House leaders lost a fight to lower a proposed increase in the state's cigarette tax to 30 cents a pack instead of the 50 cents approved last week by the Senate.
"I thought at 30 cents the House was very likely to override the veto. I'm not sure at 50 cents," House Speaker Bobby Harrell said after the bill was sent back to the Senate.
South Carolina's cigarette tax is 7 cents a pack, the nation's lowest rate. The tax has been unchanged since 1977.
Gov. Mark Sanford has vowed to veto any cigarette tax increase that doesn't reduce some other tax.
The version heading back to the Senate generates $136 million. About $125 million of that goes to a new Medicaid trust fund, setting aside the cash to be used beginning in July 2011 to help fill what's expected to be a half-billion-dollar gap in what's needed to pay for health care for the elderly, disabled and poor when federal bailout cash disappears.
The measure also sets aside $5 million each for cancer research at the Medical University of South Carolina and smoking cessation programs and $1 million for agriculture marketing.
House members rejected the 30-cent-a-pack proposal that generated $87 million with a 62-53 vote after more than two hours of debate. Supporters argued the state needs the $125 million the legislation generates for Medicaid programs and the 30-cents proposal generated only about $87 million -- far short of patching the shortfall.
Rep. B.R. Skelton, R-Six Mile, said that when federal matching cash is included, the 50-cent increase generates more than $500 million, enough to cover the gap. Without it, Skelton said, the state's disabled and elderly will lose services and their families will be forced to quit jobs, work less and spend more time at home caring for their needs.
That's worse than the tax increase Republicans fear, Skelton said.
"Guess what? When you cut those services, you are imposing a cost increase on the people that are taking care of them," he said.
State Rep. Kris Crawford, a physician and Florence Republican, said he wouldn't mind losing a veto vote.
"I'll take one more year to be right," Crawford said. "You'll vote with me on a dollar next year" when there's desperation to plug the hole in Medicaid spending, he said.
Harrell said even the 50-cent increase isn't enough to patch Medicaid's looming shortfall.
The House made two changes to the bill: scrapping Senate plans to tap the state's national tobacco settlement fund for rural infrastructure projects along Interstate 95 and $1 million yearly for agricultural products marketing.
If the Senate agrees to those changes, the bill would go to Sanford.