Boost in cigarette tax vetoed

Mark Sanford

COLUMBIA -- It's now up to the Legislature to decide whether smokers will pay 50 cents more per pack of cigarettes to help the state fund its obligation to cover health care costs for lower-income residents.

Advocates of the cigarette tax increase are scurrying this week to build more support in the General Assembly to override Gov. Mark Sanford's veto on the legislation that he handed down Tuesday.

Heart, lung and cancer-prevention lobbyists are among those trying to secure vote pledges from legislators to override the veto.

The House vote could come as early as today, and it is expected to be very close.

Sanford said the legislators should be wary, saying the cigarette tax

increase would zap $1.3 billion out of the private sector over the next 10 years.

"There has not been a tax increase on the populous of South Carolina of this magnitude or this scale, literally, in a generation," Sanford said.

The governor said the last major tax increase was the Education Improvement Act, which passed in 1984. That added 1 cent to the state's sales tax rate to bolster spending for public schools.

The state's budget problems over the last two years are largely a result of government spending too much, not because South Carolinians are taxed too little, the governor said.

Government programs and services have been cut by more than $2 billion over the last two years, as the Legislature prepares to pass a $5 billion spending plan that begins July 1.

The cuts are a result of falling tax collections coupled with cuts to property taxes, income taxes and the elimination of the sales tax on groceries in the last several years.

Sanford, however, has said for years that government spending was unsustainable, and he's vetoed spending again and again.

"So instead of following the belt-tightening lead of families across the state by doing more with less, state government has actually expanded its reach into the pockets of taxpayers," Sanford said in a statement.

The legislation would raise the state's lowest-in-the-nation cigarette tax of 7 cents a pack to 57 cents a pack. The increase is projected to raise $136 million annually.

Of that, $5 million would go to the Hollings Cancer Center at the Medical University of South Carolina for lung cancer research, $5 million would go toward helping people quit smoking and also stop them from starting, and $1 million would go for the marketing of South Carolina-grown crops.

The rest of the money, $125 million, would be used toward future Medicaid obligations. The money would be used to draw down a 3-to-1 match from the federal government, or $375 million annually.

The governor said that the cigarette tax-increase revenue is projected to fall short of covering the growth in Medicaid within two years or sooner.

Expanding health care under the new congressional plan to an estimated 500,000 more residents will cost South Carolina an additional $914 million over the next decade. Regular growth in the program will cost millions more.

The current 7-cent tax, which has not increased since 1977, brings in $23.2 million and it is deposited directly into the general fund.

Rep. David Mack, D-North Charleston, said the cigarette tax increase won't cover all the state's health care costs, but it will help a great deal. The state has missed out on its ability to leverage the matching federal money for years, every time the Legislature failed to increase the cigarette tax and use it toward health care, he said.

"We need it more than ever now in this state and this economy," Mack said. "I think it has been a no-brainer in South Carolina for a number of years: We have the lowest cigarette tax in the nation. We need so much health-care wise because it's such a poor state and we've left tons of federal dollars on the table.

House Majority Leader Kenny Bingham, R-Cayce, said of the 124 House members, about 70 legislators will vote to override and about 30 will stand by Sanford's decision. At play are the 20-odd votes that are uncommitted.

The showdown will depend on who is in the chamber when the vote is cast, because to override a veto it takes two-thirds of the members present. If all 124 are present, 82 votes would be needed.

If the House overrides the veto, the Senate must vote to do the same. The margin of support in the Senate signals that enough votes will be in place to override the veto and immediately raise the price of cigarettes by 50 cents a pack.

Bingham said he will vote to override.

"I would like to see this issue resolved," Bingham said. "We've had this issue ongoing for a long, long time. It certainly consumes a lot of time."

What it means

Gov. Mark Sanford vetoed the 50-cent cigarette tax increase Tuesday.

--The legislation now goes to the Legislature to override or sustain the veto.

--The vote will be close in the House, which needs two-thirds of the members present to vote to override the veto. The Senate should have the support needed to override the veto.

--Sanford vetoed a 50-cent cigarette tax increase in May 2008 and the House sustained the veto.

--The governor said this is the largest tax increase in a generation.

--If the votes to override the bill fail, the matter is dead for at least another year.

--The increase would raise $136 million to go toward Medicaid costs, cancer research, smoking prevention and cessation and the promotion of South Carolina-grown crops.