COLUMBIA -- The Palmetto State no longer will have the lowest cigarette tax in the country.
Legislators on Thursday overrode Republican Gov. Mark Sanford's veto of a bill that raises the tax to 57 cents a pack from 7 cents and pours millions of dollars into Medicaid programs for the elderly, disabled and poor.
Effective July 1, Missouri will have the nation's lowest levy at 17 cents a pack, according to the Campaign for Tobacco-Free Kids, a national advocacy group that tracks cigarette taxes and trends.
Rep. Chip Limehouse, R-Charleston, said he and others have been working for the past 10 years to pass a cigarette tax increase but had been met with resistance from South Carolina's tobacco culture.
He said the state started as an agrarian society that relied on tobacco as a cash crop. But the culture is shifting to a technology-based society and the passage of the tax increase reflects that, he said. Limehouse helped lead the push in the House this year to pass the legislation.
"I am very pleased," Limehouse said. The tax increase will help shift the burden for the health care costs of poor residents who are smokers from general taxpayers and onto the smokers themselves, he said.
An official with the AARP described the organization as "ecstatic" over the vote.
"This increase has been a long time coming, and we now will be able to cement funding for the state's Medicaid and other long-term care services," said Teresa Arnold, legislative director for the AARP in South Carolina.
Sanford on Tuesday vetoed the measure because the GOP-dominated Legislature didn't offset the increase with lower taxes elsewhere.
It was an unusual effort in Republican-led South Carolina in the midst of an election year and recession and came complete with threats that voters would be reminded of the tax increase.
The 33-13 vote in the Senate brought cheers from the staid upper chamber when it was announced and capped a decade of efforts to raise a tax last changed in 1977. The House on Wednesday easily the overrode the veto on a 90-29 vote.
Border county lawmakers said the tax increase would cost jobs by making convenience stores lose business to competitors in North Carolina, where the tax is 45 cents, and Georgia, where it is 37 cents.
"Conservative Republicans, when you go back to your district, you're going to have to answer," warned state Sen. Lee Bright, a Spartanburg Republican just before voting against overriding the veto. "Folks are going to have to answer. And they'll have to answer separately for different reasons. But you'll have to answer -- and you were told."
Mark Tompkins, a political science professor at the University of South Carolina, said he thinks legislators who voted for the tax increase will face little retribution, except perhaps in border counties where legislators face election opponents.
"The people who are going to be aggravated are going to be smokers and those who sell cigarettes," he said. "You can't imagine many votes changing."
What the tax will buy
The tax increase is projected to raise $136 million, which would sit in a savings account until July 2011. At that time, $125 million would go to pay Medicaid costs; $5 million to the Hollings Cancer Center at the Medical University of South Carolina; and $5 million toward helping people quit smoking and also keep them from starting. If there was money left, $1 million would be used to market South Carolina-grown crops.
The state could use the money for Medicaid to draw down a 3-to-1 match from the federal government, bringing in a total of $375 million.
Supporters of the cigarette tax increase said the state is desperate for ways to deal with a crisis that arrives in July 2011, when federal bailout cash for Medicaid programs disappears.
"We're about to fall into the ditch," said Sen. Larry Martin, a Pickens Republican.
But Sen. Tom Davis, a Beaufort Republican, said the disaster is the Legislature's own making. "We dug this hole last year," Davis said. Last year, Davis pushed plans to avoid using federal stimulus and stabilization cash in the budget by cutting spending.
Two years ago, Sanford's veto had been upheld in the House with the help of House Speaker Bobby Harrell. But legislators said they'd become weary of the perennial fight on raising the tax.
Even with the increase, South Carolina's cigarette tax would tie with Idaho's at ninth lowest nationally.
Smoking has become more expensive around the nation, with the average smoker nationwide paying $5.28 a pack when taxes are included. South Carolina's average pack price would be $4.28 a pack with the increase.
In the midst of the recession and a slow recovery, 21 states have raised their cigarette tax since 2008. Meanwhile, the federal tax last year jumped 62 cents a pack to $1.01.
The increase will apply only to cigarettes and tiny cigars packaged to look like cigarettes. The tax on regular cigars, loose tobacco and chewing tobacco will not be increased.
Kelly Davis, coordinator for the South Carolina Tobacco Collaborative, said the measure's benefits are broader than health care. The higher tax will help keep 23,000 children from smoking. "The new law passed today is a sweeping public health initiative that will impact the lives of South Carolinians for generations to come," Davis said.
Studies have shown that raising the price is the most effective means of keeping kids from smoking, she said.
"For every 10 percent increase in price, there is a corresponding 7 percent decline in youth smoking, and a 3-4 percent decline in overall smoking rates," Davis said.
"Some 74 percent of South Carolina voters said they would support a significant increase in the cigarette tax, even as high as $1," she said. "This week, the Legislature listened to the will of the people."