corresponding tax decrease.

Sanford called for the state to reduce its income tax rate using revenue generated by increasing the 7-cent tax on a pack of cigarettes by 30 cents. His comments came at the release of his $6.8 billion executive budget for fiscal year 2008-09 that proposes to cut state spending by $326 million.

Meanwhile, the Legislature's Democrats and Republicans alike have proposed using a smoking tax to pay for health care costs, including providing insurance to the poor.

"This whole notion of this cigarette tax being the cure-all to health care in South Carolina is completely at odds with the realities of what it will take to keep Medicaid viable in the long run," Sanford said.

Using the cigarette tax, which is now the lowest in the nation, to fund annual obligations is not sustainable, he said. As more smokers quit, revenue from the cigarette tax drops.

Sanford thinks his plan — offering wage earners the choice of paying a flat tax of 3.4 percent with no deductions or taking deductions and paying 7 percent — will stimulate economic growth.

Sen. Hugh Leatherman, R-Florence, though, has different plans.

"A cigarette tax, if we get it, as far as I am concerned, it's all going to health care," said Leatherman, who holds significant influence as chairman of the Senate

Finance Committee. "I have no interest whatsoever in getting a cigarette tax increase and putting it somewhere else. That's where it needs to go."

Nationally, the average cigarette tax rate is $1.11 a pack and climbs monthly, said Kelly Davis, cigarette tax campaign coordinator for the South Carolina Tobacco Collaborative. The collaborative wants to see the tax raised by 93 cents a pack and used toward health care.

While previous governors took a less outward role in developing a budget, Sanford said he wants to stop the process from getting bogged down with duplicate requests by lawmakers, who are most interested in looking out for their individual districts.

"With fits and starts, a little bit of clawing, a little bit of back and forth, we tried to interject ourselves into that process because we think the statewide prospective is very important," Sanford said.

Sanford said he doesn't fault lawmakers for looking to bring state dollars back to their constituents but argued that the different approaches of a legislative and executive branch is what balances government. South Carolina has one of the weakest governors in the country.

"A lot of these problems, ultimately at budget time, they are symptoms of a much larger ill," Sanford said. He said in the past two years that South Carolina's budget grew faster than that of any other state in the Southeast.

The executive budget proposes to cut spending by eliminating funding for certain expenditures, including $30 million the Legislature included in its current spending plan for the 15-year bus replacement cycle. It also proposes to cut a number of higher education programs, such as $775,000 spent on the culinary arts program at Trident Technical College.

Rep. Chip Limehouse, R-Charleston, said he will closely examine the governor's proposals as a member of the House Ways and Means Committee and author of the higher education budget.

"We're going to evaluate every program on an individual basis," Limehouse said. "I approve of the governor's fiscally conservative approach."

The executive budget also:

--Includes $87.8 million in recurring and one-time money to hire 50 new troopers and 228 new correctional officers.

--Includes $50 million for the state Conservation Bank, an agency that buys land and conservation easements to block development and uses private money and federal funds to leverage deals.

--Meets the state's minimum obligation for education and Medicaid funding.

The Legislature is not bound to follow Sanford's executive budget. The Ways and Means Committee will draft the first version of the budget and send it to the Senate, usually in March. Members from the two bodies will be appointed to reach a compromise before a vote is taken. Once the legislators pass their own budget, which usually happens in May, Sanford could decide to veto parts or all of it.

Sanford's proposed cuts

Cuts in the state budget proposed by Gov. Mark Sanford include:

-- $21.6 million to undo an expansion of the Children's Health Insurance Program

-- $17.6 million to not rehire employees ending a five-year retiree incentive program

-- $16.4 million to move state health plan to generic drugs

-- $10.4 million in travel expenses across all agencies

-- $7 million to reduce maintenance at public colleges and tech schools within 25 miles of each other

-- $4.7 million to move chiropractic care paid by the state to a network and copay system

-- $3.7 million in 1 percent cuts each to Clemson, South Carolina and the Medical University of South Carolina to encourage collaboration

-- $3.6 million from College of Charleston programs

-- $3 million from the Revenue Department for additional tax collectors

-- $2 million from Francis Marion University programs

-- $1.6 million by requiring newly National Board Certified Teachers to work in struggling schools

-- $1.1 million for The Citadel's co-education initiative

-- $1 million to end an initiative to increase nurses, passed last year

-- $1 million in wildland firefighting, replaced by increasing fees to landowners

-- $1 million by shifting custodial services to night hours

-- $831,000 by centralizing travel arrangements for hotel stays and airline tickets

-- $775,000 for the culinary arts program at Trident Tech

-- $511,000 to combine the State Library, Museum, Arts Commission and Archives into one agency

-- $257,000 for law enforcement for the Confederate submarine Hunley

-- $112,000 for the lieutenant governor's security